BREAKING: Gloves Off!
Reyes Responds

FILED OCTOBER 2, 2012

Dear Client:

Citing the old Danish fairy tale, "The Emperor's New Clothes", Reyes Holdings issued a blistering rebuttal to MillerCoors' memo to distributors, (Promoting the Three-Tier System Doctrine). Writes Reyes: "After years of listening to MillerCoors' propaganda that state laws will be respected and followed, it is time for all MillerCoors distributors to announce: 'But the emperor has no clothes!'"

Sidebar: All this on the eve of MillerCoors distributor meetings, which start in Chicago tomorrow. MillerCoors was set to unveil new stricter operating standards at the regional meetings, but the Distributor Council and the brewer could not agree on how strict, according to sources.

Continues Reyes:

"Reyes began business in 1976 as a small beer distribution business in Spartanburg, South Carolina. We have never forgotten our roots, or that our story could only be possible in this great nation of ours. We have lived the American dream, selling America's beverage. But we now live in a world where foreign mega-conglomerate brewers care little for American values or laws -- they're just here to suck our hard-earned value out of our family-owned businesses. Friends, this is a cautionary tale, one worth your careful attention.

"In 2008, MillerCoors asked its distributors across the country to sign a new distribution agreement, which included an array of onerous, one-sided terms. Facing regulatory scrutiny, plummeting sales, and a tidal wave of industry criticism over the new distribution agreement, MillerCoors promised Virginia regulators and distributors, and state agencies and all distributors across the country, that it did not intend to, and would not, violate or ignore state laws. To the contrary, MillerCoors repeatedly represented (under oath, in some states) that any state law would prevail in the event of a conflict with any contract. Tom Long stated that MillerCoors 'repeatedly' had assured distributors and regulators that state law applies 'in all aspects governing the agreement.' In Virginia specifically, MillerCoors told the ABC that 'if any provision of the MillerCoors agreement conflicts with Virginia law, Virginia law supersedes the agreement and controls.'

"It is impossible to reconcile MillerCoors' court filing in Virginia attempting to block Reyes' signed deal with Chesbay with these promises. To the contrary, we now know that MillerCoors never intended to honor state laws that ensure separation of the tiers and that protect distributor value, enacted pursuant to the 21st Amendment. Instead, MillerCoors mounts an assault on what the US Supreme Court recently called the 'unquestionably legitimate' three-tier system of alcohol distribution, not just in the Commonwealth of Virginia but throughout the United States. MillerCoors' agenda is clear. It aims to seize control over, and convert for itself the value from, its vast nation-wide distribution network.

"Let's be clear about the purported basis for this unprecedented land grab. MillerCoors attempts to block the Reyes/Chesbay deal because it says that Reyes will not 'protect MillerCoors trademarks.' Yet Reyes has distributed beer in Virginia since 1988. It operates Premium Distributors of Virginia, which distributes MillerCoors and other brands in Virginia pursuant to trademark protections very similar to those in the Chesbay MillerCoors contract (which state law requires Reyes to adopt in its entirety when the deal closes). At the MillerCoors National Convention in March 2012, Premium received the Bill Coors Award for obtaining the best quality assurance score of any MillerCoors distributor in the nation. In the last twelve months alone, Reyes has distributed the equivalent of 48 million 12-ounce cans of MillerCoors product (including over 6 million in Virginia) and acquired another Virginia distributor with MillerCoors' consent.

"In not one instance-in the last year, or ever-has MillerCoors so much as suggested that Reyes did not adequately protect the MillerCoors trademarks. The MillerCoors lawsuit has nothing to do with trademarks. It amounts to a foreign invasion of our laws and our values and yes, our US Constitution.

"We appreciate the incredible outpouring of support over the past several days and we promise you one thing above all else: with your continued support, we will not let MillerCoors take our business, or yours."

Wow. The debate is heating up. What's your take?

A-B RESPONDS TO CHICAGO/CITY HEARING

A-B issued a release this morning, attributed to counsel Gary Rutledge, saying:

"Anheuser-Busch has made significant long-term business decisions and investments in Illinois based on the law and the ILCC's long-standing practice of permitting brewers to own or maintain interests in licensed distributors. For the past three decades, the ILCC issued Anheuser-Busch and its affiliates, distributor licenses for nine different locations and has issued more than 50 annual renewals of those distributor licenses.
As a licensed distributor, we are a welcome neighbor who invests in our business and our communities through our involvement in local organizations and charities and our efforts to promote alcohol responsibility, while providing good-paying jobs. We also bring added competition to the marketplace, which benefits consumers.
We ask the ILCC to stand by their previous decisions regarding our minority interest."

BEERNET EXTRA: Read MillerCoors original memo to distributors here: http://www.beernet.com/publications_daily.php?id=2773


Until tomorrow, Harry

"Facts do not cease to exist because they are ignored."
-Aldous Huxley

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