Confused: Why should virtual brewer Pabst buy a brewery?
USA | Is this some elaborate blame game? MillerCoors has announced the closure of its Irwindale brewery, while granting rival brewer Pabst the option to buy it. But Pabst does not need the capacity.
In November 2019, Pabst inked a deal with City Brewing, which will see City take over most of Pabst’s production over the next five years, beginning in 2021. According to Beer Marketer’s Insights, a trade publication, the contract brewing agreement is to last until 2040.
The publication estimates that in 2019 Pabst will have sold just above 4 million barrels (4.7 million hl) beer, among them its iconic brand Pabst Blue Ribbon.
Although Pabst owns a portfolio of heritage brands, its volume sales have declined steadily for decades. In 2008, it still sold a total of 5.8 million barrels beer, per Beer Marketer’s Insights data.
What keeps on bugging us: why should Pabst take over a brewery in California that can do 6 million barrels, if City Brewing can brew nearly all of its beers already?
Blame shifting, or what?
Could it be that MillerCoors is using Pabst as the bogeyman, who will receive all the blame once the Irwindale brewery shutters in September, and more than 400 employees will be made redundant?
City Brewing is a co-packing firm, which has plants in La Crosse, Wisconsin, Latrobe, Pennsylvania, and Memphis, Tennessee, with a total capacity to produce over 9 million hl beer. It has seen its contract business thrive, being a key supplier for Mark Anthony Brands (Mike’s Hard lemonade, White Claw) and Boston Beer, plus others.
When Pabst struck the deal with City Brewing, there was a rumour that it was more than a simple production agreement, that a transaction had occurred, possibly through a holding company. But Eugene Kashper, Pabst’s Chairman and CEO, was quoted as saying: “We’re not buying City Brewing, nor planning to buy City.” “Pabst,” he said, “wants to remain a virtual brewer.”
Read more about this topic: Why will MillerCoors' brewery shutter unless Pabst buys it?
