Last Call: Massachusetts A-B Wholesaler Cleared in Pay-For-Play Case; New Holland to Open Third Michigan Brewery

A-B Wholesaler Cleared in Massachusetts Pay-For-Play Case

Massachusetts alcohol regulators have cleared a wholly-owned Anheuser-Busch wholesaler accused of offering illegal inducements to retailers across the state.

Last May, the Massachusetts Alcoholic Beverages Control Commission (ABCC) accused A-B’s Medford-based wholesaler, August A. Busch & Co. of Massachusetts, with providing nearly $1 million in free Budweiser-branded coolers and draft equipment to hundreds of bars and liquor stores — a prohibited practice known as inducement — between 2014 and early 2015 for use specifically with the beer company’s products.

However, a three-member ABCC panel Tuesday ruled that there was “not sufficient evidence” presented during a November 28 hearing to prove that the wholesaler violated section 204 CMR 2.08 of Massachusetts General Laws, which states:

“No licensee shall give or permit to be given money or any other thing of substantial value in any effort to induce any person to persuade or influence any other person to purchase, or contract for the purchase of any particular brand or kind of alcoholic beverages, or to persuade or influence any person to refrain from purchasing or contracting on the purchase of any particular brand or kind of alcoholic beverages.”

In their ruling, the ABCC panel wrote that A-B retained ownership of the equipment, which it could have reclaimed.

“An essential element of 204 CMR 2.08 is that a licensee ‘give[s] … money or any other thing of substantial value,’” the panel wrote. “While the Licensee certainly assisted its parent company in placing the draught towers and coolers in retail establishments, it did not ‘give … money or any other thing of substantial value,’ but rather only provided de minimis labor to Anheuser, the Licensee did not violate 204 CMR 208.”

John Connell, a Massachusetts alcohol lawyer, told The Boston Globe, which first reported the story, that the ABCC’s ruling essentially provides beer companies with a playbook for approved pay-to-play schemes in the state.

An Anheuser-Busch spokesman declined to comment on the decision.

New Holland to Open Third Brewery and Taproom in Battle Creek

Michigan’s New Holland Brewing Co. has purchased an 18,000 sq. ft. building in downtown Battle Creek and plans to open a third brewery and taproom in the space, MiBiz reported.

The beer company, with brewpubs in Holland and Grand Rapids, plans to invest more than $1 million to renovate the formerly vacant space, the outlet reported. Construction is slated to begin in the fall with a target opening date of April or May 2019.

Feds Warn Florida Brewers

Earlier this week, the Alcohol and Tobacco Tax and Trade Bureau (TTB) sent cease-and-desist letters to two Florida breweries — Invasive Species Brewing and Devour Brewing — in order to halt the sale of beer infused with cannabis terpenes oil that had not yet received federal approval, SouthFlorida.com reported.

According to the report, the TTB’s letter said breweries using cannabis terpenes “should stop production of any fermented beverages … until you have obtained the appropriate formula approval.”

TTB spokesman Thomas Hogue told the outlet that the product is legal as long as it does not contain controlled substances such as THC. However, he added, the product still must be tested and receive approval from the TTB.

“If you’ve used an ingredient, like [cannabis] terpenes oil, you would need to come to us for formula approval first, since that product isn’t recognized as a traditional beer ingredient,” Hogue told SouthFlorida.com. “We will not approve labels or formulas for products that contain a controlled substance.”

Knee Deep Brewing Sued by Sony

Sony Pictures Television has filed a trademark infringement lawsuit against Knee Deep Brewing over the California-based brewery’s Breaking Bad-inspired IPA, according to the Hollywood Reporter.

In the lawsuit, Sony accuses Knee Deep of aping the Breaking Bad logo and other design elements in the packaging of its “Breaking Bud IPA” in order to capitalize on the popularity of the AMC series.

“Defendants’ unauthorized use of SPT’s trademarks and design elements threatens to erode the value of SPT’s Breaking Bad Marks by undermining SPT’s continuing ability to attract licensees for such marks and secure compensation for the right to associate one’s products with the Breaking Bad show,” the lawsuit reads.

Knee Deep owner Jerry Moore issued a statement to the Hollywood Reporter saying he was “surprised” by lawsuit after receiving a positive email from a Sony representative in 2015.

“Shortly after Breaking Bud was introduced, in early 2015, I actually received an email from a Sony representative that said, ‘It seems the Knee Deep team are big fans of Breaking Bad and we really appreciate the call out to our very popular show,’” he wrote.

Moore added that he and the rep discussed a formal partnership, but a deal never materialized.

“We are a small brewery and I don’t appreciate the distraction, not to mention the expense of having to deal with something that should have been addressed 3 years ago if Sony really had an issue with it,” he wrote.

BI Releases March Domestic Tax Paid Estimate

March marked the third consecutive month of 2018 volume declines as U.S. brewers shipped more than 14.5 million barrels of beer, down 3.1 percent from 2017 levels, according to the Beer Institute (BI), which cited unofficial estimates of domestic tax paid shipments from the TTB.

In a press release, BI chief economist Michael Uhrich noted that March 2018 had one fewer selling day than the previous year. On a selling-day-adjusted basis, U.S. beer shipments were up 1.3 percent.

“The severe and pervasive inventory issues throughout the value chain which affected February’s shipments continued into March,” Uhrich said in the release. “This has resulted in significantly less expansion in distributor inventory than is typical during the first quarter of the year and may impact second quarter depletions.”

Through the first three months of 2018, U.S. brewers shipped more than 37.9 million barrels of beer, down 4 percent compared to the same period last year.

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