What Big Pharma Could Learn From A Craft Beer Brewer

As you may have noticed that posts have been light this week, I am in Denver in vacation. I thought this article by Bruce Jaspen in Forbes was fitting given Denver's impressive craft brew industry.

While U.S. companies like Pfizer PFE -0.57% (PFE), Walgreens (WAG) and Medtronic MDT -0.08% (MDT) make noise and grab political attention by looking at overseas domiciles to lower tax rates, along comes Tony Magee, brewer of the popular Lagunitas IPA from a different school of thought.

He’s headed to Chicago, the largest city in the pension-dogged state of Illinois with its unions, hightaxes and multi-billion-dollar debts.

While neither Magee’s tax bill, nor revenue yet rival that of a global medical device maker like Medtronic or a pharmaceutical behemoth like Pfizer, he says he’s asking for nothing in his expansion from northern California to Chicago. And that’s not something most companies – large or small – can say when they look to expand, relocate or create jobs.

Magee told the Chicago Sun-Times editorial board earlier this week that he didn’t want any of the financial incentives offered by Mayor Rahm Emanuel’s Chicago City Hall.

That’s in sharp contrast to the Internal Revenue Service escapes attempted by Pfizer, which attempted to flee U.S. taxes with a British domicile, and Medtronic which this month announced plans to purchase Dublin, Ireland’s Covidien for nearly $43 billion.

Walgreen WAG -0.55%, too, has been urged by some investors to relocate its headquarters to London where it has a relationship with European pharmacy chain Alliance Boots. And drug maker Abbvie (ABBV), which last year spun off from Abbott Laboratories (ABT), was rebuffed in its attempt to buy Shire in what many observers say was the latest attempt by a U.S. company to take advantage of a loophole that allows them to avoid higher corporate taxes here.

But Magee, who is looking to expand from his base in Northern California to Chicago, would have “none” of the financial incentives offered by the city of Chicago, according to the Sun-Times report.

“I was like, I don’t want any of it,” Magee told the Chicago Sun-Times editorial board.

Magee told the paper that he’d prefer to see the city spend tax money on other things. Magee also seemed to take a shot at other corporations that ask for governmental largess when they do business, bring in jobs and scout for expansion locations.

“You start realizing you make the world around you by the decisions you make as you move through it and if I don’t feel like the government should be looted [or] whored out for businesses … we don’t need it … so why ask for it?”Magee told the Sun-Times. “I’d rather they have more midnight basketball and fill potholes. Don’t give it to me.”

Magee, who is originally from the northwest Chicago suburbs, sees Chicago as a city with cachet and also likes its geographic location as a shipping hub to get his brand around the world. In northern California, Lagunitas has been spending $150,000 a month in shipping costs, Sun-Times reported.

He told the paper: “If I’m going to sell beer from this brewery in Sweden and the UK as we do right now … they all know where Chicago is.”

 

 

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