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Somewhere in between the time when Pabst Blue Ribbon was just Frank Booth's favorite beverage and when it became the go-to can of every skinny-jeaned hipster from Bushwick to Silver Lake, production of the beer itself was taken over by conglomerate MillerCoors. That production agreement, signed in 1999, is set to expire in 2020, and that may mean the PBR bubble is about to burst.
Pabst is claiming that MillerCoors is trying to put it out of business by not negotiating an extension on the contract brewing agreement in good faith. MillerCoors claims it can do whatever it wants with its breweries. Naturally, the two are now squaring off in court to determine our frothy future.
While it still exists as a portfolio of beers, Pabst Brewing Company does not own any of its own production breweries. Instead, it contracts the production of Blue Ribbon, Old Milwaukee, Natty Boh, and Lone Star -- some 4-4.5 million barrels worth of beer -- to MillerCoors. MillerCoors has argued in court that this contract with Pabst is "an arms-length agreement which allows the parties to look for their own best interest," that it has sole discretion to determine whether it has the capacity to brew Pabst beer, and, in any case, offering Pabst a solution to any capacity challenges is optional, not mandatory.
Those capacity challenges have arisen, MillerCoors claims, because it is shuttering one brewery in Eden, North Carolina, and possibly another in Irwindale, California. Pabst, in turn, contends MillerCoors refused to provide proof that it would no longer have the capacity to continue brewing their beers after the closures. Additionally, they say MillerCoors wouldn't consider leasing the Eden facility and would only sell it for an "astronomical" price.
Speaking of astronomical, Pabst says MillerCoors wouldn't agree to an extension of the brewing contract unless Pabst forked over $45 per barrel, "a commercially devastating, near-triple price increase" from what it pays now, according to court documents. Pabst attorney Adam Paris told the court MillerCoors knew at the time Pabst wouldn't accept the proposal "because it would have bankrupted us three times over."
Paris further claims that MillerCoors even hired a consultant to "figure out ways to get rid of us," allegedly to get away from the brewing agreement, disrupt Pabst's production, and then capture their share of the cheap beer market.
The trial started this week, and is expected to run until the end of the month. After that, hipsters and other PBR die-hards may have to start living the High Life.
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