Pabst partners with CBA
Three-year option may herald PBR’s return to brewing
The Craft Brewers Alliance and the resurgent Pabst Brewing Company have struck a deal that may see Pabst re-enter the world of industrial-scale brewery ownership.
The three-year agreement, which runs from this month to the end of 2018, will have CBA brewing Pabst’s Rainer Pale Mountain Ale as well as other Rainier brands at its 200,000 barrel brewery and bottling operation in Woodinville, Washington.
While CBA will continue to operate the brewery and an adjacent pub, Pabst has an option to purchase the brewery and pub at any time during the agreement. According to documents filed with the US Securities and Exchange Commission, Pabst will pay $25 million if the option is exercised in the first year, $26m in the second year and $28m during the third and final year.
If Pabst does not exercise the option, it may be required to pay CBA a termination fee. There’s also an initial review period, with Pabst taking a look at environmental and title issues relating to the property. If it isn’t satisfied with the results of these reviews, it can terminate both the brewery and option agreements before 17th April.
Pabst’s master brewer Greg Deuhs, who served as CBA’s director of operations at the Woodinville plant from 2008-20102, said Pabst is “thrilled” to be returning to Rainier’s home state.
Deuhs said, “We are excited to revive many historic Rainier beers from our archives – starting with Rainier Pale Mountain Ale, which will be offered in the iconic 16 ounce Rainier ‘pounder’ glass bottle.”
Pabst has been a ‘virtual brewer’ for more than a decade following the sale or closure of its remaining brewing assets during the 1990s. Beginning in 20001 it has had its wide variety of lager brands and malt beverages brewed initially by Miller and subsequently MillerCoors. Pabst has an agreement with MillerCoors to brew, package and ship its products that rans through June 2020.
But following its acquisition in mid-2014 by drinks entrepreneur Eugene Kashper and his firm Oasis Beverages (in partnership with a private equity investor) Pabst has been reinvigorated. In July ‘15 it was announced that Pabst would return to its birthplace of Milwaukee with the opening of a brewery on the site of its original brewery. It is intended to serve Pabst as a centre for innovation and NPD and to commence operations this summer.
As for the CBA, it is expanding capacity at its largest brewery, in Portland, Oregon, to 750,000 barrels and is building a 100,000 barrel brewery for its Kona Brewing subsidiary, on the big island in Hawaii.
CBA chief operating officer Scott Mennen said, “As we complete our Portland expansion and continue transitioning more volume to that brewery, we have been looking for an opportunity to best utilise our production team and capacity in Woodinville. With this brewing arrangement, we not only deliver positive impact on our bottom line, we support another beloved Northwest heritage brand, which benefits the industry and beer consumers overall.”
Known as the Redhook brewery, Woodinville was built in 1994 and over the years has been used to brew a variety of Redhook and Widmer Brothers beers, as well as contract brewing other brands.