Florida vs ABI and BK Whopper Bars, Round II

FILED AUGUST 31, 2012

Dear Client:

As you may recall, last March the Florida Division of Alcoholic Beverages rendered a declaratory statement last week saying that Burger King's BK Whopper Bar, which sought to sell beer and wine in certain outlets, cannot hold an alcohol permit due to ownership overlap between Burger King and A-B InBev after BK asked the agency for a ruling (not to mention a stake in Eagle Brands, their Miami distributorship). The Miami Beach Whopper Bar got a temporary permit pending its appeal to the 3rd District Court of Appeals.

Yesterday, several organizations joined forces to fight the appeal: The Beer Industry of Florida (BIF) and the Retail Beverage Council of the Florida Retail Federation joined the Florida Beer Wholesalers Association (FBWA) and the Wine and Spirits Distributors of Florida (WSDF) in filing a Petition to Intervene in the appeal.

Since the Division issued its declaratory statement, a few facts have changed: Burger King sold 29% of its stock to the public and Anheuser-Busch sold its limited partnership interest in Eagle Brands. Burger King sought to have the matter remanded from the Third District to the DABT for consideration of the new facts. The court denied the motion, and Burger King voluntarily dismissed the appeal.

Burger King's new petition goes another route: It stresses the public ownership of Burger King, the sale of Eagle Brands, its commitment not to sell any A-B brands, and the formal agreements of the Brazilian owners not to attempt any control of either Burger King or Anheuser-Busch.

In their 55 page petition to intervene, the wholesalers take the position that no important facts have changed, and the ownership of Eagle Brands wasn't even a factor in the DABT's original ruling. "Because the Division found that Whopper Bar was an impermissible 'affiliate' of Anheuser-Busch, Inc, it never reached the issue of whether AB InBev's ownership interest in the wholesaler Eagle Brands Wedco, L.P., would be another reason to prohibit Whopper Bar from holding a retail vendor's license," they write. The fact that BK is publicly traded also does not change things, says the petition. The sale of 29% to the public "does not transfer the power to control Whopper Bar away from the billionaire trio." And so on.

The issue isn't about Burger King, or Whopper Bars, or even selling beer in Whopper Bars. I doubt that Mssrs Sicupira, Telles, Lemann, and Harf are calling the shots at Whopper Bars. But it's about the precedent, and it's about the preservation of the integrity of the three-tiers. Florida, like many states, has a so called "tied house evil" law, saying that owners of companies with a retail license can't also hold a brewer's or wholesaler's license. Let the camel's nose under the tent, and the rest follows.

REYES TO BUY CHESBAY

Reyes Beverage Group has entered into an agreement to acquire 6 million case Chesbay Distributing Company from the Sampson family. Chesbay operates in Chesapeake, Virginia, carrying MillerCoors, HUSA, Crown Imports, Boston Beer, Pabst, Yuengling and Mike's Hard Lemonade brands among others. Chesbay was one of the first (if not the first) distributor to put in Vertique racks. That puts Reyes at around 105 million cases (including Crest Beverage in San Diego which is a J-V).


LABOR DAY AD ROUNDUP

A spot check of retail ads around the country don't show too much unusual activity. As has been the trend for few years: More craft and secondary imports are featured these days, and a LOT more wine and spirits ads where legal.

Of course Chicago always raises eyebrows. Platinun and Bud Light Lime 12 packs for $9.88. Corona and Heineken 12 packs line priced at $11.88. (Same at St. Louis Schnucks). A whole slew of craft 12 packs for $12.88, except Sam at $11.88. Cheapest beer also typically found in the SoCal Ralphs, with BMC+Tecate 30 packs for $15.99 (purchase of two).

To see the ads, click the link: https://docs.google.com/open?id=0B_AxpKotj17vdnFzOXpIMmdmU00


HAVE A safe and prosperous Labor Day weekend, and may you sell tremendous amounts of beer at high margins. See you back here on Tuesday.

Until then, Harry

"Your successes and happiness are forgiven you only if you generously consent to share them."
-Albert Camus

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--------- Sell Day Calendar ----------
Today's Sell Day: 23
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YTD sell days Over/Under: +1

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