Eastern Iowa beer distributors to merge

Industry changes have prompted beer distributors in Cedar Rapids, Dubuque and Waterloo to merge into a single company.

Dale Lee Distributing of Cedar Rapids, Kirchhoff Distributing of Dubuque and Clinton, and Fahr Beverage Inc. of Waterloo on Monday announced plans to merge into 7G Distributing LLC. The deal, which is expected to close May 1 pending approval by suppliers, would involve alcoholic and non-alcoholic beverage operations.

7G Distributing will serve customers in Benton, Black Hawk, Bremer, Buchanan, Butler, Cedar, Clinton, Delaware, Dubuque, Jackson, Johnson, Jones, Linn and Washington counties as well as portions of Fayette and Grundy counties. The new company will maintain its offices and warehouses in Cedar Rapids, Dubuque, and Waterloo.

7G Distributing will be supervised by a three-member board of directors - Joe Lee of Dale Lee Distributing, Ron Kirchhoff of Kirchhoff Distributing and Bob Fahr of Fahr Beverage. Terry Timmerman will lead the day-to-day operations of 7G Distributing as general manager.

Joe Lee of Dale Lee Distributing said the merger was driven by changing industry conditions.

“The purchase of Anheuser-Busch by InBev in 2008, coupled with a consolidating industry, presented us an opportunity to look at the potential synergies of uniting our companies and the growth opportunities associated with this merger,” Lee said. “Our three companies represent seven generations in the wholesale beer business. We have grown up in the business together and share common goals and vision for the future.”

Lee said the transition to a single business is expected to be “seamless” for customers of the three beverage distributors.

Dale Lee Distributing moved in 1999 from Twixt Town Road in Marion to a 61,600-square-foot office and warehouse building and a separate maintenance facility at 9925 Sixth St. SW. In 2003, the company expanded its warehouse by almost 19,000 square feet.

The merger of Dale Lee, Fahr and Kirchhoff follows a consolidation trend in the industry, according to analyst Mark Swartzberg of Stifel Nicolaus in St. Louis.

Swartzberg, in written comments last fall, predicted that more distributors in the U.S. would merge with one another. “We heard plenty of chatter on this generally,” especially among Anheuser-Busch InBev's distributors, Swartzberg wrote.

Among Anheuser-Busch InBev's distributors, “we expect many players' ‘wait-and-see' postures to soon yield to action for sale, purchase, and/or merger,” Swartzberg said.