Kentucky Branch Expansion Meeting with More Industry Opposition

FILED SEPTEMBER 2, 2014

Dear Client:

Last month we wrote about ABI and the fact that the nation's largest brewer and beer distributor is attempting to expand its ownership of distribution in Kentucky with the pending purchase of Owensboro from the Hand family.

It appears the approval process is meeting with what one insider called "unprecedented opposition." We understand that the Kentucky brewers guild, NBWA, WSWA and Kentucky retailers have all added to the growing chorus of opposition joining the KBWA (MillerCoors state association) and several KY ABI distributors in filing letters of protest with the state ABC. This is interesting as it appears to be everyone in the industry v. ABI. Stay tuned.

The latest letter came last week from the Wine and Spirits Wholesaler Association vp of regulatory affairs Jake Hegeman, who submitted comments to Kentucky regulators. WSWA made clear that the association opposes the attempt of a supplier-tier entity expanding its reach into the wholesale tier, noting that, "At the core of the three-tier system is the core principle of independence of the tiers. This independence prevents the abuses of the system, such as vertical integration, that led to Prohibition over 80 years ago, and today ensures that intra-tier competition remains strong." The letter from Hegeman also noted, "When companies are allowed to occupy two tiers, these important distinctions are seriously weakened."

BEER BRIEFS:

HEINEKEN SAID IT has sold its can packaging business in Mexico to big packaging company Crown Holdings Inc. for $1.23 billion. The company makes cans and bottles, and will continue to supply Heineken.

THE USE OF FOOD STAMPS is on the decline, signalling that Americans have more cash, which is a good sign for beer sales (as food stamps can't be used for alcohol, but cash can). The WSJ reports that recent "improvements in labor markets are reaching more Americans, especially lower-income ones. If more Americans have cash, that could fuel spending."

HOW WERE YOUR LABOR DAY SALES? Ping me at hs@beernet.com.

Until tomorrow, Harry

"Do you realize if it weren't for Edison we'd be watching TV by candlelight?" - Al Boliska


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