USA: MillerCoors and Pabst settle court case over contract brewing arrangement

After a nine-day court battle MillerCoors and Pabst Brewing Company have reached an “amicable” settlement agreement to end their dispute over a continuation of a nearly two-decades old contract brewing arrangement of close to two-dozen Pabst beers. Terms of the settlement were not disclosed.

In March 2016 Pabst sued MillerCoors for $400 million claiming a contract breach as well as assistance in securing alternate arrangements for brewing roughly five million barrels (5.87m hl) of Pabst Blue Ribbon per year. A hearing in this case was set for November this year in Milwaukee County Circuit Court. (inside.beer, 17.6.2018)

MillerCoors wanted to terminate the agreement which is set to expire in 2020 but Pabst argued that the contract included options for an extension and it was hard to find or build new brewing capacities considering the high volumes of the Pabst brands. Pabst accused MillerCoors of trying to put in fact the contract brewer out of business.

MillerCoors argued that it had sole discretion to assess whether it has sufficient capacity and had no responsibility to offer Pabst a solution to the capacity issues. Therefore, the brewing group had no obligation to extend its contract with Pabst past 2020.

During the hearing, which started on November 2, MillerCoors claimed that the current rate for brewing the Pabst brands of $17 per barrel was below market rate, and the company would need $42 per barrel for a continuation of the contract.

As the Milwaukee Journal Sentinel now reported, both companies told the judge they had reached a settlement agreement. “The parties have amicably resolved all outstanding issues in the case,” a Pabst spokesperson said in a statement. “Pabst will continue to offer Pabst Blue Ribbon and the rest of our authentic, great tasting and affordable brews to all Americans for many, many years to come.”

Since 1996, when Pabst closed its brewing site in Milwaukee, Wisconsin, after 152 years, Los Angeles-based Pabst Brewing Company acts as a holding company for over two dozen brands of beer and malt liquor from defunct American breweries including signature brew Pabst Blue Ribbon. In April last year, Pabst announced to open a new microbrewery in what was Milwaukee's first German Methodist church on the former Pabst complex just west of downtown Milwaukee. (inside.beer, 11.4.2017)

Since 2014 Pabst Brewing Company is owned by Blue Ribbon Intermediate Holdings, a partnership of American Beer Entrepreneur Eugene Kashper and San Francisco–based private equity firm TSG Consumer Partners. In April 2017, TSG Consumer Partners also acquired a minority share of 23 percent in Scottish craft brewing shooting star BrewDog. (inside.beer, 10.4.2017)

 

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