Pabst Brewing Company, a holding company headquartered in Los Angeles, California announced today that it has entered with City Brewing Company in La Crosse, Wisconsin into a 20-year contract production agreement until 2040. Under the agreement, Pabst will gradually transfer from 2021 until 2024 its production from MillerCoors to City Brewing.
In 1996 Pabst, once one of the largest breweries in the United States closed down its production in Milwaukee after 152 years. Since then Pabst’s legacy brands like Pabst Blue Ribbon (PBR), Old Milwaukee, Lone Star, Rainier, Stroh’s, Old Style and Schlitz are brewed under contract by third parties. For nearly two decades, MillerCoors brews and distributes all of Pabst's beers under an agreement, which was originally set to expire in 2020 but included options for an extension.
When MillerCoors closed its brewery in Eden, North Carolina in September 2015 it also terminated the contract production agreement with Pabst by the end of 2020. However, Pabst went to court accusing the partner of a contract breach. Pabst asked for a USD 400 million compensation, as well as assistance in securing alternate arrangements for brewing roughly five million barrels (5.87m hl) of Pabst Blue Ribbon per year (inside.beer, 17.06.2018).
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.
After a nine-day court battle both sides finally reached an “amicable” settlement agreement but refused to disclose terms of it (inside.beer, 29.11.2018).
“We are pleased to welcome Pabst as a long-term partner,” City Brewing Chairman and CEO George Parke III said in a press release. “This long-term commitment accelerates our ability to move forward with an investment program to expand our facilities and enhance our capabilities — which will provide a huge benefit to all of our customers. We look forward to brewing PBR and some of the other great brands in Pabst’s portfolio that are beloved locally and nationally.”
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.
“We are thrilled to establish this long-term partnership with City Brewing. We have great respect for George Parke and his family, and also for the management team’s operational excellence, and the entire organization’s commitment to quality,” Pabst chairman and CEO Eugene Kashper said in the release. “For over 175 years, Pabst has celebrated both tradition and innovation, and we are proud to offer some of America’s most iconic beers. This partnership provides clarity and certainty for our employees and our customers, and will allow us to innovate more effectively.”