The perils of having your beers contract brewed: the case of Pabst vs MillerCoors

MillerCoors and Pabst Brewing are facing each other in court over a USD 500 million lawsuit which Pabst lodged against the number two brewer in the US, media reported in June 2018.

For decades Miller and later MillerCoors has been brewing all of Pabst’s legacy beers, including Pabst Blue Ribbon. The agreement is set to expire in 2020, it was reported. Facing a decline in its own volume, MillerCoors has allegedly already told Pabst that it may not have the capacity to continue that relationship if it is forced to close one of its breweries. Pabst’s volume contracted out amounted to over five million hl beer in 2017 according to estimates by Beer Marketers Insights.

However, without a contract renewal, many of Pabst’s beer brands will be orphaned. After all, who has this kind of free capacity in the US and would be willing to take on Pabst?

As various media say, Pabst is accusing MillerCoors of breach of contract, breach of anti-competition laws, fraud and misrepresentation. MillerCoors contests those claims, arguing it has the right to determine whether it has the capacity to extend the contract. As things stand, the two are set to go to trial in November this year.

Because of rising competition MillerCoors may have to flog more budget priced beers which makes it a direct competitor to Pabst. It is also contemplating the closure of a MillerCoors brewery in Irwindale, California, after closing one in Eden, North Carolina, in 2016. Including Irwindale, MillerCoors operates seven breweries in the US.

If MillerCoors were to close that brewery it would not have the capacity to continue brewing Pabst beers. But as MillerCoors has not confirmed the shuttering of its Irwindale brewery, it may have a tough case defending its decision to drop Pabst in court.