Commentary

Pabst And MillerCoors Reach Agreement To Keep Blue Ribbon Flowing

Pot-bellied hipsters across the land are celebrating a settlement yesterday that will keep Pabst Blue Ribbon and its siblings in convenience store fridges “for many, many years to come,” according to a company spokesman.

The agreement with Chicago-based MillerCoors was announced as jurors in Milwaukee County Circuit Court were wrapping up their first full day of deliberations following two weeks of testimony over Pabst’s two-year-old charges that Miller Coors was threatening to put it out of business. Terms of the settlement were not disclosed.

Pabst, which was first brewed in 1844 in Milwaukee and is now based in Los Angeles, proclaims prominently on its homepage that it was named 2016 Large Brewery of the Year at the Great American Beer Festival in Denver, Colo. But it has not done its own brewing for some time.

advertisement

advertisement

“Since 1999, Chicago-based MillerCoors has made and shipped nearly all of Pabst’s beers, which include Pabst Blue Ribbon, Old Milwaukee, Lone Star, Schlitz and Baltimore favorite National Bohemian. Pabst's lawyers argued in the company’s 2016 lawsuit that MillerCoors worried that Pabst would cut into its market share and devised a plan to stop brewing for the smaller competitor,” the AP’s Ivan Moreno writes in the Baltimore Sun.

“MillerCoors' attorneys called Pabst’s claim a conspiracy theory and said the company was simply deciding what makes economic sense,” Moreno continues.

“An agreement between the two companies was set to expire in 2020 but gave Pabst the right to extend the relationship until 2030 so long as MillerCoors had enough capacity to continue making the products. MillerCoors, which in 2016 closed a brewery in Eden, N.C., that made some Pabst products, said it didn’t have the capacity any longer,” Jennifer Maloney and Saabira Chaudhuri report for the Wall Street Journal.

“The Chicago brewer, whose Coors Light and Miller Lite brands have lost share, blamed declining volumes for the closure, saying they had forced its breweries to operate inefficiently. Pabst in its complaint sought $400 million in damages and alleged that MillerCoors was trying to put it out of business and eliminate a competitor,” Maloney and Chaudhuri continue.

“In closing arguments Tuesday, Pabst’s attorney Adam Paris used a colorful slide presentation to recap and highlight some of the hundreds of internal documents he said showed MillerCoors used a reverse-engineered capacity analysis as a pretext for just ending the contract. ‘A deal is a deal is a deal,’ he said, ‘and they walked on it,’” Bruce Vielmetti writes for the Milwaukee Journal Sentinel.

“Eric Van Vugt, for MillerCoors, admitted to the jury that Paris’ slick presentation looked like a fairly compelling case of conspiracy and deceit  -- except that it's full of ‘distortions, quotes out of context, a whole case made of cut-and-paste.’ 

“Besides, Van Vugt said, it just doesn't make sense that MillerCoors executives and an outside consultant would come up with such a scheme or think they'd get away with it,” Vielmetti continues.

Whatever. In the end, the two parties apparently agreed that their disagreement would be better served by hammering out their own solution rather than leave the decision in the hands of jurors.

Eugene Kashper, who bought Pabst in 2014, had testified that he would not have done so if he knew MillerCoors would seek to end its agreement to produce it, Vielmetti relates. Indeed, at the time he bought the brand, Pabst was riding high. 

“Across the bars of Los Angeles, dorms of USC and UCLA, and creative communities of 20-somethings in the United States, Pabst Blue Ribbon has never been hotter. Even following its triumphant comeback after sagging sales in 2002, Pabst’s popularity has only been steadily on the rise,” Rob LeDonne wrote for SmashboxStudios.com  in October, 2014. The post was titled “The Cult of Pabst Blue Ribbon.”

But by the following June, CNNMoney’s Patrick Gillespie was telling us that “the comeback kid of cool beer brands” was slowing down. “The hipster's brew isn't adapting to the new competition from craft and local beer. It's not enough just to be cheap anymore. PBR’s sales are down 2.6% so far this year compared to the same period a year ago, a company spokesperson said,” he wrote. 

And sales hit 2.5 million barrels in 2017, down from 2.7 million in 2014, according to BMI figures cited by the WSJ. It has also been laying people off -- 18% of its workforce last June, in fact, as Brewbound’s Chris Furnari reported

“People want a beer that they can attach a face and a name to, and PBR doesn’t really have either right now,” Joshua Bernstein, author of "The Complete Beer Course," told Gillespie. “Even dive bars now have really great craft beer on tap…. I don't foresee PBR overtaking that.”

What it does have, absent any significant marketing, is an agreement that will keep it from going the way of erstwhile competitor Rheingold, which did not fare nearly as well in its own reinvention.

Next story loading loading..