Bell’s Beer Back In Chicago, Distributor’s Lawyers Smile…

Bell’s Brewing of Kalamazoo, Michigan, has confirmed the recent rumors that it intends to return to the Chicagoland market with two ‘new’ brands as early as next week. The brewery is shipping its ‘new’ Kalamazoo Amber Ale to six bars in the Chicago area, including Brixies, the Clark Street Ale House, Lemmings, the Northside, the Handle Bar, the Silver Cloud, and the Twisted Spoke. The beer should be on tap at these locations, barring any foreseen circumstances, by Tuesday December 4.

Now I use ‘new’ and circumstances foreseen because Bell’s is using this limited release to test the waters of Illinois distribution and franchising law with these brands. The former Kalamazoo Brewing Company stopped shipping beer to Illinois a year ago because of a dispute with National Wine & Spirits, the company that has the rights to distribute Bell’s Beer in Illinois. The brewery’s brands, long a fixture in Chicago’s better beer scene, disappeared from the market after owner Larry Bell decided to end his relationship with a NWS which acquired the rights to the brand after Bell’s former distributor was bought out.

There has been much debate among Chicago beer lovers about the laws governing Bell’s possible return to the Chicago market. The dense Illinois franchise laws appear to restrict a brewery’s rights to switch distributors. Some argue that the laws should be interpreted to allow for a brand to return after a year’s absence from the market.

With this return, Larry Bell is trying another approach. He says that he has released three new beers specifically for the Chicago market that are not subject to the prior distribution agreement. The new beers, offered under the Bell’s Brewery name, will include the Kalamazoo Porter, the Kalamazoo IPA, and the Kalamazoo Royal Amber Ale. The labels read, “Brewed especially for the people of the great state of Illinois.?

To some, including the distributor’s lawyers, it may appear that these new releases look similar to the Bell’s Porter, IPA (or Two Hearted IPA), and Amber, all products that were popular in the Chicago market. Whether the new beers and their flavors bear any similarity to the old beers will likely be subject to many glass clinking debates.

On the Beer Advocate website, Bell posted his thoughts on the situation and the new beers.

Bell’s continues to work on a way to return to Illinois. NWS (owner of the distribution rights) won’t return my call. I have had discussions with other wholesalers and there is a possibility that we would return, but not with any brand we currently produce. However, we, and any new distributor we have, are likely to be sued at the point of reentry by NWS. Illinois franchise law is complex and not always favorable to breweries. Add in corruption and the bad guys at NWS and you’ve got a sticky situation. Chicago is my home town and I would love to sell beer there again. It IS being worked on, so please be patient.

In an interview with Crain’s Chicago Business, Bell said,

“This is a different beer,” he says. “These are not the beers that were assigned to them.”

Barring a court injunction order, Bell’s ‘new’ beers will certainly be welcomed by members of the Chicago better beer scene.

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The Party’s Over: The Birth of Widhook…

In the latest and to date greatest instance that craft beer is now very much about business, two of the game’s largest players have announced their intention to merge. After years of a joint sales and marketing venture called the Craft Brands Alliance (CBA), the Widmer Brothers Brewing Company and the Redhook Ale Brewery announced their intention to form one company. The new brewery, which will be called the Craft Brewers Alliance, will create one of the nation’s largest craft breweries. Just how large is something oddly up for dispute.

Media outlets (including beer bloggers) reporting on the merger have called the new brewery, derisively called Widhook (better than Redmer), the second, third, or fourth largest craft brewery. Putting aside the Brewers Association’s silly debate over the ‘craft’ moniker, shouldn’t the size of the new company be something that we can easily agree upon? I’ve seen a number of media outlets reporting that Redhook’s production was a mere 168,000 barrels last year. Added to Widmer’s production of 269,000 barrels in 2006, the total production would just beat New Belgium for third place. But if you look at Redhook’s own SEC reports, its production in 2006 was actually 271,600 barrels, which would make the new brewery slide in just behind Sierra Nevada for a solid third. I was actually surprised to see Redhook’s numbers, as I was under the impression the brewery had suffered through flat sales in recent years.

Some clips from the joint press release.

“I believe that the merger will allow us even greater opportunity to deliver unique and great-tasting beers for our customers,? said Kurt Widmer, president and brewmaster of Widmer Brothers. “The two companies have a common goal—we both strive to brew the best possible beer for our customers.?

“Our combination of talented people, high-quality beers and first-class brewing operations presents tremendous advantages for the combined company,? said Paul Shipman, founder and chief executive officer of Redhook. “The two breweries have worked well together over the past few years, and I’m confident that we will be even stronger as one company.?

Relations have not always been so rosy between the two companies. In a 2006 filing with the Securities and Exchange Commission, Redhook complained that its brands were getting shortchanged in the sales and marketing alliance it forged with Widmer in 2004. In that filing, Redhook said,

“The Company believes its third quarter sales in CBA territory have declined due to CBA’s unsuccessful execution of its sales and marketing strategy for Redhook’s core and emerging products. During this same period, CBA has been very successful selling the Widmer and Kona products.?

With annual sales of $40 million compared to Widmer’s $73 million, it’s hard to see how Redhook comes out as the winner in this deal, as many media outlets have reported. Kurt Widmer will serve as the company’s chairman of the board and Paul Shipman will serve as chairman emeritus, effectively ending his career in the beer industry. Redhook’s current president and chief operating officer Dave Mickelson and Terry Michaelson, president of the Craft Brands Alliance, will serve as co-CEOs of the new company.

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