A-B Sues Distributor

Seeks to confirm its right to nix sale to rival wholesaler.

Anheuser-Busch’s decision to disapprove a merger between an A-B wholesaler and an all-other distributor has landed in the courts.

A-B filed a suit in federal court in Florida seeking a ruling that it acted within its rights in nixing the sale of Eagle Brands to Gold Coast Beverage Distributors, according to a report in the Miami Herald.

A-B is making the move after Eagle demanded $62 million, plus consequential and punitive damages and payment of inventory, from the brewer, according to the filing.

The Miami Herald story includes an emailed statement from David Peacock, A-B’s vice president of business operations:

“This sale would have resulted in an anticompetitive situation that would not be in the best interest of Anheusr-Busch and local consumers of our beer and beverage brands.”

A-B argues that it was within its right to veto the deal.

From Beer Marketer’s Insights.

"AB seeks 'declaratory judgment' that it violated neither its own equity agreement nor Fla franchise law when it disapproved. …One focus of AB's complaint: clauses in AB equity agreement that demand wholesaler 'agrees to maximize sales' of AB products and 'devote greater effort' to AB brands than 'to any other products.'"

The Florida case had been closely watched amid much industry speculation about the eventual creation of a single distributor system. Under such a system, one distributor would handle all the beer brands in a single market.

Miller Brewing Company -- and apparently A-B -- are opposed to the creation of such a system.

The April issue of Brew Magazine explored this concept in depth.

As Brew Magazine reported, the single system is risky. It could invite regulatory intervention. It could trigger opposition from retailers. And it could weaken the three-tier system, as retailers might step up challenges of commerce laws that are essential to distributors’ businesses.

For its part, Miller believes healthy competition is the best way forward and recognizes it has a role to play in helping foster a financially strong distributor network.

The Miami Herald story can be seen here.

Beer Marketer's Insights homepage is here. Beer Business Daily's coverage of the story can be seen here (subscription required).

Previous Brew Blog coverage of the Florida situation and the single distributor model can be seen here.

The April issue of Brew can be seen here.