Anheuser-Busch InBev (A-B) and Tilray Brands are being sued in federal court by CraftCanTravel LLC (CCT) for allegedly interfering with the New York-based export company’s exclusive rights to export the former Craft Brew Alliance (CBA) portfolio of brands, including Kona Brewing, “to most of the world.”
In the filing in the U.S. District Court for the Southern District of New York, CCT writes that the relationship deteriorated in the wake of A-B’s acquisition of the remaining interest in CBA in September 2020.
CCT alleges “CBA, at A-B’s direction, is slowly choking off the critical supply of craft beer, which is the lifeblood of CCT’s lucrative export business” and “is also dismantling the very export business which CCT created so that it can be replaced with A-B’s own, wholly owned and more lucrative export and international channels or that of third-parties such as defendant Tilray Brands, Inc.”
CCT is seeking a jury trial. The company is seeking compensatory and punitive damages, as well as monetary relief from A-B and Tilray; a preliminary and permanent injunction against both companies to preserve and protect its distribution agreement rights and prevent “irreparable injury to CCT.”
In addition to the lawsuit, CCT has started an action in New York with the American Arbitration Association against CBA seeking “compensatory and punitive damages.”
CCT describes A-B as a “corporate behemoth” that has used its “economic muscle” to influence CBA to betray “its contractual obligations to fulfill and supply the international orders placed by” CCT under its international distribution agreement with the company.
CCT added that A-B’s sale of several craft brands to Tilray Brands – including Redhook, Widmer Brothers and Square Mile Cider, which CCT had exported – occurred “without any advance warning, compensation or financial redress of any kind, and Tilray will be marketing and distributing those brands in a manner that interferes with CCT’s relationship with its established customers and partners.”
CCT alleges that A-B and Tilray “are seeking to usurp the valuable distribution rights which CCT owns while causing irreparable harm to CCT’s business reputation, goodwill and relationships with customers and partners” due to the exporter’s “exclusive, international distribution rights” being the “last remaining link in the vertically integrated chain of manufacturing, distributing and selling abroad” products from the former CBA portfolio.
An A-B spokesperson told Brewbound in a statement: “CBA has complied with all terms of its contract with CCT and always adheres to the highest standards of business integrity when dealing with its partners. We believe this lawsuit is without merit and will vigorously defend against it.”
Since August 2012, CCT has served as the exclusive international distributor of CBA brands, including Kona, Redhook, Widmer Brothers, Omission and Square Mile Cider in Europe, Asia, Australia, Canada, Panama, Puerto Rico, Northern Mariana Island, Virgin Island, Guam and American Samoa. CCT said its deal with CBA was set to run “indefinitely,” barring one of the party’s demonstrating “good cause” to terminate the deal.
CCT said that the “majority” of its focus is on the “international marketing and distribution of Kona,” with “upwards of 80% of its revenues derive[d] from the brand.”
CCT claims that A-B is attempting to reclaim the international distribution rights to the former CBA brands left in its portfolio, especially Kona.
“[I]f CBA (and then A-B) owns the entire vertical chain of distribution for the CBA brands that CCT exports around most of the world, it stands to make much more money by cutting out the middleman (such as CCT),” the company posited.
CCT described several post-acquisition issues with A-B and CBA that “wreaked havoc” on its ability to fulfill orders. The company said it projected exports of 825,000 case equivalents of Kona beer to be sold across its markets in 2022, but claims A-B “failed to honor its contractual commitment to the agreed 2022 plan.” In the United Kingdom alone, CCT claimed that between 15,000 and 20,000 case equivalents (CEs) were “lost” due to “out of stocks,” as previously ordered kegs never arrived.
“It was becoming patently obvious to CCT that CBA (under the direction of A-B which had its own commercial priorities distinct from CBA) was reallocating its export capacity in favor of other brands and customers, at the expense of CCT,” the lawsuit claimed. “In so doing, CBA breached the distribution agreement, causing devastating losses to CCT, including, but not limited to, a sales shortfall of hundreds of thousands of CEs, which shortfall was acknowledged by CBA both in word as well as in writing.”
CCT claimed that in October 2023, a rep with A-B’s Brewers Collective informed the company that the Kona SKUs available to it would be an incremental “that wildly exceeded (in some instances by 800% or more) the historical volumes that CCT had ordered” and at volumes that exceeded would could be sold through to CCT’s customers and markets. This has left CCT unable to plan for 2024 and damaged its relationships, the company claimed.
At this point, CCT claimed that it is unaware of where A-B is producing Kona offerings after it was informed that the world’s largest beer manufacturer decommissioned a packaging line in Portsmouth, New Hampshire, on April 1. Thus, the company is unable to schedule logistics around future Kona shipments.
Meanwhile, the Redhook and Widmer brands, which are now under Tilray stewardship, are being relaunched in international markets in violation of CCT’s distribution agreement, CCT said. The company said that it’s received order requests for those brands, but has been left “in a lurch and unable to fulfill those orders” as it has no contract or agreement with Tilray.
The filing by CCT also posits that there’s nothing to prevent A-B from selling the Kona brand, similar to the “Tilray maneuver,” a move the company said “would completely destroy CCT.”