When I reported on Anheuser-Busch's buyout of Morgan Distributing a couple of weeks back, I did not know what the fallout would be. It's probably fair to say no one knew. We suspected the buyout would lead to Morgan being more active as a pusher of AB products. We didn't know the rest.
Thanks to reliable industry sources, we now know. There's no sugarcoating it. Within days of AB taking over, Morgan terminated its craft brands. Yep. Fired them. They later rescinded the termination letter and told craft brands they were up for "assignment"...a nice way of saying for sale to other distributors.
There are a couple of things to keep in mind.
First, Morgan was not exactly a bastion of craft beer. Its short list of craft brands included Three Creeks, Silver Moon, Gilgamesh and Uinta. The Commons was a recent, hot addition, which I'll get to. I'm leaving out the CBA (Widmer, Kona, Redhook, etc.) brands, which Morgan already pushes heavily, because the CBA is distributed by AB and wasn't going anywhere.
Second, Morgan likely would have lost its craft brands in the wake of the buyout due to the way Oregon law works. When distributor ownership changes, contracted brands have the option of renegotiating new deals with anyone they want. Firing them just made that point official with an exclamation point..
All of Morgan's former craft brands are looking for and will soon have new homes. The Commons will go back to self-distribution, which is what they've done from the outset. It's almost comical to consider that Morgan worked diligently to sign these guys then dumped them days into the relationship. That's pretty funny in a sick sort of way.
The more significant point to consider is this: The new bosses at Morgan had ZERO intention of retaining their craft brands. They wanted them gone, the sooner the better. I'm told Morgan has so much going on with its AB portfolio that it has no room for craft brands. They have given other distributors the green light to go after their former brands and expect no compensation at all.
What are they up to? AB-owned Morgan will clearly become a bastion of AB brands. As I said in the earlier post and as Ezra outlines in his post on how the three-tier system works, self-distribution laws in Oregon allowed this takeover to happen. Anheuser-Busch will essentially be distributing its own beer via Morgan. Perfectly legal. They are also reportedly looking to purchase Maletis, which has a far more significant craft presence than Morgan ever had. This is how AB intends to address declining market share in Oregon.
The danger of this arrangement is clear. Buying up distributors is part of an effort to push craft brands into a corner while stuffing AB products down the throats of consumers. These guys are anti-craft beer. Period. Distributors have extensive control over what appears on store shelves, in taverns and other retail settings. You can bet AB intends to use that leverage to the fullest extent possible. If you haven't heard of Shock Top or Bud Light Platinum, you will.
In my mind, what's going on should be illegal. Oregon's self-distribution law was intended to help small brands. Many small breweries need the dollars that would otherwise go to a distributor when they're getting started. No one apparently considered the possibility that gigantic companies would use the self distribution law to buy up distributors and bully the market. Ye gods!
This is not good news if you're a fan of good beer. Trust me.