MillerCoors’ brewery will shutter unless Pabst buys it

USA | Molson Coors will cease production at its Irwindale brewery, California, in September, unless Pabst Brewing takes up the option to buy the facility, The Los Angeles Times said on 8 January 2020.

The brewery opened in 1980, and brews the MillerCoors line of brands, as well as other brands by Pabst. With a production capacity of 6 million barrels per year, it only did 4.8 million barrels (5.6 million hl) in 2019, the newspaper said.

Volumes will be shifted to the group’s breweries in Golden, Colorado, and Fort Worth, Texas, which have spare capacity, over the next nine months, Molson Coors said. Once Irwindale is gone, MillerCoors, a subsidiary of Molson Coors, will operate only six major breweries in the United States, per its website.

MillerCoors has about 25 percent of the US beer market, but has been losing sales. Overall beer sales in America declined 4 percent from 2008 to 2017, the group said.

Will Pabst prove willing?

Whether Pabst will take up the offer to buy the plant – the asking price is USD 150 million, according to media – is another question. The LA Business Journal says that Pabst has 120 days to make a decision. The deal must be closed by the year’s end, according to documents Molson Coors filed with the US Securities and Exchange Commission.

The contract brewing arrangement between MillerCoors and Pabst has been fraught as of late.

In 2018, Pabst alleged in court that MillerCoors was trying to put it out of business, by lying about not having the capacity to continue brewing Pabst beers, under a 1999 agreement between the two companies. That longstanding deal expires in 2020 but provided for possible extensions, CNN reported in November 2018.

Pabst ultimately settled with MillerCoors, but the terms were not disclosed, according to brewbound.com.

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