Australia/USA: Yakima Chief Hops accused of breaching contract with Australian distributor

A lawsuit was filed against Yakima Chief Hops (YCH), the leading hop broker in America, by Bintani, a major supplier of raw materials to the Australian craft beer industry. Bintani claims that YCH canceled a supply contract with the family owned company after Bintani announced last month the partial sale of the company to Brewers Supply Group (BSG). BSG is an American company based in Shakopee, close to Minneapolis, Minnesota, which supplies like Bintani the craft beer industry in the U.S. and Canada with malt, hops, other brewing ingredients and accessories. BSG is a wholly owned subsidiary of Rahr Corporation, one of the largest and oldest family-owned malting companies in the world. (inside.beer, 10.10.2016)

Bintani claims the breach in contract to be a retaliation of YCH because BSG is a direct competitor to YCH in the American market. BSG hops, a division of BSG, has nearly 100,000 square feet (approx. 9.300 square meters) of refrigerated storage in the Yakima Valley of Washington, the heart of the US hop growing region which can hold roughly 7 million pounds (3.180 tons) of hops bales and pellets at 31°F (-0.5°C). BSG hops are distributed through the warehouse in Yakima and eight other warehouses across the United States.

71 percent of the Bintani’s hop volume and about 85 percent of its hop sale is currently done with YCH. The alleged breach will therefore result “in damages in excess of $20 million [US$14.5m] to Bintani and approximately $245 million [US$177m] to the Australian brewing market as a whole,” according to the statement of claim.

In a letter from Ryan Hopkins, YCH’s vice president of North American sales, attached to the claim, the hop broker says that he was “genuinely disappointed” to learn of Bintani’s decision to sell a portion of its business to a competitor. “Not only has confidentiality been violated, but the agreement also stipulates that there shall be no assignment of rights under the agreement without our prior written approval,” the letter goes on.

Bintani counters that “as a current owner in Bintani through certain of its subsidiaries, Rahr and these subsidiaries are entitled to receive the information disclosed,” the complaint said. “The information was not improperly disclosed and was always maintained as confidential, so there was no breach and, furthermore, no harm or prejudice to YCH.”

In addition, Bintani said it did not “assign, sell or otherwise transfer” distribution rights and would remain the legal partner in the contract with YCH.

Last year, the largest supplier of raw materials to the Australasian craft beer industry, Cryer Malt, was bought by Barret Burston Malting, a subsidiary of GrainCorp, the world’s fifth largest maltster. (inside.beer, 13.10.2017) GrainCorp owns also indirectly Country Malt Group (CMG), the second largest supplier to the U.S. craft beer industry next to BSG. YMC collaborates with CMG in the U.S. in the distribution of its hops products.

 

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