Under Review: The Hand Family Purchase of City Beverage

In Beer News by Ryan3 Comments

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Members of the Illinois Liquor Control Commission are set to review the proposed buyout of distributor City Beverage by a Tennessee Family at the commission’s monthly meeting in Chicago this afternoon.

If you recall, Anheuser-Busch announced on October 31st that they were selling their 30-percent stake in the four wholesalers that make up City Beverage (Arlington Heights, Chicago, Markham and downstate Bloomington) to the Hand Family. Also announced, on the same day, the investment firm that owns the remaining 70-percent interest in City Beverage would be buying River North Sales and Service.

The plan: roll the two into one creating the largest Bud distributor in Illinois.

Moving forward, the mega distributor will be known as Lakeshore Beverage.

photo courtesy @chicagobars

photo courtesy @chicagobars

Today, the Liquor Control Commission will look into the players involved in both BDT Capital and the Hand Family Companies to ensure no one falls into the categories below — which were spelled out in the new law and could prohibit the deal from moving forward.

A person who is licensed by any licensing authority as a manufacturer of beer, or any partnership, corporation, limited liability company, or trust or any subsidiary, affiliate, or agent thereof, or any other form of business enterprise licensed as a manufacturer of beer, having any legal, equitable, or beneficial interest, directly or indirectly, in a person licensed in this State as a distributor or importing distributor. For purposes of this paragraph, a person who is licensed by any licensing authority as a “manufacturer of beer” shall also mean a brewer and a non-resident dealer who is also a manufacturer of beer, including a partnership, corporation, limited liability company, or trust or any subsidiary, affiliate, or agent thereof, or any other form of business enterprise licensed as a manufacturer of beer.

According to an Illinois Liquor Control Commission spokesperson the buyout of River North is already a done deal. That buyout, involving BDT Capital, did not require commission approval. The expectation, according to the spokesperson, is that River North will be folded into City Beverage if/when the commission approves the sale of City Beverage to the Hand Family.

That sale, however, is less cut and dry. The announcement last year ended a years-long saga involving the much sought-after wholesaler. A year before agreeing to the sale, A-B defeated a challenge of its ownership interest mounted by distributor groups in the state and the ILCC’s own legal counsel. They contended A-B was violating the Illinois Liquor Control Act by holding an interest in City Beverage. The commission disagreed and challenged the legislature to clean up state law if they really didn’t want a brewer to hold an interest in a distributor.

Months later those wholesaler groups took their fight to the Illinois General Assembly pushing legislation that was eventually signed into law prohibiting a brewer from holding any interest in a distributor.

Judging from the picture above, while BDT Capital will be the majority owner of River North and City Beverage — or Lakeshore Beverage moving forward — the Hand Family will run the show. J.R. Hand, president and CEO of the Hand Family Companies will reportedly be at the helm. He was in Chicago last week to meet with employees and the Illinois Craft Brewers Guild, among others.

ICBG Executive Director Justin Maynard tells GuysDrinkingBeer his chat with Hand was a positive one. “J.R. is looking forward to having Lakeshore become more involved within the craft beer industry here in Illinois; was very clear in identifying his craft beer team members and the responsibility in takes to work with a well-formed Guild,” said Maynard. “Our vision is not only to work closely with all distributors here in Illinois, but to work together on state legislative initiatives for the betterment of Illinois craft beer.”

That last sentence is intriguing as River North and City Beverage split from the Associated Beer Distributors of Illinois years ago over the Anheuser-Busch/City Beverage/WEDCO flap and could perhaps be an ally to the Guild moving forward.

(Editors Note: The Illinois Liquor Control Commission approved the sale of City Beverage to the Hand Family, which you can read more about HERE.)

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Ryan

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Equal parts beer nerd and policy geek, Ryan is now the curator of the Guys Drinking Beer cellar. The skills he once used to dig through the annals of state government as a political reporter are now put to use offering unique takes on barrel-aged stouts, years-old barleywines and 10 + year verticals.