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07.21.2009 9:38 am

Updated: Anheuser-Busch distributors in Kansas start carrying craft beers from O’Fallon, Tallgrass

St. Louis Post-Dispatch
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It’s a bit of a David and Goliath story. A little brewery that labors in the backyard of Anheuser-Busch has now pulled off a bit of a coup, thanks to…who else? Anheuser-Busch’s independent salesmen.

O’Fallon Brewery, a little operation northwest of St. Louis, will now have its beers distributed in Kansas through the Anheuser-Busch network of distributors. Tony Caradonna, O’Fallon’s co-founder along with wife Fran, told us that at least three Anheuser-Busch distributors already have O’Fallon beer in their possession - peach wheat beer (or “Wheach”), American-style India Pale Ale, and smoked porter. The arrangement came together over the past six weeks or so.

“It’s a big deal,” Tony told Lager Heads. “It’s a pretty cool thing. … There’s no doubt, they’re the best distributor network out there.”

O’Fallon Brewery is not the only craft brewer to benefit from the new openness of Kansas-based Anheuser-Busch wholesalers to small-batch beer. Tallgrass Brewing Co. of Manhattan, Kansas has signed up 10 Anheuser-Busch distributors just this year, said co-founder Jeff Gill. That came from a big meeting this spring at Tallgrass, when Gill gave a tour for a bunch of A-B wholesalers who were interested in picking up craft brands to supplement A-B’s products.

Thanks to A-B wholesalers, “we can have the best logistics, and we can have local guys selling our product,” said Gill, a former geologist whose brewery churned out its first beer about two years ago. Gill said the switch to A-B wholesalers is causing a 50 percent jump in sales; Tallgrass now makes between 350 barrels and 400 barrels of beer per month.

At last count, Anheuser-Busch worked with more than 600 independent wholesalers, who act as middlemen and salesmen between the brewer and retailers such as bars, restaurants and convenience stores and grocers. Its wholesalers are widely believed to be a competitive advantage for A-B - and a boon for any craft brewer lucky enough to ink alliances with them.

Caradonna and Gill are apparently riding the wave of a big change among most of Anheuser-Busch’s distributors in Kansas. For a decade, Anheuser-Busch has made it a practice to pay its wholesalers to carry only Anheuser-Busch beers, or those of approved companies such as InBev (back before the companies were combined.) The rules governing that incentive were relaxed last year to allow A-B’s wholesalers to carry hot craft brands.

Now, a number of Kansas wholesalers are apparently ditching complete “exclusivity” with Anheuser-Busch (and at least some of the monetary payments that come with it) in favor of striking out and grabbing attractive craft brands. Why did the scales tip?

“These guys are looking for opportunities outside the A-B alliance brands, because they see opportunities for growth,” said Gill.

There may be another factor as well. With exclusivity payments to U.S. wholesalers costing Anheuser-Busch InBev millions of dollars a year, wholesalers may wonder if CEO Carlos Brito will eventually put the clamps on the program.

“They see exclusivity as not a sure thing,” said Gill.

Gill predicted that the new arrangement with little breweries will help strengthen A-B distributors, and by extension,  Anheuser-Busch. He doesn’t expect the distributors to be distracted from their main task of selling Anheuser-Busch’s big brands.

“Tony and I understand that Bud Light is the horse to pull the cart,” said Gill. “We respect that. We understand our place on the totem pole.”

In any case, O’Fallon and Tallgrass are now hoping that A-B’s distributor network can work some magic on their behalf: That it will, in Tony’s words, “open up the doors and possibilities.”

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14 comments

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Good for those guys! I really like their IPA, although my wife thinks Boulevard’s is better. It’s nice to see the little guys expanding their network.

— cjslt
9:55 am July 21st, 2009

Good for them.
But isn’t Inbev setting out to dismantle their distributors? You know eliminate the middleman.

— jhg
10:35 am July 21st, 2009

Good for them. O’Fallon’s Wheach beer is a local gem! I enjoy their beers more than any of the other local craft brewers.

— Greg
11:23 am July 21st, 2009

Congratulations to Tony and Fran. They have built their business over the years with integrity and hard work. It is great when good things like this happen to good people.

— voiceinthewilderness
11:27 am July 21st, 2009

Their Smoked Porter is great. I highly recommend it, along with Trailhead’s Old Court house. They both rate closeness to Guinness, but a tad lighter in texture. In any case, YUM , YUM.

— bustedbtym
11:33 am July 21st, 2009

Can anybody tell me where their beers are sold?

— rvbuilder
12:07 pm July 21st, 2009

Wheach is nasty. Try Boulevard Wheat, that’s where it’s at!

— KC
12:18 pm July 21st, 2009

It’s a shame that they (AB wholesalers) no longer sell Ray Hill’s American Pilsner. THAT’S a good beer!!!!

— Duff Man
12:24 pm July 21st, 2009

Great news for a great brewery. However, there store prices are usually out of my price range. $9 a six pack is not exorbitant, but it is not an everyday sort of beer.

/Loves the 5-day IPA

— Wowee
12:30 pm July 21st, 2009

I love the Smoke Porter! And good for O’Fallon!

RVbuilder, I have found O’Fallon at Randalls near Jefferson and 44. Also, Shop n Save

— ghan75
12:35 pm July 21st, 2009

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