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This Pabst vs. MillerCoors Lawsuit Could Threaten the Future of PBR

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Pabst has been in the beer business for almost 175 years, but it now seems to be facing a challenge that could threaten the viability of every one of its iconic brands—including that beloved hipster beacon PBR, which finished #2 in our blind tasting of 30 cheap macro lagers.

The conflict revolves around a lawsuit filed by Pabst against its Chicago-based contract brewer, MillerCoors. Because the modern Pabst largely does not brew for itself, and is more or less a holding corporation for iconic regional beer brands such as Rainier, Lone Star or Schlitz, MillerCoors has been producing the vast majority of beer brewing the “Pabst” title since a contract brewing agreement was put in place between the two companies in 1999. That agreement expires in 2020, at which time MillerCoors is apparently seeking to renegotiate much more expensive terms for Pabst—that, or stop brewing their products altogether, which is what Pabst believes the intent has been all along.

That scenario, wherein MillerCoors stops contract brewing for Pabst, would be a potentially devastating one for the latter. In its court filings, Pabst is arguing that MillerCoors is the only company that even has the 4 to 4.5 million barrels in annual capacity available for such a huge contract brewing assignment. Essentially, they’re saying that it would be impossible to find a replacement due to their size, and that MIllerCoors is attempting to eliminate some of its biggest competition in the marketplace by simply depriving that competition of brewing facilities to make its beer. Presumably, MillerCoors-owned brands (such as the surging Hamms, which was #1 in our cheap beer tasting) could then step in to snag a chunk of the market possessed by PBR and others.

The trial in Milwaukee’s County Circuit Court begins today, and it scheduled through Nov. 30. Pabst is seeking more than $400 million in damages, and for MillerCoors to be ordered to honor Pabst’s interpretation of their contract as far as renewal is concerned.

According to Yahoo’s report on the trial:

Pabst’s attorneys have said in court documents and hearings that MillerCoors LLC is lying about its brewing capacity to break away from Pabst and capture its share of the cheap beer market by disrupting Pabst’s ability to compete. At a March hearing in which MillerCoors tried to have the lawsuit dismissed, Pabst attorney Adam Paris said “stunning documents” obtained from MillerCoors show that it went as far as hiring a consultant to “figure out ways to get rid of us.” MillerCoors has called that a mischaracterization of the consultant’s work.

Complicating matters is the potential closure of two MillerCoors brewing facilities in recent years; one in Eden, NC and the other (which hasn’t yet closed) in Irwindale, CA. As Yahoo puts it: “Pabst contends that MillerCoors refused to provide any information to substantiate its claim that it would no longer have the capacity to continue brewing Pabst’s beers, and that it wouldn’t consider leasing the Eden facility and would only sell it for an “astronomical” price.”

MillerCoors, meanwhile, reportedly wants $45 per barrel to continue contract brewing for Pabst as it is currently, which Pabst says is an almost three times increase in what they’re currently paying—devastating to be sure. The PBR maker is contending that this is an artificially inflated price intended to drive Pabst to the curb, where it will be left without a brewing partner and unable to produce beer. MillerCoors, in retaliation, says in its court documents that Pabst is seeking “a windfall through litigation” rather than making a fair offer.

If you’re wondering why the name AB InBev hasn’t come up in this story, by the way, it’s because they’re not a potential suitor for brewing Pabst brands—Anheuser is not exactly known for contract brewing for its competitors.

“It really is an existential issue for Pabst because it has no real alternatives,” said Pabst lawyer Adam Paris in March.

Beyond the business story unfolding here is significant uncertainty regarding a host of classic regional beer brands that are still being kept alive (in name, anyway) via Pabst. If the agreement between these two companies was to fall apart, it could put numerous historical beer brands in jeopardy. Is a day coming when you won’t be able to find National Bohemian beer in Baltimore, or Stroh’s in Detroit? What of Old Style in Chicago, or Olympia in Washington?

Let’s hope that whatever happens, we don’t lose any of these classics.

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