AB InBev angered by Ohio beer bill as craft brewers claim victory

The Ohio State Flag: A controversial new bill seeks to stop brewer's in the state also owning distributors, and has upset Anheuser-Busch

Anheuser-Busch InBev (AB InBev) has attacked ‘free market restrictions’ after a controversial brewery bill was passed in Ohio, but the state’s Craft Brewer’s Association says the law protects craft brewers’ route to market.

Passed last month, Senate Bill 48 contains a provision forbidding brewers in Ohio from also owning distributors, a measure that has been driven by the Wholesale Beer & Wine Association of Ohio (WBWAO).

AB InBev’s Colombus, Ohio brewery is the nation’s fourth biggest, and the brewer vehemently opposed the bill, having inked deals with state distributors granting it either options to purchase them, or to decide who does.

Anheuser-Busch told BeverageDaily.com that the brewer had owned a distributor in Canton since 1994, serving 1000+ restaurants, bars, convenience and grocery stores throughout eastern Ohio.

Anheuser-Busch opposes ‘anti-competitive’ public policy

AB InBev executives met with Ohio governor John Kasich last month, ahead of his decision on whether to sign the bill into law – he has now signed it – and the brewer said it has “a strong interest in how they’re brought to market.”

“There has been no showing, in legislative hearings or anywhere else, that there is some kind of problem in the beer industry in Ohio that requires intrusion by the Ohio General Assembly,” it said.

“We urge the legislature to reject anti-competitive public policy.”

The brewer added: “Anheuser-Busch is strongly opposed to any bill that restricts the free market that has long existed in Ohio’s beer industry.”

“Government interference in private business transactions would be contrary to the pro-growth environment that has made Ohio a great place to do business."

Asked why the WBWAO supported the legislation, spokesman Erik Bean said: “Basically, this grows out of our long-standing support for the Ohio three-tier system, where manufacturing, distribution and retail are independent of each other,” he said.

“This has been in place since the 1930s, and we believe is probably a model system for the country. If any of the tiers exerts undue influence on another tier, based on their economic strength, then we see this as a bad thing.”

‘Scary to think one supplier could control access to market’

Erik Bean, president of the Ohio Craft Brewer’s Association (OCBA) told BeverageDaily.com: “My understanding is that the governor has already signed the bill.” The bill becomes effective 90 days after the governor signs it.

Bean said that the bill benefited the craft brewing segment in Ohio, and said: “There are still things to work out, but this bill preserves our access to market, and I think the Governor acknowledged that.”

“The big part is that it protects the independence of the middle tier – the distributors,” he said.

“But there are also pieces in there that reduce our annual fees. I think those are the two most important things in that bill for craft brewers in the state of Ohio,” Bean added.

Asked whether he feared a monopoly situation, if large brewers such as AB InBev were able to acquire distributors, he said: “It’s scary to think that one supplier could control all aspects of the access to market.

“That’s our primary concern. If they – AB InBev – own the beer distribution channels, they would have a lot stronger ability to block our access.”

Did Bean believe that such a scenario would also affect pricing in Ohio? “We have different products, so I don’t know on the craft side. Pricing is a concern but we sell our beers for a lot more than they do,” he said.

“And the consumer acknowledges why. But there is concern over pricing, because they certainly could if they controlled both tiers, they could undercut the craft sector – their margins are different.”

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