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17 June 2011

Headquarters – here today, gone tomorrow

Funny the new owners of the Pabst Brewing Company should want to relocate headquarters to Los Angeles. Only a few years ago Pabst’s headquarters had been lured to Chicago from San Antonio, Texas with the help of a big wad of tax dollars and training funds.

The company, which owns Pabst Blue Ribbon, Schlitz and Old Style beer brands, was purchased last year for about USD 250 million by billionaire investor C. Dean Metropoulos, who then granted control of Pabst to his Los Angeles-based sons Daren and Evan Metropoulos.

The Metropoulos family declined to comment about the reasons behind the move or how many local jobs it might create in California.

It was to be expected that the Metropoulos family would shake up the company. Perhaps the changes were implemented a bit too aggressively because they led to the departures of Pabst’s CEO and more than two dozen other executives.

Obviously, the former Pabst executives did not receive a golden handshake which would have kept their lips sealed for years. In recent weeks, a few have spoken out about how bitter they feel about the shift in company philosophy.

What must irk them is the move in headquarters. The flagship brand, Pabst Blue Ribbon, or PBR, has a cult following of young, hip urbanites in Chicago, who seem to go for the brand because it is unsexy, unpretentious and blue-collar Midwest.

Hipsters weren’t the only ones disappointed by Pabst’s announced departure.

Pabst’s move to Woodridge from San Antonio in 2006 was backed by USD 1 million in state tax incentives and training funds. In exchange, the company pledged to create 31 full-time jobs within two years and make an investment of USD 2.4 million in its facilities, it was reported.

U.S. media say the company started receiving the tax credits in 2008. The agreement required the company to remain in Illinois and retain those jobs for 10 years.

The state of Illinois could go after the company for those taxes.

Pabst was owned for about two decades by the charitable foundation of the late Los Angeles brewing mogul Paul Kalmanovitz. The Internal Revenue Service ordered the Kalmanovitz Charitable Foundation to sell the company because a federal law barred charities from owning a for-profit business for more than five years.

PBR’s comeback began about 10 years ago, but as recently as 2005 the company was on the brink of bankruptcy, said former Pabst CEO Kevin Kotecki, who resigned in November 2010.

Data from Symphony IRI Group shows the company outpaced the rest of the beer category over the last three years, averaging 4.3 percent growth, compared with 0.81 percent year-over-year for all beer.

Recent data from Symphony IRI shows growth has slowed to 3.2 percent over the last 12 months.

Pabst doesn’t actually brew PBR. The beer is made in six breweries around the U.S. in facilities owned by SABMiller.

Pabst shipped about 6.8 million hl of beer in 2009, down sharply from 29 million hl in 1995, according to the Brewers Association trade group.

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