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AB-InBev to buy Wicked Weed

From Chris Furnari – Brewbound

Anheuser-Busch InBev is making its first U.S. craft brewery purchase of 2017, today announcing the acquisition of North Carolina’s Wicked Weed Brewing.

Specific financial terms of the transaction were not disclosed and the deal is subject to regulatory approval. Recall that last year, the U.S. Department of Justice promised to “carefully scrutinize any future craft acquisitions” by A-B.

“We have chosen to partner with The High End to position ourselves to make Wicked Weed what we imagined it could be when we first sat at a craft beer bar and talked about opening a brewery,” co-founder Walt Dickinson said via a press release. “As a brewer, giving our team more resources to continue innovating our portfolio and the ability to reach more craft drinkers, allows us to keep putting the beer and the people first.”

Wicked Weed, based in the popular craft beer-soaked mecca of Asheville, North Carolina, is the 10th U.S. craft brewery to sell to Anheuser-Busch InBev since 2011. It joins Goose Island (Chicago), Blue Point Brewing (New York), 10 Barrel Brewing (Oregon), Elysian Brewing (Seattle), Golden Road (Los Angeles), Breckenridge Brewery (Colorado), Four Peaks Brewing (Arizona), Devils Backbone (Virginia) and Karbach Brewing (Texas), in A-B’s craft and import focused “High End” portfolio.

Wicked Weed currently produces beer out of four breweries. It’s fourth facility, built last year, is located on 17 acres in South Asheville and spans 57,000 sq. ft.. It is entirely devoted to the production of sour, farmhouse and wild-fermented beers.

The company opened its third production space, a 40,000 sq. ft. brewery that features a 50-barrel brewhouse, in July 2015.

Read the full article here

 

Matthew McLaughlin, Esq. Awarded 2017 Brewers Association F.X. Matt Defense of the Craft Brewing Industry Award

Craft Beer Attorney Coalition member, Matthew McLaughlin, Esq. of McLaughlin, PC and the Mississippi Brewers Guild, was awarded the 2017 Brewers Association F.X. Matt Defense of the Craft Brewing Industry Award at the annual Craft Brewers Conference that took place April 11th-13th in Washington, D.C..

This award is named for the late F.X. Matt, president of the F.X. Matt Brewing Co. in Utica, N.Y., from 1980-1989, and a tireless and outspoken champion for the small brewing industry. Nominations are open to individuals who have given aid and support to the causes of small, independent brewers, and by doing so have supported the Brewers Association’s goal of vigorously defending the craft beer industry.

Matthew serves as General Counsel for the Mississippi Brewers Guild and was instrumental in helping draft a bill to update state laws that would allow direct-to-consumer sales for small brewers among other items in the bill language.

This is the second member of the CBAC that has been awarded this prestigious BA award. In 2015, Brook Bristow of Bristow Beverage Law and the South Carolina Brewers Guild also received the F.X. Matt Defense of the Craft Brewing Industry Award.

The Craft Beer Attorney Coalition is a member-based, non-profit organization that has been developed to advance the professionalism of the craft beer industry’s legal representatives.  Our members dedicate themselves to the legal world of craft beer with their commitment to industry-specific education training and pro bono community services to existing breweries and breweries-in-planning nationwide.  http://craftbeerattorneycoalition.org/

Currently, we have members serving the following states:

  • California – Candace Moon, Esq.
  • Colorado – Candace Moon, Esq.
  • Georgia – Taylor Harper, Esq.
  • Minnesota – Jeffrey O’Brien, Esq.
  • Mississippi – Matthew McLaughlin, Esq.
  • North Carolina – John Szymankiewicz, Esq.
  • Ohio – Adam Armstrong, Esq.
  • South Carolina – Brook Bristow, Esq.
  • Tennessee – Matthew McLaughlin, Esq.
  • Texas – Angel Tomasino, Esq.

 

 

 

A-B Disapproves MegaMerger in Southeast 

Source: Beer Business Daily

April 6th

“‘Three A-B houses in the Southeast are joining forces to form a 35 million case red network operation in what is being described as a mega-merger,’ we reported in early February.

Recall the trio looking to team up included R.A. Jeffreys in North Carolina; Southern Eagle in Georgia and South Carolina; and Crown Beverages in South Carolina.

But word has come down that, after their due diligence, A-B disapproved the transaction Monday.

A source close to the matter walked BBD through it.

WHY DENY? A-B has encouraged voluntary consolidation in their network. (There’s actually a consolidation guide; all wholesaler have a copy.)

But there are limits to the benefits of consolidation. In this case — and these things are evaluated on a case-by-case basis — bottom line: the transaction would have involved large, complicated territories and wholesalers who are already stretched to their limits over the past decade’s-worth of consolidation.

The would-be merged wholesalers were not expected to be able to fulfill the service element expected under A-B’s equity agreement. (Indeed, one part of the merger’s plan was to add only one EAM [Equity Agreement Manager] who would cover the territory via personal plane.)

By now, we understand, both sides have filed suit.

MORE WHY? As we understand from the informed source, A-B had been working with the three wholesalers to understand the proposed transaction. Diligence included interviews with the three wholesalers’ principals to fact-gather and understand effects.

A-B had expressed concerns from the beginning, but became increasingly concerned about the complexity and implications of the proposed merger.

TOO LARGE? With this would-be monolith, you’re looking at basically 500 miles stretching from the southernmost part of Georgia all the way up to North Carolina. It includes major cities like Charleston, and Raleigh, as well as rural markets.

The combined territories would span three states (the Carolinas and Georgia). That also means three sets of regulations, state pricing, etc. AKA lots of complexity.

STRETCHED TO THE LIMIT? Southern Eagle is the southernmost piece.  RA is the northernmost North Carolina piece and Crown is in the middle. Southern Eagle and RA are the two big wholesalers, and each has grown significantly through consolidation in the last 10 years.

How significantly? In 2007, both Southern Eagle and RA Jeffreys added five territories each. In fact, the two of them combined have gone from 5 million cases in 2007 to 28 million today.

We understand that when the wholesalers submitted their proposal, they proposed one EAM would cover the territory with his personal plane.

So… A-B denied approval. Also:

THEY’VE FILED A LAWSUIT FOR DECLARATORY JUDGEMENT IN NC. They have no interest in litigating, we hear, but to protect themselves, A-B filed a lawsuit for declaratory judgment in federal court in North Carolina.

And the other side appears to be litigating, too, natch.”

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Senate Bill 85 Passes the House

Today, the House voted 147-14 to approve Senate Bill 85.  Now, the bill has to go back to the Senate for a vote, because a House committee amended the bill to offer similar privileges to distilleries (the original Senate version focused only on breweries).  There shouldn’t be an issue in the Senate, which means we might have a signed bill this week!

Wal-Mart Sued Over ‘Craft’ Labeling On Beer Collaboration

Wal-Mart Sued Over ‘Craft’ Labeling On Beer Collaboration

Source: Law360

By Kat Greene

February 14, 2017

Wal-Mart Stores Inc. has been accused of marketing and pricing a mass-produced beer as though it were a small-batch craft product, according to a proposed class action in Ohio that targets the retail giant’s collaboration with a supposedly small supplier that isn’t really small at all.

Ohio beer shopper Matthew Adam said he bought a 12-pack of beer that was packaged to look like, and priced to sell like, the beer from other small beer makers. The beer was from a line Wal-Mart is selling in a collaboration with Trouble Brewing, a company that purports to fit the “craft beer” name.

But Trouble Brewing isn’t small at all, Adam said in the proposed class action filed Feb. 10. Rather, it’s a unit of a much larger conglomerate that mass-produces beers, meaning it shouldn’t be sold for a premium craft price near the other premium craft brews, he said.

“He suffered an ‘injury in fact’ by paying for something he believed was genuinely ‘craft beer,’ when it was not,” according to the complaint. “Essentially, the craft beer is not worth the purchase price paid.”

The suit accuses Wal-Mart of fraud and violating the Ohio Consumer Sales Practices Act, among other claims.

Adam said that when he bought the Trouble Brewing variety pack, he’d assumed he was paying a premium because the beer was craft. To be called craft, according to the Brewers Association, a brewery must make fewer than 6 million barrels annually and be less than 25 percent owned by a mass producer.

Wal-Mart has been selling four different styles of its own line of beer since last year as part of a collaboration with Trouble Brewing, according to the suit. Trouble Brewing, Adam said, doesn’t really exist. Rather, its official name when it applied for a brewing license was Winery Exchange Inc., which has since changed to WX Brands.

That company’s brewery address isn’t for WX Brands, but rather, for Genesee Brewing Co., a mass producer in Rochester, New York, according to the suit. Genesee is in turn owned by an even larger company in Costa Rica, Adam said.

He seeks to represent a class of consumers who paid the premium price of craft beer for what ultimately is just mass-produced beer, according to the complaint.

Wal-Mart said in a statement that the company hasn’t yet been served with the complaint, but that it intends to defend itself against the allegations.

“We hold our suppliers to high standards and are committed to providing our customers the quality products they expect,” the company said.

The plaintiffs are represented by Brian T. Giles and Bryce Lenox of Giles Lenox.

Counsel information for Wal-Mart couldn’t be immediately determined.

The case is Matthew Adam v. Wal-Mart Stores Inc., case number A 1700827, in the Court of Common Pleas, Hamilton County, Ohio.

 

Beer economist: For somebody to grow, somebody has to shrink

The article below and, more particularly, the comments therein by Bart Watson  – economist for the Brewers Association – serve to emphasize the importance of allowing direct-to-consumer sales by breweries.  If, by law, a brewery’s sole revenue stream is distribution, i.e., is prohibited from direct-to-consumer sales, it is going to have a difficult time surviving.  This has been true for some time now, but with current market trends and other states tweaking their laws in favor of craft breweries, the passage of SB85 becomes more and more vital.

Beer economist: For somebody to grow, somebody has to shrink

Source: Cincinnati.com

Shauna Steigerwald

Feb. 8, 2017

“There’s still growth out there, but it’s harder to find.”

That’s the message about the craft beer market that Bart Watson, chief economist for the Brewers Association, conveyed to an assembled crowd of brewing industry professionals at the Duke Energy Convention Center Wednesday morning.

Watson, whose organization is a national trade association representing small, independent craft brewers in the U.S., spoke as part of the third annual Ohio Craft Brewers Association (OCBA) Conference. The event had some 450 registered participants this year.

Nationally, craft beer’s growth rate is slowing, but the industry is still growing. Watson said. Some of the slowdown can be attributed to craft beer’s larger base: Consider that there are now more than 5,000 breweries operating in the country, more than at any time in U.S. history, and up from about 2,000 just five years ago. He expects to see the number of craft breweries continue to grow to as many as 8,000 or even 10,000 in the near term. Once closings are factored in, the U.S. currently nets an average of 2.1 new breweries every day, he said.

Being in the middle of states in terms of its number of craft breweries, Ohio in particular still has plenty of room for growth, Watson figures. Mary MacDonald, OCBA’s executive director, said the state ended 2016 with 194 active breweries, having grown by 44 last year. Expect to see that number increase again this year. Ohio currently has 236 licenses, meaning more than 40 new ones are already in the works.

The industry has big economic implications for the state: Ohio craft breweries have a $700 million impact on the state’s economy and provide nearly 4,000 full-time equivalent jobs, Watson said.

As for where Ohio’s growth could be headed, he points to Michigan’s 445 active licenses as a reasonable benchmark. Kentucky, by the way, has 60; Indiana, 163.

It’s also important to considering not just the number of breweries but also how much – or rather, how little – they are producing.

“The vast majority of these breweries are really, really small,” Watson said. “They’re operating more like a restaurant or a bar than a production facility.”

By his thinking, an occasional brewery closure, such as Ei8ht Ball’s recently announced local exit, is not cause for alarm but a sign of a more mature industry with increased competition.

“If 500 close, I wouldn’t blink an eye,” because twice as many would likely open in the same timeframe, he said.

He does expect to see changes in the industry, though. Before his speech, he said that beer drinkers shouldn’t expect to see breweries grow at the rate of local breakouts MadTree or Rhinegeist, which he singled out as anomalies in the industry to begin with.

“The era of moving from a microbrewery to a multi-state, regional is not dead, but it’s going to be very infrequent,” Watson said. “It’s going to be harder for everyone to grow in an environment like this. For somebody to grow, somebody has to shrink.”

Also, nearly 80 percent of drinking-age U.S. adults already live within 10 miles of a brewery, so it’s no longer enough to just find a new place to open one. Most likely there will already be competition when a new brewery enters a market.

So he talks about differentiation a lot now. “Now, I think you’re going to have to do something different,” he said. That might include things like launching beers that stand out in a crowded market or targeting underserved segments of the market, such as female beer drinkers, he said. “I think the next phase is going to be the interesting one.”

Bud Light Lime-A-Rita Not So ‘Light,’ 9th Circ. Told

When you see the image above, what comes to mind?

Bud Light Lime-A-Rita Not So ‘Light,’ 9th Circ. Told

Source: Law360

By Daniel Siegal

February 7, 2017

Drinkers of Bud Light Lime-A-Rita on Tuesday urged the Ninth Circuit to revive their putative class action accusing Anheuser-Busch LLC of tricking consumers into thinking the sugar-loaded beverage is low-calorie, arguing that the brewer’s use of the term “light” on labeling has meaning for consumers.

During oral arguments in Pasadena, California, Behdad Sadeghi of Zimmerman Reed LLP, representing named plaintiffs Sheila Cruz, Deborah Esparza and Catherine Silas, urged a three-judge panel to reverse U.S. District Judge Andre Birotte Jr.’s ruling dismissing the suit, which contends that Anheuser-Busch’s labeling of the cocktail-flavored malt beverage tricks consumers into thinking that Lime-A-Rita is comparable to Bud Light Lime, when in fact it contains nearly three times as many calories.

The panel appeared to be amused by the case’s subject matter, with Circuit Judge Morgan Christen saying before arguments began that the case was the “law clerks’ favorite,” and Circuit Judge Susan Graber adding there was “a lot of show-and-tell in chambers in this morning.”

Sadeghi then showed the judges a flattened Lime-A-Rita box, and argued that the use of the term “light” on the label could plausibly be misleading to consumers, and that the trial court erred in dismissing the case at the pleadings stage on the basis that “no reasonable consumer” could be misled by the label because there is no full-calorie Lime-A-Rita to be compared against the Bud Light version.

Judge Graber, however, asked why the comparison shouldn’t be between a Lime-A-Rita and a full-strength margarita made with liquor, which would have twice as many calories as the Lime-A-Rita – and thus make the “light” descriptor accurate.

“What’s on the box, the carton is a picture of what looks like a margarita, and it’s all about ‘give your margarita a twist,’ and ‘this is the margarita with a twist,'” she said. “Why isn’t the comparator product an ordinary margarita, as to which, this has fewer calories?” she asked.

Sadeghi responded that although the comparison to an ordinary margarita is plausible, the use of the Bud Light logo on the box means it is equally plausible that consumers would draw the comparison to an ordinary Bud Light, or a Bud Light Lime – both of which have many fewer calories than the Lime-A-Rita.

“The reason they use the same Bud Light moniker is it has meaning to people,” he said. “That meaning … is that it was a product that is light in some way.”

The proposed class action was filed by Cruz in November 2014 in California state court. Cruz alleged that Lima-A-Ritas are “the highest calorie alcoholic beverage sold by [Anheuser-Busch].” Lime-A-Ritas have 192 to 220 calories in eight ounces, according to Cruz, whereas a full Budweiser has only 145 calories and a normal Bud Light 110 calories in 12 ounces, she said in the complaint.

The U.S. Food and Drug Administration generally limits the use of “light” to products that have, at most, two-thirds the calories of the comparable reference product, Cruz said.

Anheuser-Busch introduced Lime-A-Ritas in 2012, and the line now also includes Raz-Ber-Rita, Straw-Ber-Rita, Mang-O-Rita and Apple-Ahhh-Rita, Cruz says, selling $462 million worth of product nationally in 2012. According to the appellate briefs, those varieties have now been joined by Cran-Brrrr-Rita.

The suit was removed to federal court in December 2014 and dismissed in June 2015 for failure to state a claim, and the plaintiffs appealed to the Ninth Circuit in July 2015.

On Tuesday, Peter Morrison of Skadden Arps Slate Meagher & Flom LLP, representing Anheuser-Busch, urged the appellate panel to uphold Judge Birotte’s ruling, arguing first that the Alcohol and Tobacco Tax and Trade Bureau, which regulates alcohol packages, had “expressly” said that the “light” was OK, and thus the brewer has safe harbor from the suit.

Morrison added that a reasonable consumer would never think that a Bud Light Lime-A-Rita has fewer calories than a “regular old Budweiser.”

“It’s a false comparison. The reason is no reasonable consumer would believe that this product would be comparable to a beer,” he said.

Morrison said that the appropriate comparison would be a Lime-A-Rita made with full-calorie Budweiser – which does not exist, but would in fact have more calories than the Bud Light Lime-A-Rita.

The panel took the matter under submission.

Circuit Judges Susan Graber, Jay Bybee and Morgan Christen sat on the panel for the Ninth Circuit.

Cruz is represented by Christopher Ridout, Caleb Marker and Behdad G. Sadeghi of Zimmerman Reed LLP, and Kevin Mahoney of Mahoney Law Group APC.

Anheuser-Busch is represented by Peter Morrison of Skadden Arps Slate Meagher & Flom LLP.

The case is Sheila Cruz et al. v. Anheuser-Busch LLC, case number 15-56021, in the U.S. Court of Appeals for the Ninth Circuit.