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Saturday, December 22, 2007

Anheuser-Busch Signs Distribution Deal With Starr Hill Brewery

Ever visit Crozet, Va.? Have you heard of Starr Hill Brewery? No?

Well some of the folks in St. Louis at Anheuser-Busch have. Earlier this week they announced a deal under which A-B will serve as the master distributor for Starr Hill's line of beers.

Starr Hill has six employees and turns out 5,000 barrels of beer annually. Founded in 1999, the company now has what many craft brewers 10 times their size wish they had: access to a network of 600 wholesalers from coast to coast.

What is behind A-B's decision to partner with such a small player? According to media reports about the deal, A-B wants to help Starr Hill build its brand in Virginia and then expand it from New York to Georgia during the next three to five years. If they have momentum behind the product it could go national at that point.

With craft beer sales up 11 percent during 2007, A-B has been active launching its own line of brews aimed at the segment and in signing deals with craft brewers around the country, most focused on providing distribution and sales help. The distribution deals give A-B distributors products they can use to stave off competitive inroads made by brands like Boston Beer's Samuel Adams. In most cases few consumers will know or care that A-B is helping distribute the beer. The spread of Redhook and Widmer Bros. brands under the A-B umbrella has been fairly successful.

With its willingness during 2007 to partner with craft brewers of various sizes, the makers of Budweiser may be positioning themselves as "King Makers" with the ability to take a minor microbrewery and propel it towards national prominence. It will be interesting to see how the company expands these brands during the next several years.

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