NY wholesalers battling A-B's takeover tactics - opposition to Anheuser-Busch Inc.'s cornering of New York State beer market

Modern Brewery Age, Jan 22, 1990

NY wholesalers battling A-B's takeover tactics

The Empire State Beer Distributors Assn. is mounting a vigorous public information campaign to combat a scheme by Anheuser-Busch, Inc., to corner the beer market in New York State.

Empire, representing more than 200 local beverage wholesalers, has charged that Anheuser-Busch's goal is to control its own distribution and thereby eliminate the intraband competition that has historically meant lower beer prices for New York consumers. In the process, Empire claims, Anheuser-Busch, if successful in its scheme, will eliminate hundreds of jobs through wholesaler consolidation and put the independent wholesalers out of business.

The first phase of Anheuser-Busch's scheme, Empire contends, was its August, 1989, purchase of Port Distributing in Long Island. One indication of the brewery's intent was the fact that it reportedly paid more than twice what industry observers feel Port's real market value was.

On October 31, 1989, Anheuser-Busch terminated its franchise agreement with Harbor Distributing of Hicksville, Long Island. The brewery claimed that Harbor had failed to meet the requirements of its franchise agreement. Harbor has applied for a temporary restraining order.

In court papers, Harbor recently pointed out that Anheuser-Busch has a "hidden agenda" to eliminate all its wholesalers so the brewery can control all distribution. Harbor noted that Anheuser-Busch's action can be perceived as an object lesson to the other Budweiser franchises which are currently getting offers from the brewery.

"The lesson is simple," said Empire executive director Richard Lipsky. "Don't negotiate too hard or we'll just terminate you and then we will be able to buy you at a rate way below market value."

Lipsky also noted that the consolidation of all metropolitan New York Budweiser franchises under the brewery's wing could lead to the elimination of price competition among and between all brands of beer.