Bigwigs from Anheuser Busch InBev are due to go before the Illinois Liquor Control Commission this afternoon. They’re expected to make the case as to why the brewing giant should retain a thirty percent stake – through a wholly owned subsidiary – in distributor City Beverage. City has four locations in the state; Arlington Heights, Bloomington, Chicago and Markham.
Currently Wholesaler Equity Development Corporation, or WEDCO, holds the minority stake in City. But that is in jeopardy after the ILCC cited AB InBev and WEDCO for violating the Illinois liquor Control Act.
We first reported the citation a week-and-a-half ago.
In the citation the ILCC is recommending City Beverage’s distributor licenses be revoked and WEDCO divest itself of its minority stake. The revocation of the license would be put on hold to allow the subsidiary to shed its thirty percent interest.
It’s not clear what exactly will happen at today’s hearing. Initially the ILCC said this June meeting would lay the foundation for future meetings on the matter. But the citation issued to AB InBev told the brewing giant to attend and plan to defend itself against the ILCC’s allegations. It’s also not clear if this citation would mark the end of this year’s long battle for distributor high ground in Illinois. Some insiders have told us privately this could ultimately be decided in the courts.
No decision was made during Wednesday’s hearing in Chicago. Instead, the commission laid out a tentative timeline for this case.
- July 18th – Motions filed
- July 27th – Responses to motions filed
- August 8th – Oral arguments & notice of amicus brief filing
- September 7th – *Amicus brief filed
- September 21st – Responses to amicus brief filed
- October 1st – Hearing
We say the timeline is tentative because Liquor Control Commission Chairman Steve Schnorf told commissioners he wants to make sure all the “I’s” are dotted and the “T’s” crossed, leaving no room for error, so if the interested parties need more time they’re probably going to get it. Ironically, this will likely play in to AB InBev’s strategy of dragging this out as long as possible.
*amicus curiae brief – a brief presented by someone interested in influencing the outcome of a lawsuit but who is not a party to it
Mainstream Press Weighs In
After months of this issue generally going unnoticed by the mainstream media, the Chicago Sun Times caught up with us on Tuesday.
“There’s a brouhaha brewing over how Budweiser gets doled out to Chicago bars and liquor stores that could — if Anheuser Busch gets its way — affect the beer selection at your local watering hole.
Here’s the issue: Budweiser’s parent company wants to retain its 30-percent ownership stake in a mega-beer distributor, City Beverage. But attorneys for the Illinois Liquor Control Commission say that’s illegal under the state’s new “craft beer law.” And they have recommended revoking the wholesaler license of City Beverage — which distributes beer in Chicago, Peoria and other parts of the state — until the brewer divests its ownership interest.”
Lost in translation here, or just plain omitted, is that the revocation of City’s licenses would be stayed to give WEDCO time to divest itself. So distribution isn’t going to shut down while all this plays out.
“If Budweiser gets its way, distributors and retailers say drinkers who enjoy a variety of beers could be left crying in their pints.”
This comes down to AB InBev wanting to cut costs and retain a foothold – albeit a small one – on the Chicago market. It isn’t expected to have ANY effect, whatsoever, on what does and does not wind up on store shelves.
If WEDCO retains its thirty percent stake then nothing changes. They have been operating this way for years. If WEDCO is forced out of Illinois then someone else picks up that minority stake and City Beverage continues to distribute beer.
Also, Budweiser is a brand – not the name of the brewer.