Pabst, MillerCoors Reach Settlement in Contract Brewing Dispute
Article by Justin Kendall Brewbound.com After a month of arguments in a Milwaukee courtroom, Pabst Brewing Company and MillerCoors have settled a lawsuit that Pabst claimed could have put the 174-year-old beer company out of business. Terms of the settlement were not disclosed. In a statement, a Pabst spokesperson suggested that a long-term solution had been reached after the two parties “amicably resolved all outstanding issues in the case.” “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,” the spokesperson said.In a separate statement, MillerCoors said: “The parties have amicably resolved all outstanding issues in the case.” The lawsuit centered around a nearly two-decades old contract brewing arrangement between Pabst and MillerCoors — which brews Pabst Blue Ribbon, Lone Star, Schlitz, Old Milwaukee and other brands for Pabst — that was slated to expire in 2020. However, Pabst held options to renew the contract through 2030. Despite the renewal options, MillerCoors argued that it may not have the brewing capacity required to extend the contract. Volumes for the maker of Coors Light and Miller Lite have declined in recent years, and, as a result, the Chicago-headquartered company shuttered its production facility in Eden, North Carolina, in 2016. The company has also contemplated closing a second production facility in Irwindale, California. MillerCoors notified Pabst in 2015 that the company would not have the brewing capacity to extend the contract arrangement through 2025. In turn, Pabst filed suit, claiming MillerCoors was attempting to “sabotage” its ability to compete. Pabst also argued that MillerCoors would have enough capacity to brew the nearly 4.5 million barrels of beer the company produces annually. During the trial, which began on November 2 in in Milwaukee County Circuit Court, MillerCoors said it made between $70 million and $80 million annually brewing Pabst’s brands. However, MillerCoors claimed that the current rate of $17 per barrel was below market rate, and the company would need $42 per barrel to continue brewing for Pabst. For its part, Pabst had contended that the $42 per barrel rate was too expensive. Pabst CEO Eugene Kashper testified that if MillerCoors did not extend the agreement, his company could be forced out of business, the Milwaukee Journal Sentinel reported. He also told the court that he wouldn’t have bought Pabst in 2014 had he known MillerCoors would end its manufacturing arrangement. Attorneys for Pabst argued that MillerCoors breached its contract by rejecting its contract extension, and the company was trying to force Pabst out of business in order to claim its share of the sub-premium beer market.