Pabst, MillerCoors: A brewing battle

Court to rule on competition clash

Pabst Brewing Company and MillerCoors are going to trial, with hipster favorite Pabst contending that MillerCoors wants to put it out of business by ending a longstanding partnership through which it brews Pabst’s beers.

The case has high stakes for Pabst, whose lawyers argue that the company’s very existence relies on the partnership with Chicagobased MillerCoors, which produces, packages and ships nearly all its products, which include Pabst Blue Ribbon, Old Milwaukee, Natty Boh and Lone Star. MillerCoors, meanwhile, says it’s not obligated to continue brewing for Pabst and that Pabst doesn’t want to pay enough to justify doing so.

The trial in Milwaukee County Circuit Court begins today and is scheduled through Nov. 30.

Pabst’s attorneys have said in court documents and hearings that MillerCoors 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.

The 1999 agreement between MillerCoors and Pabst, which was founded in Milwaukee in 1844 but is now headquartered in Los Angeles, expires in 2020 but provides for two possible fiveyear extensions. The companies dispute how the extensions should be negotiated: MillerCoors argues that it has sole discretion to determine whether it can continue brewing for Pabst, whereas Pabst says the companies must work “in good faith” to find a solution if Pabst wants to extend the agreement but MillerCoors lacks the capacity.

Pabst needs 4 million to 4.5 million barrels brewed annually and claims MillerCoors is its only option. It is seeking more than $400 million in damages and for MillerCoors to be ordered to honor its contract.

Pabst depends on MillerCoors because the only other U.S. brewer with capacity to make its products is Anheuser-Busch, which doesn’t do contract brewing, Paris said.

“It really is an existential issue for Pabst because it has no real alternatives,” Paris said at the March hearing.

AP BITTER RIVALS: Cases of Pabst Blue Ribbon and Coors Light are stacked next to each other in a Milwaukee liquor store last week. Pabst Brewing Company and MillerCoors are heading to trial starting today to settle a contract dispute in which Pabst accuses the brewing giant of trying to undermine it by ending a contract to make its products.