Santa Rosa’s Seismic Brewing Co. settles disputes with big US beer wholesaler

Seismic Brewing Co. of Santa Rosa and Reyes Holdings, the biggest beer distributor in the United States, have resolved a legal fight that spotlighted consolidation in the beer wholesale market, a topic that has attracted the attention of the Biden administration.

Seismic and Reyes, a food service wholesaler and distributor in the Chicago area, had been in legal battles in both state and federal court as an initial contract dispute evolved into antitrust concerns over the distribution giant’s market power in California.

Reyes Holdings has been purchasing many smaller beer distributors in recent years, including its acquisition in April of Columbia Distributing, with operations in Sonoma and Marin counties.

Reyes and Anheuser-Busch InBev largely dominate beer wholesaling in California and that makes it difficult for smaller brewers to be able to reach retail shelves, said Daniel Croxall, a professor at University of the Pacific’s McGeorge School of Law. “If you got two people in the game … that doesn’t give you a lot of options,” Croxall said.

The case started when a Reyes subsidiary named Harbor Distributing bought DBI Beverage in 2019. DBI had represented Seismic in the San Francisco area but Seismic backed out, complaining the new wholesaler wanted to impose more onerous policies that would make it “virtually impossible” to switch distributors, according to court filings. In return, DBI sued, alleging breach of contract.

The case picked up more attention as Seismic then filed a cross complaint against Reyes and Harbor alleging anti-competitive practices and noted how the Biden administration issued a report earlier this year on concentration within the American beer sector. The administration wants to promote greater competition in the alcoholic beverage industry to benefit small producers and consumers.

A state judge in San Francisco on April 8 dismissed such claims against Harbor and Reyes. But Seismic went to federal court that same month and raised similar competition concerns about the companies.

Under the resolution, the only lawsuit that remains is the original contract dispute between DBI and Seismic. Neither Seismic nor Reyes has admitted any wrongdoing or liability and the resolution means they don’t have any legal claims against each other, according to a statement issued June 29.

The two companies “have determined it is in their mutual best interests to pursue potential business relationships,” the statement reads. “The parties are glad to have reached a mutual resolution of these legal matters and look forward to working together.”

Seismic is owned by Chris Jackson, a proprietor of Jackson Family Wines of Santa Rosa, and his wife, Ariel. The couple in May bought Golden State Cider of Healdsburg and is looking to grow the business under a new parent company called Sonoma Craft.