MillerCoors Wants to End Its Activities by Ending a Long-Term Partnership by Brewing Pabst Beers

By Ivan Moreno | Associated press

MILWAUKEE – Pabst Brewing Company and MillerCoors go to trial. Pabst, the hipster's favorite, says MillerCoors wants to end his business by ending a long-standing partnership that allows him to brew Pabst beers.

The case has big stakes for Pabst, whose attorneys argue that the very existence of the company relies on the partnership with Chicago-based MillerCoors, which produces, packages and ships almost all of its products including Pabst Blue Ribbon, Old Milwaukee, Natty Boh and Lone. Star. MillerCoors, meanwhile, says he does not have to keep brewing for Pabst and Pabst does not want to pay enough to justify it.

The lawsuit in the Milwaukee County Court of Appeal begins Monday and will run until November 30.

Pabst's lawyers have stated in court documents and hearings that MillerCoors LLC has lied about its brewing ability to break with Pabst and conquer its share of the cheap beer market by disrupting its competitiveness. At a hearing in March during which MillerCoors attempted to have the complaint dismissed, Pabst's attorney, Adam Paris, said that "amazing documents", provided by MillerCoors, showed that the company was not doing anything about it. he had even gone so far as to hire a consultant to "find ways to get rid of us." called this a bad description of the consultant's work.

The 1999 agreement between MillerCoors and Pabst, founded in Milwaukee in 1844 but now headquartered in Los Angeles, will expire in 2020 but provides for two possible extensions for a five-year period. Companies dispute how extensions should be negotiated: MillerCoors says it has the exclusive discretion to determine whether it can continue to produce for Pabst, while Pabst says companies must work "in good faith" to find solution if Pabst wants to extend the agreement. but MillerCoors lacks capacity.

Pabst needs 4 to 4.5 million barrels a year and says MillerCoors is his only option. She claims more than $ 400 million in damages and asks MillerCoors to honor her contract.

During contract extension negotiations in 2015, MillerCoors announced that it would close its brewery plant in Eden, North Carolina, and that it could possibly have to close another plant in Irwindale, California. Pabst claims that MillerCoors has refused to provide information in support of its assertion that it would no longer be able to continue brewing Pabst beers and would not consider renting Eden's facilities and would not sell them. than at an "astronomical" price.

Pabst said MillerCoors would not accept an extension of the sale unless Pabst pays $ 45 per barrel – "a commercially devastating price increase, almost triple that" compared to what it pays now. At the March hearing, Paris told MillerCoors that Pabst could not accept this proposal "because it would have bankrupted us three times".

At lawsuits, MillersCoors stated that Pabst's proposals to keep the Eden plant "unreasonable from a business perspective" and that Pabst was seeking "an unexpected gain through litigation" instead of offering to pay enough to keep an installation open. He also said the closure of the facility was intended to "ensure the long-term sustainability" of MillerCoors, as thousands of new breweries have entered the market over the past decade.

MillerCoors and Anheuser-Busch, which have the largest market shares in the United States, with 24.8% and 41.6%, respectively, lost customers to smaller independent brewers, imports, and than wines and spirits, according to the Brewers Association.

"The beer market has evolved and beer lovers are demanding more and more varieties, richer flavors and local produce from small, independent producers," said Bart Watson, Chief Economist for the Brewers Association.

Overall beer sales in the United States declined from 213.1 million barrels in 2008 to 204.2 million barrels in 2017, according to the Brewers Association.

Pabst depends on MillerCoors because the only other American brewer with the capacity to manufacture its products is Anheuser-Busch, which does not brew a contract, said Paris.

"It's really an existential problem for Pabst because there is no real alternative," Paris said at the March hearing.

Paris said that the 2013 MillerCoors consultant's report proves that the company has never intended to act in good faith. Pabst's lawyers said the report included sections devoted to how to "completely eliminate Pabst" and said that MillerCoors should close two breweries "to make sure not to have excess manufacturing capacity subcontracting ".

MillerCoors attorney Eric Van Vugt told the court that the company was not relying on the consultant's report to decide to close Eden or to consider closing the Irwindale brewery.
"If we keep Irwindale open, yes, we can supply their beer," Van Vugt said. "No one disputes it. This is the only factor we need to look at. "