Craft Breweries Victorious in Kentucky Beer Distribution Battle

Anheuser-Busch can make beer, but they have to let other people sell it in Kentucky.

The state Senate voted 23-13 to ban brewers from owning alcohol distributors, a sign of the increasing influence of the emerging craft beer industry over the world’s largest brewer. The bill has already passed the Democratic-controlled House of Representatives and a spokeswoman for Democratic Gov. Steve Beshear says the governor will sign it.

Anheuser-Busch already owns two distributors: one in Louisville since 1978 and another in Owensboro it purchased last year. The bill forces the beverage giant to sell those companies, creating uncertainty for its 200 employees and worrying business-minded Republicans who fear the move will discourage other foreign-owned companies from investing in Kentucky.

The bill was one of the most closely watched during the short legislative session, employing an army of lobbyists and even TV ads in a state weary of the nearly $40 million in ads during the state’s recently completed U.S. Senate race. And it split the Republican majority in the state Senate that is usually unified on most issues.

Interest in craft brewers has exploded in Kentucky and across the country in recent years. The Kentucky Department of Alcoholic Beverage Control says Kentucky has 26 active independent brewers. Before 2011, state officials received just eight applications for a brewing license. But since then, state officials have received 24 applications.

Anheuser-Busch officials argued that the interest and availability of craft beers in Louisville, the state’s largest city where the company has owned a distributor for more than three decades, was proof Kentucky’s beer market was competitive. But state law prohibits microbreweries such as Country Boy Brewing from owning distributors, and the Lexington company told lawmakers it wanted an even playing field in the state.

Anheuser-Busch first purchased a distributor in 1978, but it had to sue the state to get it. In response, state regulators banned brewers from owning distributors in a truce that lasted for more than 30 years. But last year, Anheuser-Busch tried to purchase a second distributor in Owensboro. It sued the state again, and won. But this time, instead of a regulation, legislators decided to change the law.

“Anheuser-Busch wants monopoly, not a free market,” said Sen. John Schickel, R-Union.

Republican state Sen. Julie Raque Adams of Louisville filed an amendment that would have allowed brewers to own no more than two distributors, effectively exempting Anheuser-Busch. But she withdrew the amendment before the vote.

“This bill is the ultimate assault on private-property rights. No one in this chamber can claim victory on this bill, especially when it comes to the almost 200 employees, many of whom reside in my district,” Adams said. “It is not government’s role to interfere in the lives of private enterprise employees.”

Damon Williams, director of sales and marketing for Anheuser Busch of Louisville, called the vote “appalling” and said it is “nothing short of a full-scale attack on a good corporate citizen who has followed every rule and invested heavily in the Commonwealth of Kentucky for decades.”

“We will continue to fight for the business we’ve successfully built with our employees over the last 40 years,” Williams said.

Topics Legislation Kentucky