Anheuser-Busch Cos. can retain its minority ownership stake in one of Chicago's largest beer distributors, Illinois liquor regulators ruled Wednesday, allowing the beer maker to have some control over its sales.
The decision comes in a long-running standoff between Busch and the Illinois Liquor Control Commission over the state's three-tier system of selling alcohol, in which separate companies make the product, ship it and sell it to consumers.
The beer maker, a subsidiary of Belgium's Anheuser-Busch InBev, has been looking to increase its market share nationally and save money by streamlining its distribution network. Anheuser-Busch has more than 500 distributors across the country, nearly all of which are independent companies with exclusive contracts to sell Budweiser and other A-B brands in a certain geographical area, according to the St. Louis Post-Dispatch.
In 2010, Anheuser-Busch informed Illinois regulators that it intended to buy out City Beverage, which has four distribution operations in the state. Busch has been allowed to distribute beer in Illinois since 1980 and had acquired 30 percent of City Beverage, which was majority-owned by Detroit-based Soave Enterprises.
But the liquor commission blocked the deal to preserve the state's three-tier system. Anheuser-Busch took the matter to court, noting that several Illinois microbreweries distribute their own beer and that keeping the company out of the distribution business discriminated against out-of-state brewers. (In the meantime, Soave sold its stake to BDT Capital in November 2010.)
A federal judge sided with Anheuser-Busch this year and ruled the state law was discriminatory. But the judge denied the company's request to remedy the law by granting out-of-state brewers the right to distribute their own products in Illinois. Instead, the judge left it to the General Assembly to clarify the state's distribution rules.
Legislators responded by creating a law in 2011 that banned in-state and out-of-state brewers from self-distribution. They granted limited rights to microbreweries.
Based on the new law, three trade groups, the Associated Beer Distributors of Illinois, the Illinois Licensed Beverage Association and the Beverage Retailers Alliance of Illinois, have argued that it is illegal for Anheuser-Busch to hold any interest in City Beverage. Anheuser-Busch has said the legislative changes do not affect its right to maintain its stake in City Beverage.
