In December Premium Distributors of Virginia bought Loveland Distributing Co. Loveland Distributing Co owned the distribution rights for Bell’s beer in the Richmond area. Bell’s stopped shipping to the Richmond area in December while it attempted to terminate it’s contract because of the sale. Bell’s is claiming they are not terminating the contract because of Premium Distributors of Virginia, but because the details of the sale were not shared before hand so Bell’s could vet the buyer, which was part of Bell’s original contract.
This will cost Bell’s about 300,000 cases/year or about 5% of their business. This will also affect six additional distributors that were responsible for Bell’s distribution in different areas of the state.
With the laws around Virginia’s three tier system Bell’s would be stuck with Premium Distributors of Virginia with no way to get out. The clause stating the details around any sale needed to be made available so they could vet the potential buyer is the only thing keeping them from being sold to a terrible distributor and having to just deal with their new distributor. To me this is a very valid argument for breaking off the contract with now Premium Distributors of Virginia since the contract with Bells was broken.
Bell’s seems to be acting on a matter of principle in this scenario. While they could still have vetted Premium Distributors of Virginia after the fact and possibly approved of them, Bell’s stated they have nothing against them personally and still are trying to end the contract. With the collateral damage this is going to cause the other six distributors since Bell’s is pulling out of Virginia entirely, it makes me wonder if this is the legal front Bell’s is taking but there are underlying reason’s they are not making public.
It is also interesting to note a very similar situation happened back in Illinois in 2006.