Beer Distribution News
Anheuser-Busch takes stake in Goose Island Beer
CITY Beverage will deliver the local brew
Chicago Tribune, June 8, 2006 — An Oregon brewer with ties to the nation's largest beer company has agreed to acquire a large stake in Chicago's Goose Island Beer Co. in a deal that will allow the local brew to be delivered by Budweiser distributors.
"It is a minority investment," said John Hall, owner of Goose Island.
"Thirty-five percent is reasonably close," he said declining to be more specific or to provide the amount of money being invested by Portland-based Widmer Bros. Brewing Co. Hall said the deal has yet to be finalized.
He said the investment would allow him to return the money the original investors made in the brewery when it opened in 1988.
Rob Widmer, an owner of Widmer Brothers, of which Anheuser-Busch Inc. has been 40-percent owner for nearly a decade, said the deal will permit Goose's products to be purchased throughout the Chicago area.
"There are 8,000 accounts in the Chicago area and the AB distributors call on all of them," said Widmer noting that the current Goose distributor only called on 1,000 of the accounts.
Hall said Anheuser-Busch is "the king of beers and their distribution network is one of the best. I am very pleased to be part of it."
The announcement came at the same time that Pabst Brewing Co., a brewery that is synonymous with Milwaukee, said it is moving its headquarters to west suburban Woodridge. It has been headquartered in San Antonio for more than two decades.
Pabst, in addition to its namesake Pabst Blue Ribbon beer and 40 other malt beverages also brews Old Style, Special Export and Schlitz. While it is the nation's fourth-largest beer company, it closed the last of its own breweries in 2001. Since then it has contracted brewing of its brands largely to Miller Brewing Co.
Pabst is expected to spend about $2.4 million on the move, of which $1 million is to be covered by a state grant from the Illinois Department of Commerce and Economic Opportunity. The beer company said it will create 31 jobs as a result of the move.
Kevin Kotecki, chief executive of Pabst, which is owned by a charitable trust, said a major reason for the move was that "most of our brands were born in the Midwest."
In addition, it is No. 3 in beer sales in Illinois.
The deal allowing Goose Island to switch to Budweiser distributors from Union Beverage Co., which is being paid to give up its distribution rights, is being facilitated by Anheuser-Busch. Anheuser has agreed to provide logistical support and reportedly as much as $12 million to buy the distribution rights.
Budweiser distributors--including River North Sales & Service; CITY Beverage, owned by Soave Enterprises of Detroit, which has warehouses on the South Side and in the northwest and south suburbs; and Superior Beverage Co., in the western suburbs--took over distribution on Wednesday.
"We are proud to include Goose Island among the high-quality, distinctive brands we carry," said August Busch IV, the president of Anheuser-Busch Inc.
"The relationship between John Hall and the Widmer brothers . . . will help John achieve his original vision by making his great beers more widely available," Busch said.
The investment by Busch-affiliated Widmer comes as the St. Louis giant has ramped up its efforts to expand into the micro and craft beer segments due to the slowing of beer sales.
Last month Busch acquired the Rolling Rock label as part of its push into the craft segment.
Shipments of Busch products, mainly Budweiser, Budweiser Light and Michelob, fell 2 percent in 2005 to 101.8 million barrels, according to data compiled by Beer Marketer's Insights. Overall, sales by microbrewers grew about 9 percent in 2005, compared with sales of domestic beers, which fell 1.6 percent.
Last year sales of Goose Island grew 24 percent, led by its signature brew, Honkers Ale. According to Chicago-based Information Resources Inc., a market information company, Goose sold $4.2 million in beer, up from $3.4 million in 2004.
----------
By John Schmeltzer
Tribune staff reporter
Published June 8, 2006
jschmeltzer@tribune.com
Copyright © 2006, Chicago Tribune
