Pay-to-play infects Chicago beer market, Crain’s investigation finds

What went down at the Wit is but one example of the fierce, behind-the-scenes struggle for dominance in Chicago’s $500-million-a-year beer market. The city is one of the last contested territories for the nation’s two beer giants—Anheuser-Busch InBev N.V. and MillerCoors LLC, an affiliate of SABMiller PLC—which wage a proxy war through licensed distributors. The major wholesalers are movers and shakers themselves: the billionaire Reyes family; Yusef and Jonathan Jackson, sons of the Rev. Jesse Jackson; and, as of September, Warren Buffett’s “favorite banker,” Byron Trott.

‘ Brewers call Chicago a whores’ market.’

— Deb Carey, co-owner, New Glarus Brewing Co.

Independent brewers say the brand-name distributors, with deep pockets and abundant supply, often resort to pay-to-play business practices that mirror the worst of Chicago politics. Sources say the big brewers and their wholesalers keep out the independents by offering cash, new tap systems, free beer and other incentives to tavern owners and retailers in exchange for taps or shelf space for mainstream brands. Some bar owners have set up separate marketing companies to take in the cash, a monthslong Crain’s investigation has found, while their taverns benefit from lower prices and “special” discounts.

There’s just one problem: Federal and state laws forbid producers and distributors from offering money, loans or anything else “of value” to retailers to freeze out the competition, with such exceptions as signs or ad materials under certain dollar limits. It’s also unlawful for bars to accept these gifts.

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