USA: Columbia Distributing to pay $21.2m for prematurely terminating distribution agreement

Columbia Distributing, one of the largest beverage distributors in the United States with over 250 alcoholic brands and nearly 60 non-alcoholic brands, has to pay a combined $21.2 million to three Washington wholesalers, as determined by an arbitrator ten months after Pabst Brewing Company prematurely terminated distribution agreements with them.

Chris Steffanci, new CEO at Columbia Distributing as of Januar 2nd, 2018 and successor of retired Gregg Christiansen, an industry legend who served as the company’s CEO for the last 15 years, has now to pass the acid test.

The three family-owned distributors Odom Corporation of Spokane, Craig Stein Beverage of Vancouver, and Marine View Beverage of Tumwater said they were dropped without warning by Pabst Brewing and the business was handed over to Columbia Distributing of Portland, one of the industry’s largest players. The three distributors claimed that they weren’t given the 60 days’ notice required by their contracts, and that Pabst acknowledged there was no deficiency in their performance.

In May a federal judge determined that Pabst acted incorrectly. Washington franchise law requires that successor wholesalers “must compensate the terminated distributor for the fair market value of the terminated distributor’s rights to distribute the brand.”

Last week, Peggy Rasmussen, who was appointed by the American Arbitration Association determined that Columbia Distributing has to compensate Odom Corporation and Marine View Beverage with $8 million each, while Craig Stein Beverage will receive $4.5 million. The sums were derived using the discount cash flow methodology with brand value multiples ranging from 1.84x for Marine View’s slice of the Tsingtao business, and 8.11x for Craig Stein’s portion of the Olympia beer business.

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