Legal Hurdles Clearing for Craft Brewers in Illinois

The legal wrangling in Illinois over the fate of beer distribution has had craft brewers frightened for their livelihoods since 2010. That year, Anheuser-Busch filed a lawsuit against the state because Illinois blocked the company’s move to purchase a beer distributor. The suit was over the fact that Illinois doesn’t allow out of state brewers to distribute their own product, forcing them to go through a distribution company instead. In-state brewers can self-distribute their own product. That all seemed poised to change in the wake of Anheuser-Busch’s suit though.

The lawsuit made progress through the court system and the judge actually ruled that if the state legislature did not create a law dealing with it, all breweries (regardless of location or size) would be forced to use distribution companies rather than distributing their own products. The deadline was May 31, 2011, and the state government came through just in the nick of time. Of course, only the Senate voted – the bill still must pass the House in order to be made into law.

The new proposed law would allow craft brewers in the state to distribute their own brews without having to go through a middleman. This offers significant savings for small brewers, as using a distributor is usually beyond their financial means. For the purposes of the bill, a craft brewery is defined as one producing no more than 465,000 gallons of beer each year. Each brewery would be able to self-distribute up to 15,000 kegs (or 7,500 barrels) every year. That’s certainly good news for microbreweries and nano breweries that want to get their brews into local bars and restaurants.

While the proposal is not quite as good as it could be, it’s far better than the alternative. However, not everyone is happy about the proposal. Obviously, Anheuser-Busch is not pleased and is doing everything in their power to lobby against it since it keeps them from distributing their own products. Even the Illinois Craft Brewers Guild is not that happy as the barrel cap for distribution limits the growth of the industry within the state. Still, it’s better than the alternative which is the total loss of self-distribution for all breweries in the state.

In the end, it’s a battle of David versus Goliath – a win for Anheuser-Busch would tilt the playing field in their favor and against the small brewers struggling for success.

Posted on May 20, 2011 .