Goose in talon worth it to Busch

Not really a surprise, as this has been in the works for months, but it looks like the AB-Goose deal is near completion. Doesn't look, though, that either John or Greg will be made "Director of AB Craft Brewing". ;) ~jcs Largest U.S. brewer nears deal for stake that would give it distribution rights By John Schmeltzer Tribune staff reporter Published May 18, 2006 In a deal that is likely to send shock waves through the fiercely independent microbrewery industry, the nation's largest brewer is close to buying a significant stake in Chicago's Goose Island Beer Co., according to sources close to the situation. Anheuser-Busch Inc., which brews Budweiser, Bud Light, Michelob and other beers, is close to purchasing up to 35 percent of the local brewery and taking over distribution of the Chicago beer that is growing in popularity. Neither Goose Island president and founder John Hall nor his son Greg, Goose's brewmaster, could be reached for comment on the negotiations that have stretched on more than six months. A deal will relieve Goose Island of the marketing and sales problems that have hung over the brewery since it terminated its sales and marketing agreement with United States Beverage LLC in 2004. The company had been using the firm to help market to retailers and bars and assist in contracting deals to use excess brewing capacity at its West Side brewery. St. Louis-based Anheuser-Busch, which has about 49 percent of the U.S. beer market, declined to comment on the pending investment. "It is our policy to not confirm, deny or speculate on reports of potential investments, acquisitions, mergers, new business partnerships or other transactions," said Dave Peacock, vice president of administration for Anheuser-Busch Inc. Sources said the deal could be finalized in the next 30 days. Anheuser-Busch's thirst for growth in the micro segment comes as consumption of mass brews has slowed as younger drinkers turn more to spirits and microbrews. Sales by microbrewers grew about 9 percent in 2005, compared with sales of domestic beers, which fell 1.6 percent. Goose Island has become a local favorite since opening its first brewpub in 1988. It later added a second brewpub and built a brewery and bottling plant on the West Side. Last year, sales of Goose Island grew 24 percent, led by its signature brew, Honkers Ale. According to data compiled by Information Resources Inc., Goose sold $4.2 million in beer, up from $3.4 million in 2004. Goose Island currently owns a brewpub on North Clark Street near Wrigley Field. The original Goose Island brewpub on Clybourn Avenue may not be affected by the stake because it is owned separately by John Hall. A deal would give Busch a much-needed addition of a fast-growing microbrewery to its stable of lager and light beers. It mirrors a deal made in the 1990s when it bought stakes in Redhook Ale Brewery Inc., based outside Seattle, and Portland, Ore.-based Widmer Brothers Brewing Co. Anheuser-Busch now owns 33.7 percent of Redhook and 39.5 percent of Widmer. Anheuser-Busch is seeking to expand quickly into the fastest-growing segment of the beer industry. Paul Gatza, director of the Brewers Association, which represents microbrewers like Goose Island, said it is unlikely that Busch's purchase would hurt Goose Island sales. "There probably will be some hard-core enthusiasts who become aware of that and make other selections," he said, but most won't even be aware of the deal. Gatza said that the deal may be among the first of several that Busch announces this year as it tries to stop its slide in sales. Earlier this year, it asked beer enthusiasts in Ohio and New England to choose which beer they wanted brewed in small breweries Busch owns in Columbus and Merrimack, N.H. And Gatza said that Busch reportedly is trying to buy the Rolling Rock beer label. Anheuser-Busch's deal to buy part of Goose Island also is similar to a deal the St. Louis-based brewer attempted to strike last year with Boulevard Brewing Co. in Kansas City, Mo. "They are trying to do these deals because they need to get those products to their wholesalers," said John McDonald, president of Boulevard Brewing Co. But McDonald said a partial acquisition presents particular problems to a craft brewer. "If you come out with a product they are trying to sell themselves, they just wouldn't sell it," he said. That's because "even it they only own 35 percent of your company they have total control of you." ---------- jschmeltzer(a)tribune.com Copyright © 2006, Chicago Tribune