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April 30, 2024

Lakeshore Beverage et al., v. New Belgium Brewing, et al.

Econ One was retained by eight Illinois beer wholesalers distributing New Belgium Brewing and Bell’s Brewery malt beverage products. New Belgium Brewing and/or Bell’s Brewery (“suppliers”) terminated the distribution rights of malt beverage products of the wholesalers as a part of the consolidation of their distribution network in Illinois.

New Belgium was ranked fourth for most beer shipped in 2019 among all the regional craft brewing companies, behind D.G. Yuengling and Sons, Inc., Boston Beer Co., and Sierra Nevada Brewing Co. Bell’s was one of the top ten regional craft brewing companies by volume in the U.S. Bell’s was ranked seventh for most beer shipped in 2019 among all the regional craft brewing companies.

We were asked by the wholesalers’ Counsel to estimate the fair market value of the distribution rights of the suppliers’ brands assigned to each wholesaler, as reasonable compensation, as instructed by the State of Illinois’ Beer Industry Fair Dealing Act (“BIFDA”).

After our comprehensive industry, market, economic, and financial analyses, and valuation study, we submitted an expert report and Econ One expert Mr. Ilhan Geckil provided his testimony at an arbitration hearing. After the arbitration process, our clients got a favorable decision regarding the fair market value of the distribution rights of the subject products.

In her Arbitration Opinion and Award, the arbitration judge opined that “After reviewing the testimony and the reports, the Arbitrator is of the opinion that the methodology and reasoning of Mr. Geckil is more persuasive for many reasons, two of which are that he normalized for the year and a half that the pandemic affected the sales of craft beer and he analyzed which of the comparable would be most similar to the demographics and geographical territories of each wholesaler.” The judge further stated in her Award decision that “Another factor that made Mr. Geckil’s analysis more persuasive is that when looking at comparables he considered whether the state had a major metropolitan area similar to Illinois.”

Industries: Food and Beverage

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