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Minnesota Budget Battle Hits Beer

Stocks in this article: TAP BUD

MillerCoors has just as much reason to be in crisis mode. The warm spring and summer months produced more than $4.1 billion of the company's net sales last year and 55% of its total net sales. Meanwhile, MillerCoors' U.S. production dropped 3% and its share of the U.S. market slid from 29.5% to 28.9%. Losing an entire state is not what MillerCoors needs right now, especially with Anheuser-Busch Inbev (BUD) still holding 48% of the U.S. market and the craft beer industry growing 11% by volume and 12% by revenue last year; Samuel Adams maker Boston Beer Co. (SAM) alone grew 11.8%. Even imports hit hard by the recession are heating up again, including Diageo-Guinness (DEO) shipments increasing 4% last year.

MillerCoors isn't going to let Minnesota slip away so easily. MillerCoors spokesman Julian Green says the company filed all brand licensing paperwork with Minnesota and paid to renew 39 brand registrations by the required date of June 13. He added that the company was told by the state that it overpaid by $210 and sent a new check which was received June 27 -- three days before the government shutdown. The state wants MillerCoors to pull its product, but the company has informed its distributors and retailers that they should continue to sell the brands, including Fosters, Killian's Irish Red, Leinenkugel's, Peroni, Icehous and Keystone Light, as usual.

"At no time were we informed our renewal forms were filed in error or would not be processed by June 30 due to overpayment," Green says. "We believe it is unfortunate that we and other state licensees are being impacted by the state shutdown when we followed all applicable laws."

MillerCoors and the bars of Minnesota have plenty of company when it comes to confronting a regional beer crisis. Craft brewers in Wisconsin were skunked by Gov. Scott Walker last month when he signed a state budget that restricts brewers from obtaining a wholesaler's license and, by extension, independently distributing their beer or even doing so through a brewpub. The bill was designed to protect hometown Milwaukee-bred Miller and MillerCoors from being engulfed by Anheuser-Busch-bought distributors, but ended up severely hindering the business of Wisconsin craft brewers such as New Glarus, Minhas Craft and Capital.

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