Wednesday, May 26, 2010

Pabst finally, almost, probably...sold

After years as the property of a charitable institution, Pabst Brewing looks likely to be sold to C. Dean Metropoulos. The Wall Street Journal reports that Metropoulos will be paying the Kalmanovitz Charitable Foundation about $250 million for the company, a collection of brands and employees that owns no brewing facilities (Pabst's brands are all brewed under contract). Here's the nut of the story for those who are not WSJ subscribers:
Investor C. Dean Metropoulos made a fortune building well-known consumer brands including Bumble Bee Tuna and Vlasic Pickles. Now, he is looking to wash them down with a Pabst Blue Ribbon.
Mr. Metropoulos, a 64-year-old executive known for invigorating brands, has reached an agreement to buy Pabst Brewing Co. from the charitable foundation that owns the company for about $250 million, according to people familiar with the matter. Although little known outside of food circles, he earned a fortune managing brands such as Chef Boyardee, Duncan Hines and Ghirardelli Chocolates. With Pabst, Mr. Metropoulos is showing his deal-making skills.
About 15 other private-equity firms, including Morgan Stanley's private-equity arm, had considered a bid, said people familiar with the matter. The purchase is in its final stages and has the financial backing of General Electric Co.'s lending arm, the people said.
Pabst Brewing is the country's fifth-largest beer supplier, according to industry newsletter Beer Marketers Insights Inc., accounting for 2.7% of industry volume last year. Pabst's blue-collar roots have made the brand-known among beer cognoscenti as PBR-a beer of choice for a generation of irony-loving hipsters from Portland, Ore., to Manhattan's Lower East Side.
It's just me, but if Mr. Metropoulos really wants to "invigorate" this brand...he should buy/build a brewery for it. Give Pabst a home, Mr. Metropoulos; give it back its soul. And maybe give it back some hops while you're at it.

13 comments:

Bill said...

I have to say that I'm fine with the Pabst line-up being contract brewed by Miller -- the various brews are much tastier than, say, most of Miller's offerings. Really, for those of us who still enjoy adjunct lagers, Pabst does a great job with their recipes, and Miller does a great job in carrying them out.

I guess if all things were equal, it would be nice to see some of the formerly regional brews go back to being brewed in said regions, but perhaps the new owner might sell off some of the brands and, in so doing, make it so.

The Professor said...

Perhaps Metropulos will sell off the Ballantine brand; I do know that Mark Hellendrung, the fellow who has successfully revived Naragannsett Beer, has expressed interest in Ballantine as well. If the XXX can be restored to the formula used 40-50 years ago (and if the IPA can be successfully revived) I think they would sit very comfortably alongside many of the 'new' beers out there today (and probably outclass a good number of them).

Generik420 said...

I definitely consider myself a fan of the Pabst family of beers. At the end of a session, I usually gravitate to PBR or the new Schlitz, both far superior to any of the mega brands. Ballantine Ale is still a great session beer, although very hard to come by in my neck of the woods.

I am glad to see the new owner is not just some financial institute as was predicted a year or so ago. But at the same time, it sounds like this new potential owner has a habit of buying a brand and selling it a few years later for a big profit. Pabst has recently been tweaking recipes to great effect, as seen in the re-introduced old recipe Schlitz. Or Old Style once again being Kreuzened. My worry is this person is just viewing Pabst as an investment opportunity and may not continue developing the brands.. or maybe things will get even better. It will be interesting to see regardless.

Russ said...

Generik-

I think PBR's hipster cache peaked a few years ago so if this guy wants to reinvigorate the brand I'm not sure what option he has other than to actually make his products taste better. Of course, I'm not a marketing guy so I could very well be wrong...

jp said...

for me the interesting story will be how he finances it. Private equity firms are typically known as leveraged buyout investors, LBOs. They put in a small portion of equity and use debt to finance the rest, which is not put on their on balance sheet, but rather on the acquired company's books. The upside for the investor is it does not require a huge amount of capital and if things do not work out they lose only their orginal invrsment which is typically not more than 20% of the total cost. The down side is the new company is saddled with a lot of debt which it needs to pay down. A quick way to do this is to sell off assets which are considered non core to the strategy. I am thinking Metropoulos will focus on the flagship brand Pabst and maybe a couple more say schlitz and will look to sell of all those other legacy brands to pay down debt. Not sure what they are worth but I bet there is some kind of market out there for ballnatines, old style, and Stag. I cannot see what else he could sell since pabst has no hard assets in the form of plant which given the lack of new brewing plant coming on line would be quite easy to sell. Just my 2 cents

Lauren Clark said...

Yes, find breweries for PBR and Ballantine (and Schaefer?) and for the love of god, keep "Schlitz classic" coming.

Glenn B said...

And here I sit drinking a nice icy cold Weissbier. I have not had a Pabst BR in about 25 or 30 years. Well maybe one or two in some hole in the wall bar somewhere in my travels that I have forgotten, but not as much by choice as needing a beer and that was maybe what they had. Really folks - Pabst BR is yesterday's has been. Hopefully though it will be improved to give it niot only some taste but some kick too. Just my 2 cents...

All the best,
Glenn B

Lew Bryson said...

Well...remember, Glenn: those of us drinking something other than light lager are still a small minority. Not as small as we used to be, but still less than 5% of beer drinkers in America. There's plenty of room for Pabst to maneuver in what's left, and if the big guys can't pull themselves together...Pabst may well make a move. Doesn't really affect craft beer, but I can't help being interested!

Chris said...

I must admit that Pabst is my lawn mowing beer. Nice and light, just a hint of hops. The price is right, and it's one of the few USA owned big brewery styles around.

Anonymous said...

chris dont know where you live but check out lionshead made in PA superior to pabst and they actually employ people and have a brewery, or genny beer or cream ale, ditto for them and both of these places actually give benefits to their employees!

plus you can out-cool the hipsters drinking something they've never heard of.

Lew Bryson said...

I'm surprised that Genny Cream hasn't scored on the retro train; it's just waiting to happen...

Lee Botschaner said...

Agree Lew. I was at the distributor recently and was shocked to realize what a value genny cream was at 13 a case. The lion would be smart to beat genny to the punch with Lieb.

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