Bell’s Brewery’s portfolio will be excluded from the sale of Indianapolis-headquartered Monarch Beverages to the Reyes Beer Division, after the Comstock, Michigan-based regional craft brewer informed its distributors last year it would not allow its brands to be sold to certain successors.
“Last year, we sent out a letter that I hand-signed to every one of our wholesalers saying that we would not accept Anheuser-Busch, Molson Coors or Reyes as a successor wholesaler,” Bell’s founder Larry Bell told Brewbound. “We weren’t going to accept a branch of one of the breweries, and we were not going to accept Reyes.
“Right now, that’s not binding; it’s just a letter,” he continued. “In new contracts that we have with wholesalers, we have a clause that says we will not accept Reyes as a successor wholesaler.”
Reyes, the nation’s largest beer distributor, announced Monday it had struck a deal to acquire Monarch, whose brands include the portfolio’s of Molson Coors, Constellation Brands, Heineken USA, Diageo, Mark Anthony Brands, Boston Beer, Yuengling, Sierra Nevada, New Belgium — and Bell’s. However, the rights to Bell’s offerings, of which Monarch sells about 200,000 case equivalents, will not be included in the transaction.
A new distributor has not been named to cover Monarch’s territory, which includes nearly two-thirds of Indiana.
“We do not have any news on that front at this time,” Bell said.
In early 2019, Bell’s stopped shipping its beer to Virginia after Reyes inked a deal to acquire Richmond, Virginia-based Loveland Distributing in October 2018, which had sold Bell’s products since 2015. Bell’s is involved in three different lawsuits in Virginia regarding wholesaler terminations. Last week, the Virginia Alcoholic Beverage Control Authority ruled that Bell’s and Salem, Virginia-based Blue Ridge Beverage could settle their dispute through arbitration.
“We just had a significant decision at the Virginia ABC backing up our claim to have the right to arbitration, which could be a real precedent setter for brewers’ contracts going forward,” Bell said. “Every brewer should have an arbitration clause in the contract now that we know they’re going to hold up.”
Brewers Association general counsel Marc Sorini delved into the topic of arbitration to settle disputes after the federal district court for the Western District of Michigan issued an opinion that supported disputing parties’ ability to select arbitration as part of Blue Ridge’s lawsuit against Bell’s.
Sorini wrote that arbitration allows disputing parties to “craft their own process — a comprehensive arbitration clause can spell out details like the place of arbitration, applicable rules and even the scope of discovery.” Arbitration also allows parties to stay out of traditional court systems which could be “perceived as unfair to one of the parties,” he wrote.
However, some drawbacks to arbitration include limited appeal rights, added costs of paying arbitrators and the lack of creation of binding precedent.
“Arbitration is sometimes criticized for leading to indecisive results that ‘split the baby,’’’ Sorini wrote.
Bell’s has yet to return to the commonwealth of Virginia, which accounted for 5% of its business before it pulled out in 2018.
“I’m hoping that we can come to a business solution there,” Bell said. “But until I have that in my hands, we continue our battles.”
Bell’s is distributed in more than 40 states and Puerto Rico. In 2019, it was the country’s seventh largest craft brewery by volume, with a 5% increase in production, to 494,081 barrels, according to the BA.