Anheuser-Busch sues Chick Fritz in distribution dispute

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Anheuser-Busch sues Chick Fritz in distribution dispute

BY MONICA STABILE

Springfield business Robert ‘Chick’ Fritz Inc. is being sued by Anheuser-Busch for refusing to give up the right to distribute several European brands of beer.

The federal lawsuit and a counterclaim by Chick Fritz question the application of a state law regulating beer distribution.

Anheuser-Busch filed its complaint at the end of January in the U.S. District Court for the Central District of Illinois, claiming Chick Fritz refused to give up rights to distribute Stella Artois, Bass, Beck’s, Spaten, Franziskaner, and St. Pauli Girl beer in return for appropriate compensation under Illinois law.

The Illinois Beer Industry Fair Dealing Act regulates business deals between brewers and beer distributors. Anheuser-Busch says in court documents that if a brewer decides to end distribution rights with a wholesaler, BIFDA would determine the compensation amount and whether a brewer’s product is 10 percent or less of the total number of all beer supplies sold from the wholesaler’s business.

Chick Fritz is the largest beer distributor in central and southern Illinois and is the only business in the state which has refused to give up selling Anheuser-Busch brands. Chick Fritz says in court documents that there is no good reason for Anheuser-Busch to terminate its distribution rights.

Anheuser-Busch imports many international brands of beer into the United States, but due to past legacy agreements with former suppliers of those European brands, Chick Fritz is able to sell those products.

The lawsuit claims a previous contract between Chick Fritz and InBev USA, the former supplier, says that their agreement would end if InBev USA ceases to be the importer, in addition to prohibiting Chick Fritz from suing the importer for any damages that the contract termination might cause. Anheuser-Busch is owed by InBev Worldwide Inc.

Anheuser-Busch distributes its main beer brands through Anheuser-Busch Wholesalers, an independent network of wholesalers in Illinois which each have a designated district in which they sell Anheuser-Busch products to area retailers. Anheuser-Busch aims to streamline all of its brands to be sold by AB Wholesalers, including European brands.

The only Anheuser-Busch brands that Chick Fritz sells are European beers. Earlier in January, Anheuser-Busch offered to pay Chick Fritz a multiple of gross profit, between five to six-and-a-half times for each of the beverages.

Chick Fritz admitted in its response to the complaint that the European products supplied by AB Wholesalers comprise 10 percent or less of the total number of beers the company sold annually. However, Chick Fritz claims the state law requires good cause to terminate distribution rights.

“Although the European beers constitute less than 10 percent of Chick Fritz’s annual sales volume, their value to Chick Fritz’s overall portfolio is immeasurable,” the company wrote in court documents. “The European beers are premium brands which add prestige to Chick Fritz’s overall portfolio of beers and enhance the goodwill associated with Chick Fritz’s business.”

Chick Fritz claims the European beers are among its most profitable, and demand for those beers increases demand for its other products. The company also claims Anheuser-Busch “discriminates” against it by not allowing Chick Fritz to purchase promotional materials like branded signage and glassware.

Anheuser-Busch has filed for an extension of time to answer Chick Fritz’s counterclaim.

At time of publication, attorneys for both parties had not responded to a request for comment.

Contact Monica Stabile at intern@springfieldbusinessjournal.com.

By |June 7th, 2017|Categories: Secondary Feature|0 Comments

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