Local Beer News — 5 Rabbit, Goose Island, and Distributors
Strife at 5 Rabbit Brewery
Back then, 5 Rabbit was just starting to contract brew its distinctive beers and dribbling them into distribution. That distribution built rapidly.
They accomplished an almost-unheard-of feat for a brand new brewery — a gold medal at The Great American Beer Festival for its 5 Lizard Latin witbier.
They built a 30-barrel brewery of their own, in Bedford Park.
They hired John Hall, a renowned brewmaster from Goose Island, to brew their beer
But the relationship between Showaki and his partner, Andrés Araya, was deteriorating. Allegations of inappropriate affairs and improper money handling resulted in two defamation lawsuits being filed in January by Araya against Showaki. At the time, 5 Rabbit Creative Director Randy Mosher was quoted as saying that it was clear the partners’ relationship was deteriorating, but that “the intent was to carry on and focus on the cool stuff that was happening for us.”
“Now it’s up to those guys and the lawyers as to how this will work out,” he said.
And now it’s been partially worked out.
Showaki sold his stake in the company, and a friend of Araya’s, Cesar Garza, is coming in as an investor and heading sales and marketing. The lawsuits have yet to be resolved, though.
There are plans for more distinctive Latin-themed beers to come. Mosher, author of Radical Brewing, as well as other beer books, will ensure the new brews are unlike any you’ll see from other breweries.
Nick Barron to Goose Island brewpubs
We told you about Jared Rouben becoming brewmaster at Goose Island’s brewpubs in 2010. Now, Rouben has moved on, with plans to consult and eventually open a brewery of his own. His replacement is Flossmoor Station’s brewmaster, Nick Barron.
Rouben, with a culinary background, was known for his collaborations with local chefs on specialty beers. But Barron is no stranger to collaborations, even if the Flossmoor Station collaboration program wasn’t as extensive as Rouben’s at Goose Island.
Bjorn Johnson is taking over for Barron at Flossmoor Station.
We wish all the guys well.
(Note that Goose Island’s brewpubs on Clybourn and in Wrigleyville were not part of Goose Island’s sale to Anheuser Bush; the brewpubs are now owned by an independent company, Chicago Brewpubs, Inc.)
Distributor Ownership and Control
Upon the repeal of Prohibition, a unique system — called the three-tier system— was set up for distribution of alcoholic beverages. Under that system, manufacturers, distributors and retailers each had to be independent entities, preventing any one from having too much power over the distribution of alcohol.
Skip ahead to 2009. Anheuser Bush, through its WEDCO subsidiary, already owned 30% of City Beverage, which distributes AB products. AB was offered the opportunity to purchase the remaining 70%. The Illinois Liquor Control Commission blocked that purchase, on the basis that AB was an out-of-state company. AB sued, noting that Illinois breweries could own stakes in distributors, therefore claiming blocking the purchase was discriminatory. The courts agreed, and directed the state to pass legislation to resolve the issue and clarify distribution ownership.
That led to passage of the Craft Brewer Act, which reinforced the explicit ban on any brewer having any financial interest in a distributor. (Later, an exception was made for brewers producing 15,000 barrels or less – the small guys – which has contributed to the flourishing of small craft brewers like Pipeworks, Small Town and Begyle, among many others.)
The Craft Brewer Act should have required AB to relinquish its 30% stake in City Beverage. It’s not unreasonable to imagine that many of the legislators who voted for it thought that would be the outcome — a return to the ideals of the original three-tier-system.
However, the Illinois Liquor Control Commission ruled (interestingly enough, on Halloween Day, 2012) that the Craft Brewer Act lacked clarity, and on that basis allowed AB to maintain its City Beverage investment.
Many in the industry complained this would stifle competition and hurt smaller brewers who couldn’t self-distribute.
So, last week, a bi-partisan group of state senators introduced SB 1855, which is intended to clarify the Craft Brewer Act, and return to the basic concept behind the three-tier-system.
Should be interesting to follow, though it’ll probably be under the radar of the major media.