The end of Pabst Blue Ribbon? The beer giants at the head of the bitter battle

12 November 2018 / 19:42 GMT

By Alyssa Newcomb

A battle is literally being played between Pabst and MillerCoors, who were in court Monday to argue a case that could make or break the future of Pabst Blue Ribbon.

Over the last two decades, MillerCoors has been making Pabst's traditional beers including Pabst Blue Ribbon, Old Milwaukee, Lone Star and Natty Boh. The two companies signed a brewing agreement in 1999, which is expected to expire in 2020, with two renewal options. Without a renewal of this agreement, Pabst should probably stop the production of several of its famous brands.

There is only one big problem. MillerCoors says it has less brewing capacity and that it is not obliged to renew the agreement. Pabst claims that MillerCoors, which is facing a decline in the volume of brands in the United States, is trying to drive competition out of its business.

The lawsuit, which will cost close to half a billion dollars, will be heard by a jury in the Milwaukee County Court of First Instance and is expected to last until November 30. In addition to damages of more than $ 400 million, Pabst asks MillerCoors to work "in good faith." To help find a solution, even if the company no longer has enough capacity.

In 2016, MillerCoors closed a 1.3 million square foot brewery in Eden, North Carolina, which had the capacity to brew more than 8.8 million barrels of beer a year. Pabst said it needs 4 to 4.5 million barrels a year.

But MillerCoors is not sure it will help. Previously, the company said it had to close a site in California capable of brewing 6 million barrels of beer a year. If this happens, MillerCoors will have six breweries.

In a statement released on Monday, Pabst said MillerCoors "deliberately violated our 19-year deal to thwart competition."

"Even if the market power of MillerCoors is much greater than that of Pabst, we will not allow this industry to intimidate us," the statement said. "We are confident that the court will take into account the" capacity "concerns manufactured by MillerCoors for what they are: an attempt of bad faith and barely veiled to unlawfully hurt a competitor."

MillerCoors did not immediately respond to a request for comment.

Paul Gatza, director of the Brewers Association, said he had not seen the deal between MillerCoors and Pabst. However, "a company that does not control its own beer production capacity would be in danger at the end of the contract, especially if no other brewery has the capacity to meet the needs of a company by the excess other companies. capacity, "he said.

The lawsuit comes at a time when beer sales are down. Overall beer sales fell 1% last year, while craft beer sales rose 5%, according to the Brewers Association.

In its third quarter earnings report last month, Molson Coors, MillerCoors' parent company, reported net sales up 1.8%. However, MillerCoors lost 3.3% of its US brand volume this year, largely due to lower sales of its light beers, including Coors Light and Miller Lite.

"We know you want and need to repair these brands as they are the main driver of our collective volume and profit," said Gavin Hattersley, CEO of MillerCoors, in an article published last month on his blog. "And we are working on revitalizing them with authentic positions that build respect for our beers."