PABST (evidently) near DEATH (again!) - litgation

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PABST (evidently) near DEATH (again!) - litgation

#1

Post by MAKER'S MARK »

Pabst on its last leg? - time will tell:

MILWAUKEE — Pabst Brewing Company and MillerCoors are going to trial, with hipster favorite Pabst contending that MillerCoors wants to put it out of business by ending a longstanding partnership through which it brews Pabst's beers.

The case has high stakes for Pabst, whose lawyers argue that the company's very existence relies on the partnership with Chicago-based MillerCoors, which produces, packages and ships nearly all its products, which include Pabst Blue Ribbon, Old Milwaukee, Natty Boh and Lone Star. MillerCoors, meanwhile, says it's not obligated to continue brewing for Pabst and that Pabst doesn't want to pay enough to justify doing so.


The trial in Milwaukee County Circuit Court begins Monday and is scheduled through Nov. 30.
Pabst's attorneys have said in court documents and hearings that MillerCoors LLC is lying about its brewing capacity to break away from Pabst and capture its share of the cheap beer market by disrupting Pabst's ability to compete. At a March hearing in which MillerCoors tried to have the lawsuit dismissed, Pabst attorney Adam Paris said "stunning documents" obtained from MillerCoors show that it went as far as hiring a consultant to "figure out ways to get rid of us." MillerCoors has called that a mischaracterization of the consultant's work.
The 1999 agreement between MillerCoors and Pabst, which was founded in Milwaukee in 1844 but is now headquartered in Los Angeles, expires in 2020 but provides for two possible five-year extensions. The companies dispute how the extensions should be negotiated: MillerCoors argues that it has sole discretion to determine whether it can continue brewing for Pabst, whereas Pabst says the companies must work "in good faith" to find a solution if Pabst wants to extend the agreement but MillerCoors lacks the capacity.
Pabst needs 4 to 4.5 million barrels brewed annually and claims MillerCoors is its only option. It is seeking more than $400 million in damages and for MillerCoors to be ordered to honor its contract.
During 2015 negotiations about extending the contract, MillerCoors announced it would close its brewing facility in Eden, North Carolina, and that it eventually might have to shutter another facility in Irwindale, California. Pabst contends that MillerCoors refused to provide any information to substantiate its claim that it would no longer have the capacity to continue brewing Pabst's beers, and that it wouldn't consider leasing the Eden facility and would only sell it for an "astronomical" price.
Pabst says MillerCoors wouldn't agree to an extension unless Pabst paid $45 per barrel — "a commercially devastating, near-triple price increase" from what it pays now. At the March hearing, Paris said MillerCoors knew Pabst couldn't accept that proposal "because it would have bankrupted us three times over."
In court filings, MillersCoors said Pabst's proposals to keep the Eden facility open "were commercially unreasonable" and that Pabst sought "a windfall through litigation" instead of offering to pay enough to keep a facility open. It also said the facility's closing was "to ensure the longer-term sustainability" of MillerCoors because thousands of new brewers have entered the market over the past decade.
MillerCoors and Anheuser-Busch, which have the biggest U.S. market share at 24.8 percent and 41.6 percent, respectively, have been losing business to smaller independent brewers, imports, and wine and spirits in recent years, according to the Brewers Association.
"The beer market has shifted and beer lovers are increasingly demanding more variety, fuller-flavor, and local products from small and independent producers," said Bart Watson, the Brewers Association's chief economist.
Overall U.S. beer sales have declined, with shipments down from 213.1 million barrels in 2008 to 204.2 million in 2017, according to the Brewers Association.


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Re: PABST (evidently) near DEATH (again!) - litgation

#2

Post by Longhorn Mike »

This is a bummer because I enjoy a number of Pabst's brands from time to time. However, it is hard to feel sorry for a company that has closed dozens of breweries* over the last 40 years to whine about not having anyone to brew for them.

* Pabst and the companies it purchased over the years closed or sold breweries in the following cities:

Milwaukee (multiple plants)
Los Angeles (multiple plants)
Pabst (Perry, GA)
Newark
Peoria
Portland
St. Louis
New Orleans
Galveston
Omaha
Fort Wayne
Cranston
San Antonio (multiple plants)
San Francisco
Vancouver
Tampa
Memphis
Winston Salem
Syracuse
Honolulu
Longview
Detroit
Allentown
LaCrosse
Seattle
Newport
St Paul (multiple plants)
Evansville
Phoenix
Belleville
Frankenmuth
Baltimore
Auburdale

I probably missed a few others. Just one or two of these plants could cover Pabst's entire need. While many of these plants were sold years ago for scrap, a few of these are still open and make tons of beers (or malt beverages) for Pabst's competitors today. The old Schaefer / Strohs plant in Allentown curretly produces a lot of malt beverages for Diago, the old Schlitz / Strohs plant in Florida produces tons of Yuengling and the old Heileman brewery in LaCrosse produces beers for City Brewing, including beers brewed for Pabst. I believe the old Duncan / Heileman Auburdale brewery in Florida currently brews Polar Beer for the south Florida market.

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Re: PABST (evidently) near DEATH (again!) - litgation

#3

Post by oldindiapaleale »

The old Schaefer / Strohs plant in Allentown curretly produces a lot of malt beverages for Diago

Samuel Adams bought the Allentown plant from Diageo several years ago. A lot of the other plants were closed by Falstaff, Strohs or Heileman before Pabst bought the brand names. The consolidations in the brewing industry during the 1980s and 1990s was ruthless. Now Pabst is being squeezed to either pay more or go somewhere else.
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Re: PABST (evidently) near DEATH (again!) - litgation

#4

Post by ConeAddict »

I know Pabst was rumored to be acquiring City Brewery a few years back which is the Heilemans Brewery in La Crosse and also produces from the Rolling Rock brewery in Latrobe and a large old Schlitz brewery in Memphis. They do all contract brewing and I would think would take on a lot of the Pabst production if asked. I expect Pabst will be fine.

Edit: I see now Longhorn Mike already pretty much covered this.
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Re: PABST (evidently) near DEATH (again!) - litgation

#5

Post by WMassPete »

here in Western Massachusetts - you are probably as likely to find a PBR as the cheap beer at any given bar as opposed to Bud or whatever- hmm...with such a popular brand - seems like some other brewer would like to team up with them.....
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Re: PABST (evidently) near DEATH (again!) - litgation

#6

Post by Sea Monkey »

If I had to guess, it is more about the DISTROBUTION network then the Brewery itself. Pabst could contract a different brewery but they DO NOT come with the distribution network.
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Re: PABST (evidently) near DEATH (again!) - litgation

#7

Post by ConeAddict »

Sea Monkey wrote: Mon Nov 12, 2018 1:00 pm If I had to guess, it is more about the DISTROBUTION network then the Brewery itself. Pabst could contract a different brewery but they DO NOT come with the distribution network.
City Brewery produces a lot of national brands like Smirnoff Ice, Mikes Hard lemonade, really a lot of the malt beverage products you see everywhere. They acquired and reopened the Memphis brewery both to increase production capacity and for the added distribution capabilities. I think this is all posturing by Pabst as they want to avoid going back into the production business if possible. Now that I think about it I think the Pabst acquisition of City was thought to be just delayed a few years and reading the above lawsuit I can see why now. If they can't settle on a deal with MillerCoors I would expect them to buy City which is owned by private investors who would likely sell for the right price. Then they can make sure their brands are at the front of the lines and it's a natural fit with it's Wisconsin location and I think Pabst holds a lot of the old Heileman brands like Old Style now.
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Re: PABST (evidently) near DEATH (again!) - litgation

#8

Post by golf_lover44 »

Pabst says MillerCoors wouldn't agree to an extension unless Pabst paid $45 per barrel — "a commercially devastating, near-triple price increase" from what it pays now.
So Pabst pays around $16 per barrel to MillerCoors for 31 gallons of beer. Remember that when you go to the store and the retailer charges you around $125 for a half keg of Pabst beer.
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Re: PABST (evidently) near DEATH (again!) - litgation

#9

Post by Diamond State Boy »

But..but...Thats my brand! Nooooooo.... ☹😔
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Re: PABST (evidently) near DEATH (again!) - litgation

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Post by Flat_Top »

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Re: PABST (evidently) near DEATH (again!) - litgation

#11

Post by Diamond State Boy »

Just went to $8.99 a 12pk here in NC. 😔😠
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