(FROM THE WALL STREET JOURNAL 6/25/15)
By Jacob Gershman and Tripp Mickle
If you thought your favorite beer was an import, think again. It
may have been brewed in St. Louis . . . or Latrobe, Pa., or Fort
Worth, Texas.
And, if that beer is Beck's, you might soon be eligible for a
refund.
The refund -- of as much as $50 for Beck's drinkers who can
produce valid receipts -- is part of the settlement of a
class-action lawsuit claiming that the beer's maker, Anheuser-Busch
InBev, tricked American consumers into believing that the beer was
an authentic German pilsner, when it is really brewed in St.
Louis.
Even consumers who don't have receipts may be entitled to as
much as a $12 refund. And that is true even for beer drinkers who
have known all along that Beck's is no longer made in Germany.
The agreement between plaintiffs and the world's largest brewer
won preliminary approval on Tuesday from a federal magistrate in
Miami. A final approval hearing is scheduled for October.
The deal is a costly one for AB InBev. In addition to the
refunds, the company agreed to pay as much as $3.5 million in
attorneys' fees and costs to Kozyak Tropin & Throckmorton LLP
of Florida and three other law firms, lawyers said.
Beck's isn't the only brand to trade on its foreign roots. Red
Stripe, owned by Diageo PLC, advertises itself as Jamaican-style;
Foster's, made by MillerCoors LLC, has a kangaroo on its can, and
sister brand Killian's Irish Red alludes to Ireland in its
name.
Some may be more likely than others to become legal targets,
depending on how far they go in their labeling. Production of
Beck's moved to St. Louis from Germany in 2012, according to the
suit against AB InBev. The suit alleged that phrases featured on
Beck's packaging, such as "German Quality" beer and "Originated in
Bremen, Germany," gave consumers the wrong impression about where
the beer was made, in violation of state consumer protection
laws.
"We've looked at other cases, and don't think they have the same
merit we brought here," said Tucker Ronzetti, the lead attorney at
Kozyak Tropin, which brought a separate suit against AB InBev's
Kirin brand. "We hope the change we have brought through this
settlement leads to better practices throughout the market."
Beer companies like AB InBev moved production of imports to the
U.S. after foreign auto makers did the same in recent years without
losing the clout or title of "import" for brands like BMW and
Lexus. If a BMW could make an X3 or X5 in South Carolina and sell
it for the same price, why couldn't brewers do the same,
MillerCoors spokesman Pete Marino said Wednesday. He added, "That
opened a window."
MillerCoors made the decision to move production of Foster's to
the U.S. about five years ago. The move was largely driven by
costs, Mr. Marino said. The Australian brand comes in 25-ounce
cans, which are heavy and expensive to ship. Foster's is now
produced from MillerCoors's brewery in Fort Worth. The company
employs an Australian brewmaster and imports yeast to make the beer
taste like a Foster's made in Australia.
MillerCoors still makes its premium imports, Peroni and Pilsner
Urquell, in Italy and the Czech Republic, respectively. But it
charges about 20% more for those beers than it does for Foster's,
which is about 15% more than a domestic beer like Miller Lite.
AB InBev made a similar calculation with Beck's, reasoning it
could reduce costs and provide fresher beer without hurting sales,
according to evidence presented in the suit. Imported Beck's used
exclusively German ingredients, including barley, water and hops,
while domestic Beck's used local water, barley and some domestic
hops.
Despite those changes, the company believed the "labeling,
packaging and marketing of Beck's has always been truthful,
transparent and in compliance with all legal requirements," said
Jorn Socquet, Anheuser-Busch vice president of marketing.
The company chose not to shift production of its biggest import,
Belgian-made Stella Artois, because the risks of doing so would be
great, a person familiar with the Beck's production decision said.
Stella Artois has twice as much volume as Beck's, which sells about
500,000 barrels a year, according to Beer Marketer's Insights
Imported beers remain a small but fast-growing part of the
overall market. Imports in the first four months of 2015 surged
11.3% to 10.4 million barrels from a year earlier, according to the
Beer Institute. Over the same period, domestic volumes fell an
estimated 2.7% to 55.4 million barrels, the industry group
estimated.
About two-thirds of beer imports this year have come from
Mexico, followed by the Netherlands, Belgium, Canada and Ireland.
Germany, home of Beck's, is a distant sixth.
Corona, the top-selling imported beer, is still brewed in
Mexico, even though its U.S. manufacturing and distribution rights
are owned by Constellation Brands Inc., a company based in Victor,
N.Y.
Heineken, the No. 2 import, was the first foreign beer to arrive
in the U.S. after Prohibition ended in 1933 and continues to be
shipped from the Netherlands. Dutch brewer Heineken NV also ships
its other brands to the U.S. from abroad, including Dos Equis,
which is brewed in Mexico.
In the Beck's settlement, class members include consumers who
have purchased the beer in the U.S. since May 2011. Once it is
completed, they will be able to fill out an online form to claim a
refund. Beck's drinkers can get 10 cents back for every individual
bottle purchased; 50 cents for a six-pack or $1.75 per 20-pack.
As part of the settlement, Anheuser-Busch agreed to make
labeling adjustments. A statement on the bottle saying it is made
in the U.S.A. will become more visible. The green boxes in which
the bottles are packaged also will specify that the beer is made in
America.
AB InBev faced a similar class action in a case involving the
marketing of Kirin beer. In that case, which settled late last
year, the claim was that consumers were led to believe the beer was
from Japan.
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