Copyright 2001 Chicago Sun-Times, Inc.
Chicago Sun-Times

February 04, 2001, SUNDAY, Late Sports Final Edition

SECTION: SUNDAY NEWS; Pg. 4

LENGTH: 1082 words

HEADLINE: Jackson sons quiet on hiring

BYLINE: BY TIM NOVAK AND CHUCK NEUBAUER

BODY:

For decades, the Rev. Jesse L. Jackson Sr. has threatened companies with boycotts for failing to have minority employees, but Jackson's sons refuse to say how many minority employees work at their Chicago beer distributorship.

It's one of many questions Jackson's sons Yusef and Jonathan refuse to answer about the lucrative deal they got from Anheuser-Busch Inc. in 1998. The deal came 16 years after their father boycotted the world's largest brewer because only three of its 900 distributorships were owned by minorities.

Neither Anheuser-Busch nor the Jacksons would say how many of the distributorships are owned by minorities today.

The Jackson brothers own River North Sales & Service, which annually distributes between $ 30 million and $ 40 million worth of Budweiser and other products between Lake Michigan and Harlem Avenue, Irving Park and Roosevelt Roads. No bar or restaurant in that area can buy Anheuser-Busch products from anyone but the Jacksons. This includes hotels, nightclubs and Wrigley Field.

The Jacksons reportedly have as many as 100 drivers and sales representatives, but they refuse to say how many are minorities.

"River North Sales and Services is . . . a private business," according to a statement from Yusef Jackson, the company's president. "All of our actions in acquiring and operating this business have been ethical and proper. As for your
questions, much of the information involved is either proprietary or personal. Our choice is to keep it private."

Yusef Jackson said in a later statement that his "management team has developed an inclusive workplace environment which reflects the ethnically diverse area we serve."

Under laws dating back to Prohibition, most states, including Illinois, generally forbid alcohol manufacturers from selling directly to consumers. The manufacturers must sell their products to distributors, who then sell it to bars, restaurants and stores. Anheuser-Busch, like many brewers, has enormous control over who can distribute its products.

When Anheuser-Busch sold the River North distributorship to Jackson's sons, they had no experience selling beer or running a mid-size company.

Yusef, River North's president, was 28 and working at Mayer Brown & Platt, a major Chicago law firm. Jonathan, River North's vice president, was 32 with a master's degree in business from Northwestern University. He had worked as a
consultant and developer.

Jonathan Jackson also is president of the Citizenship Education Fund, the group his father uses to encourage corporations, such as AT&T, to do business with minorities. Yusef Jackson is a board member and attorney for the group.

Yusef owns 67 percent of River North and Jonathan owns 23 percent. The remaining 10 percent is owned by Donald Niestrom Jr. He and his father were longtime Anheuser-Busch employees who worked at the River North distributorship
before the Jacksons bought it. Niestrom Jr. is now River North's vice president of operations, according to state records.

Chicago is a major focus for Anheuser-Busch. The company sells 47 percent of the nation's beer, dominating most markets, but in Chicago, the company runs second to Miller Brewing Co. Anheuser-Busch's goal is to become the dominant brand in Chicago, and the Jacksons will play a key role if that is to happen.

An Anheuser-Busch distributorship is a gold mine, industry experts say. It gives the owner a monopoly to sell the brewery's products in a specific area.

Anheuser-Busch has 700 distributorships nationwide. Several are owned by Busch family relatives, including Anheuser-Busch Chairman August Busch III's daughter and son-in-law, his half brother Peter Busch and cousins, according to reports the company filed with the U.S. Securities and Exchange Commission. Others are owned by the children of Anheuser-Busch directors.

"Most distributorships are family owned and have been for generations," according to a distributor who asked to remain anonymous so he could keep selling Anheuser-Busch products. "Because they're family-held businesses, they don't turn over that frequently."

The Jacksons bought the distributorship in late 1998 from Anheuser-Busch. Neither the Jacksons nor Anheuser-Busch officials would discuss details of the Jackson brothers' purchase.

"We negotiated a straightforward deal and paid a competitive price for the company along with its property," Yusef Jackson said in a written statement.

Anheuser-Busch, according to the Jacksons, calls the Jackson brothers and Niestrom "exactly the kind of people we look for to be wholesalers representing our company in the community. . . . They have the added advantage of being in the age demographic we describe as 'contemporary adults,' the key beer-purchasing segment. . . . This is a very strong management team."

Anheuser-Busch said in a statement to the Chicago Sun-Times that it has "several minority owners" of distributorships, but it refused to say how many.

"The wholesalerships are independently owned and operated and don't change hands frequently. When they do, we work to recruit qualified minority owners."

Anheuser-Busch created a $ 5 million program to help minorities buy distributorships in September 1982 amid Jackson's threats that Operation PUSH would boycott the company. The brewer had three distributorships owned by minorities at that time.

A black-owned paper in St. Louis, where Anheuser-Busch is based, reported that Jackson had demanded $ 500 each from black businessmen to support the boycott. Jackson sued the paper, but he dropped the suit after a judge ruled that the newspaper could inspect Operation PUSH's financial records.

Jackson went ahead with the boycott in October 1982, proclaiming, "This Bud's a dud." A year later, Anheuser-Busch added another $ 5 million to the minority financing program, one of several moves that Jackson endorsed.

Yusef Jackson said in his statement that he, his brother and Niestrom bought the River North distributorship without any financial help from Anheuser-Busch.

Yusef Jackson refused to divulge the price his company paid for River North, but public records show his company got a $ 6.7 million loan from NationsBank to pay Anheuser-Busch for the assets, equipment and the distributorship's building and warehouse on Goose Island.

Anheuser-Busch, however, had spent $ 10.5 million, including $ 2.6 million from the City of Chicago, seven years earlier to buy the land and build the 79,000 square-foot-building.

GRAPHIC: Yusef Jackson (left) and Jonathan Jackson (right), sons of the Rev. Jesse L. Jafkson, Sr. (middle) own the right to distribute Budweiser on much of the North Side. The business, experts say, is a gold mine. See also related stories pages 1, 2. ; Ellen Domke

LOAD-DATE: February 09, 2001