Pabst Blue Ribbon Sues MillerCoors Over Contract Disagreement

Pabst Brewing Company has filed a $400 million suit against MillerCoors Brewing. In 1999, the two companies entered an agreement in which the latter brewer was to produce Pabst’s heritage drinks, including Pabst Blue Ribbon, Old Milwaukee, Natty Boh, and Lone Star.
 
That contract, signed with the option for two five-year renewals, is set to expire in 2020. However, MillerCoors has claimed that it no longer has the capacity to brew the 4 to 4.5 million barrels that Pabst needs annually. Representatives of Pabst have countered that this claim is dishonest and have alleged that MillerCoors, which has seen a decrease in brand volume, is declining to renew in an illegal effort to put Pabst out of the budget-beer business.
 
MillerCoors has a market-share of 24.8 percent of the US brewing industry, second only to Anheuser-Busch. According to the Brewers Association, overall beer sales in the U.S. have fallen and the greatest decrease in sales has been among mass-produced domestic beer brands, such as Miller.
 
In 2015, while negotiating a contract-extension, MillerCoors announced that it was going to shut down its brewing facility in Eden, North Carolina, which produced over 8 million barrels annually. MillersCoors would not allow Pabst to lease the Eden facility and offered to sell at a price Pabst deemed unreasonable.
 
In the wake of this development and the fight over the contract renewal, Pabst has argued that MillerCoors has declined to offer information to substantiate its claim that it would no longer have the capacity to brew Pabst’s beers. Pabst further contends that MillerCoors would only agree to a contract extension at a price of $45 per barrel, which is nearly three times the rate Pabst currently pays. Representatives from Pabst have stated that accepting the $45-per-barrel rate would bankrupt the brand.
 
The two brands disagree as to what the contract entails. MillerCoors claims it has sole deciding power as to whether or not the contract is renewed, while Pabst insists that the two companies must work in a “good faith agreement” together to continue the production of Pabst’s products. In March, MillerCoors sought and failed to have the case dismissed.
 
Pabst attorney Adam Paris has stated that “stunning documents” obtained from MillerCoors show that the company hired a consultant to determine how to put Pabst out of business. While MillerCoors representatives have stated that Paris mischaracterizes the work of the consultant, Paris claims that a report from the consultant demonstrates the MillerCoors did not have the intention to act in good faith.
 
The only other brewing company in the United States with the capacity to produce Pabst’s products is Anheuser-Busch, which does not do contract brewing. MillerCoors is Pabst’s only viable option. The trial will begin on November 19 and is scheduled to continue until November 30th.

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