Monday, May 23, 2011

Craft brewer bill headed to governor

By Jamey Dunn

The Illinois House approved a bill today aimed at solving a legal dispute over beer distribution, but some small brewers say the measure would stifle growth in their industry.

A federal judge ruled that Illinois must revamp its policy for beer distribution, which only allowed in-state companies to self distribute, on the grounds that it discriminated against out-of-state sellers. As a result of the lawsuit filed by Anheuser-Busch Inc., the court gave lawmakers until May 31 to revamp the system or no brewers would be allowed to distribute their own beer.

Senate Bill 754 would allow small breweries, both in Illinois and outside the state, that produce less than 465,000 gallons or 15,000 barrels a year to get a permit to distribute up to 232,500 gallons or 7,500 barrels of their own product in Illinois. The measure passed with no opposition in the House. It passed in the Senate earlier this month and now goes to Gov. Pat Quinn.

Lawmakers said they tried to strike a balance to protect small brewers while barring large companies from cornering the market by allowing them to branch out into distribution. The Associated Beer Distributors of Illinois, which supported the bill, argued that if large brands were able to get into the distribution market, they would have no reason to sell any beer other than their own. “If [Anheuser-Busch] is allowed to own distributorships, the ability for craft brewers, new imported brands and new domestic brands will have a reduced access to market. Independent distributors provide an avenue for those products that brewery-owned distributors won’t,” Bill Olson, president of Associated Beer Distributors of Illinois, said in a prepared statement.

However, some craft brewers say the bill sets the limit too low for the amount of beer a brewery can produce and be eligible for a self-distribution license. "Once again, the beer distributors are spending money to get their way in Springfield, and consumers are losing as it is gets harder to put local beer on the shelf and on tap" Josh Deth, owner of Revolution Brewing in Chicago, said in a written statement.

The Illinois Craft Brewer’s Guild holds up for comparison the production levels of Goose Island brewery, which was recently purchased by Anheuser-Busch. According to a statement on the guild’s website, the Chicago-based brewer produced about 130,000 barrels of beer last year. During negotiations over the measure, the group backed a production limit of 60,000 barrels.

“Once you go beyond the level of 15,000, you are not in the category of craft brewer,” Spring Valley Democratic Rep. Frank Mautino, sponsor of the bill, said during debate in the House.

The guild also took issue with a provision that would require brew pubs, bars and restaurants that brew their own beer to have a brewing operation at a second location to be eligible for a craft brewer's license to distribute their beer.

Rep. John Bradley, a Marion Democrat and a lawyer, voted in favor of the bill but warned that it likely would not put a stop to legal disputes over distribution rights. “I don’t think that this is going to settle the litigation which has taken place throughout this state with regards to this issue, and I don’t think that ultimately this is going to settle this issue. And I would just caution … anyone [who] thinks that because of passing this bill that this issue is being resolved. … I don’t think any of us should kid ourselves as to what the long-term impact of this is going to be.”


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