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Thursday, April 21, 2011 05:14 pm

Bud brings beer wars to Springfield

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Anheuser-Busch has reportedly hired more than a dozen Statehouse lobbyists this spring to protect its interests in a long-running battle to control how it distributes its brews in Illinois.

The St. Louis company has, in the past, owned a beer distributorship in Illinois. It sought to buy another one in Chicago, but was blocked by the Illinois Liquor Control Commission. So, the company sued in federal court.

In the process, Anheuser-Busch discovered that two relatively small Illinois “craft brewers” were allowed to distribute their own beer in Illinois, but out-of-state craft brewers weren’t given the same privilege. The brewer’s suit tried to use that contradiction to its advantage.

A federal judge decided last September that the contradiction in Illinois practice didn’t allow him to open up the distributor market to Anheuser-Busch. But he did decide that he could stop the small in-state craft brewers from distributing their own product as long as out-of-staters were barred. The judge, however, agreed to stay his decision until the General Assembly could weigh in this spring.

That ruling has set off a furious Statehouse battle. Illinois, like other states, has a three-tiered delivery system for beer – brewers, distributors and retailers – which was set up after Prohibition ended almost 80 years ago.

The Associated Beer Distributors of Illinois is a major player in state politics. Their political action committee has raised almost $1.7 million since January of 2008. They usually get what they want in the General Assembly. But, after slowing down a bill to allow in-state and out-of-state craft distributors to self-distribute, they’ve recently had to jump on board or risk allowing Anheuser-Busch to stop the whole process in its tracks.

The craft brewers came into session asking to distribute a huge amount of beer on their own – 60,000 barrels a year, or almost 2 million gallons. That was viewed in the Senate as a gross overreach, and an amendment was introduced last week to allow them to self-distribute just 7,500 barrels a year. The distributors say, in practice, any brewery which produces more than 2,000 barrels usually ends up turning to the distributors because distribution just becomes too complicated and cumbersome to do it on their own.

Anheuser-Busch is saying it would like to pass a bill to allow it to self-distribute, or at least buy that Chicago distributorship. But it’s an out-of-state company with little pull in Illinois and no real history of a Statehouse presence. It needed a lot of help, which is one reason it has hired so many bigtime lobbyists, including former state Sen. James DeLeo, who said last week that he is acting as a “consultant” and wouldn’t actually be coming down to Springfield. DeLeo was one of the most influential members of the Senate for years, and he’s still highly respected by members.

Anheuser-Busch also has lobbyists on its team who are close to House Speaker Michael Madigan, including one of the top insiders at the Statehouse, Madigan’s former House Majority Leader Mike McClain.

As with any big move like this, one should always look at what the players really want. And Anheuser-Busch’s real-life strategy appears to be to stop that bill from moving any further in the General Assembly and then take its chances on an appeal of the federal judge’s decision. If a bill passed that excluded Anheuser-Busch, the company would have a tougher time explaining to an appellate court that state laws are vague enough to grant its requests. A successful appeal could open up the distributor game to the company, which would result in a huge increase in profits by cutting out the middlemen. We’re talking high stakes and big money here.

Rival brewer Miller-Coors also jumped into the beer wars late last week, reportedly hiring several lobbyists of its own to work against Anheuser-Busch.

Miller-Coors makes a ton of money in Chicagoland (Miller Lite is the far and away top seller), so it doesn’t want Anheuser-Busch to gain any sort of foothold in the city.

It’s always easier to kill a bill than to pass one, particularly when it comes to legislation as controversial as this. The craft brewers still aren’t totally happy with the legislation and the bill has to navigate some very complicated political waters. Who will be crowned Springfield’s King of Beers? We’ll know in a few weeks.

Rich Miller publishes Capitol Fax, a daily political newsletter, and thecapitolfaxblog.com.

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