BeerDorks.com: Reviews, Commentary and Opinions on Midwest Craft Beer and Microbreweries

 
November 6, 2006

Beer Issues:

One Belluva Problem

Two (well, three, actually) sides to the mess that led to Bell's Brewing pulling out of the Illinois market.
by Baby-Boy Jackson

Baby-Boy Jackson is just here for the beer.
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Illinois has run out of Bell’s beer, and there is no more coming.

Larry Bell, the owner of Bell’s Brewery, in Galesburg, Mich., said it’s not personal and he likes Chicago and Illinois. The reason he is now shipping his beer to Iowa and Virginia instead is that he has had a falling out with his distributor, National Wine and Spirits, Inc., which is headquartered in Indianapolis.

“It is a shame that we’re not going to do business in Illinois, but we’re not going to be able to come to an agreement down there right now,” Bell said.

(Note to Illinois Bell’s drinkers: Keep those shipments to Iowa in mind as you fight the rising panic while reading this article.)

Bell said that NWS had subcontracted distribution of Bell’s to a company called Glazer Wholesale Distributors, of Dallas, Texas. In July, NWS announced that it wanted to buy out Glazer’s contract and get out of the beer distribution business.

Because NWS was going to focus only on wine and spirits, this meant it would sell the rights to distribute Bell’s beer.

“The distribution rights were being sold to a company we did not want to do business with. Our choice was to be sold, get sued, or leave,” Bell said.

Rather than fight a costly court battle, Bell’s decided to leave, Bell said.

Bell did not name the company his rights would be sold to, and NWS did not respond to requests for comment.

The distribution of alcoholic beverages is regulated by both federal and state laws that set up a three-tier system. Brewers are at tier I and not allowed to sell directly to retail outlets, which are tier III. That is where tier II, the distributors, come in. Illinois law prevents a brewer from changing distributors without some kind of cause. So, once a distributor owns the rights to a particular brand, it is the only one that can distribute that beer until it sells the rights or there is some kind of cause that would allow the brewer to switch.

The law is what is preventing Bell’s Brewery from just delivering its beer to bars and stores itself.

But, Bill Olson, an executive vice president with the Associated Beer Distributors of Illinois, said that NWS’ plans to sell the rights to Bell’s would be sufficient cause for Bell to look for another distributor that would be to his liking.

“If he’s already got an agreement with a distributor, he can cancel that for-cause, and I think he has a for-cause action here,” Olsen said.

Olsen said that the reason Illinois law prevents brewers from arbitrarily switching distributors is that the distributors put a lot of money into marketing the beer on behalf of the brand by selling to retailers, holding tasting events, and doing “whatever we need to do to create an interest in that product.” The reason they do this is that by helping the beer sell, the distributor makes more money distributing it.

“We’re picking up an obligation to spend money when we say we are going to be their distributors,” Olsen said. He said the law was there to make sure that the distributors are fairly compensated for the work they put into selling a beer.

Olsen said he thinks that Bell should hire a lawyer to look into the law and see what his options are in Illinois rather than giving up on the market.

Bell said that is not something he wants to do. So, for the time being, there will be no Bell’s beer in Illinois.

So, what is an Illinois Bell’s lover to do in the meantime?

Well, true Beer Dorks know how to get their favorite brew. After doing some checking, it appears that some of the beer that was coming to Illinois is now going over to Iowa. One of the lucky recipients is a place called John’s Grocery in Iowa City, Iowa. John’s will ship any beer it stocks, including Bell’s, to Illinois and several other states. (Readers outside of Illinois will need to call for availability. Variations in state laws prevent John’s from shipping everywhere.) The guy who took my order at the store said John’s has been trying to get Bell’s to come there for a long time, but never had any luck. No luck, that is, until Bell’s left Illinois.

Well, within a week I had a six-pack of Bell’s Oberon and a six-pack of Bell’s porter on my kitchen table. You can only browse the web site and must place your order by phone. Now, the cost of shipping two six-packs to Chicago was about $11. But desperate times call for desperate measures.