MillerCoors faces legal battle in Ohio

By THOMAS J. SHEERAN

Associated Press Writer

CLEVELAND (AP) -- MillerCoors LLC is facing a court fight in Ohio over its attempt to trim costs by cutting beer distributorships.

Beverage Distributors Inc. of Cleveland and AFP Distributors Inc. of Glouster in southeast Ohio have asked U.S. District Court Judge Michael Watson in Columbus to block the brewer from breaking their franchise agreements.

MillerCoors said in separate Aug. 19 letters that it was terminating the distributorships effective Sept. 25 under an Ohio law allowing such an action when ownership changes hands. The distributors sued the brewer last week in response.

The company is a newly formed joint venture between SABMiller's U.S. unit and Denver-based Molson Coors Brewing Co.

MillerCoors is competing for market share against St. Louis-based Anheuser-Busch, which controls about half the market. Anheuser-Busch recently accepted a buyout offer from Belgian brewer InBev SA worth $52 billion.

The industry is seeing consolidation as brewers grapple with rising costs for ingredients and fuel and a clientele that is increasingly reaching for wine, spirits and craft beers.

"MillerCoors has made the consolidation of its distributor network one of its highest priorities. We believe consolidation is critical in helping MillerCoors distributors compete more effectively and operate more efficiently in each market," MillerCoors vice president Tim Owston told the Ohio distributors in last month's letters.

According to the trade publication Beer Business Daily, MillerCoors has pursued the strategy of consolidating distributorships in a handful of states where laws allow a franchise termination with a change of ownership.

The Ohio case could hinge on whether the court buys the idea that a change of ownership has occurred when Miller Brewing Co. owns 58 percent of the MillerCoors venture, the trade publication said.

Kerr Distributing in Athens received AFP's Miller distribution territory in southeast Ohio, while Superior Beverage Group of Austintown landed the Miller territory of Beverage Distributors in Cuyahoga County, which includes Cleveland.

Distribution of Miller brands makes up more than half of Beverage Distributors' business and about 95 percent of AFP's business in their respective franchise territories, their lawsuit said.

Julian Green, a spokesman for MillerCoors, said Thursday that the company would not comment on the lawsuit.

Beverage Distributors referred requests for comment to its attorney, David W. Alexander, and a message seeking comment was left Thursday at his Columbus office. A message also was left at AFP offices.

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On the Net: http://www.millercoors.com