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Goose May Go the A-B Way

Jan 11, 2006 - The Chicago Tribune reports that Goose Island Beer Co. and Anheuser-Busch are "in talks."

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Goose Island president and founder John Hall confirmed as much, but said discussions have been limited to "distribution issues." He declined to comment further on the nature of the talks.

A-B reportedly is talking with other microbreweries about distribution deals or taking a stake in the companies, including Old Dominion in Virginia. With the craft beer segment continuing to outpace the larger brewers in annual growth, all three major brand brewers have shown a renewed interest in adding specialty beer to their portfolio's.

"Its wholesalers are clamoring for high-margin, growth brands," said Benj Steinman, editor of Beer Marketer's Insights, told the Tribune. "Anheuser has promised to deliver them, but they can't just create them."

A-B currently has equity interest and distribution alliances with both Redhook Ale Brewery with breweries in Seattle, Washington and Portsmouth, New Hampshire, and Widmer Brewing in Portland, Oregon. A deal with a strong Midwest brewery with excess capacity would makes sense from both a geographical and logistical standpoint.

Goose Island produced about 50,000 barrels last year, with distribution in eight states.

Goose Island's distribution has been somewhat unsettled since it terminated its relationship with its sales and marketing agent last year and brought that function in-house. The company had been using United States Beverage LLC since 2000 to help with marketing to retailers and bars and also to assist in contracting deals to use excess brewing capacity.

But the partnership with United States Beverage fell apart, and the Connecticut-based company sued Goose Island, accusing it of unfairly ending its relationship. Goose Island settled the suit for an undisclosed amount, according to a Goose Island investor.

One potential sticking point in the negotiations looks to be Goose Island's existing distributor relationships. Union Beverage Co., which has been Goose Island's distributor in Illinois for the last decade, is aware of the talks and has no plans on relinquishing its distributor rights, said Bob Collins, vice president of sales and marketing.

"We are doing a phenomenal job with their brands, and our plan is to be a long-term Goose Island distributor," Collins said.


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