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A major Northwest hop broker is accused of violating a contract by refusing to sell hops to Australian brewery supplier after a competitor bought a stake in the company.
Bintani Australia of Melbourne, Australia, has filed a lawsuit in U.S. District Court for the Eastern District of Washington seeking an injunction prohibiting Yakima Chief Hops of Yakima, Wash., from breaching the agreement.
Capital Press was unable to reach a representative of Yakima Chief Hops as of press time.
If Yakima Chief Hops terminates its exclusive distributor arrangement with Bintani as announced, the alleged breach “will result in damages in excess of $20 million to Bintani and approximately $245 million to the Australian brewing market as a whole,” the complaint said.
Bintani has bought hops from the Washington company for 15 years and it now represents 71 percent of the Australian firm’s hop volume and 85 percent of its hop sales, according to the complaint.
The complaint alleges that the leadership of Yakima Chief Hops was motivated to pull out of the supply agreement by “animosity” toward the Brewers Supply Group, “one of its competitors in North America” that’s taken an ownership interest in Bintani.
Yakima Chief Hops was “genuinely disappointed” to learn of Bintani’s decision to sell a portion of its business to a competitor, as it considers distributors to be “loyal partners,” according to a letter from Ryan Hopkins, the company’s vice president of North American sales, attached to the complaint.
“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,” Hopkins said in the letter.
Bintani counters that it remains the counterpart to the contract and didn’t “assign, sell or otherwise transfer” distribution rights under its deal with the Brewers Supply Group, whose parent company, Rahr, was required to sign a confidentiality deed as part of the merger and acquisition transaction.
“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.”
Since terminating the supply agreement in mid-September, Yakima Chief Hops has begun to “actively solicit Bintani’s brewery customers in Australia,” causing the company to lose orders, which has already cost it $1.5 million in projected sales, according to the complaint.
Yakima Chief Hops is the only source of some properietary varieties of hops and other cultivars are in short supply, which means Bintani and its brewery customers won’t easily find replacements, the complaint said.
“This has also exposed Bintani to potentially massive liability to brewery customers, both in the form of lost sales and the breweries’ lost reputation and goodwill damages,” the complaint said.