20.11.18

PROTECTING COMPETITORS IS NOT THE SAME AS PROTECTING COMPETITION.

Once upon a time, Schlitz sold Old Milwaukee at a lower price than "The Beer That Made Milwaukee Furious" as a subtle form of price discrimination.  A few locals were in on the secret.

More recently, Miller Coors leased excess capacity at some of their plants to produce all of the other Great Milwaukee beers: draft-brewed Blatz, Pabst Blue Ribbon, Schlitz, and for all I know Meister Brau and Braumeister.  (Well, at least Old Milwaukee, see above, and Lone Star.)

It's now come down to Miller Makes It Wrong.  " 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 dispute involves the profitability of Miller's excess capacity.
During 2015 negotiations about extending the contract, MillerCoors announced it would close its brewing facility in Eden, North Carolina, and that it eventually might have to shutter another facility in Irwindale, California. Pabst contends that MillerCoors refused to provide any information to substantiate its claim that it would no longer have the capacity to continue brewing Pabst’s beers, and that it wouldn’t consider leasing the Eden facility and would only sell it for an “astronomical” price.

Pabst says MillerCoors wouldn’t agree to an extension unless Pabst paid $45 per barrel — “a commercially devastating, near-triple price increase” from what it pays now. At the March hearing, Paris said MillerCoors knew Pabst couldn’t accept that proposal “because it would have bankrupted us three times over.”

In court filings, MillersCoors said Pabst’s proposals to keep the Eden facility open “were commercially unreasonable” and that Pabst sought “a windfall through litigation” instead of offering to pay enough to keep a facility open. It also said the facility’s closing was “to ensure the longer-term sustainability” of MillerCoors because thousands of new brewers have entered the market over the past decade.
That entry is more akin to the scale of seven score years ago.
“The beer market has shifted and beer lovers are increasingly demanding more variety, fuller-flavor, and local products from small and independent producers,” said Bart Watson, the Brewers Association’s chief economist.

Overall U.S. beer sales have declined, with shipments down from 213.1 million barrels in 2008 to 204.2 million in 2017, according to the Brewers Association.

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.
Yes, one reason Blatz claimed "All Blatz is draft-brewed" was that they didn't ship it very far. Neither does Sprecher these days. Milwaukee's Big Three (plus that outfit in St. Louis) had to practice Better Living Through Chemistry in order to exploit the economies of volume shipping cross-country.

Why the favorite local product these days is frequently an India Pale Ale perplexes me, as Headache in a Glass is a recipe suited to being toted on a sailing ship around Good Hope, but I digress.  Reason's Baylen Linnekin suggests there's not much money to be made in selling off that excess capacity, even under allegedly competing labels.  "I drink Miller Lite at baseball games from time to time, and PBR, Olympia, and Rainier at happy hours when they're offered for less than $3."

There's Budweiser in the Cold Spring Shops pantry for cooking.  Sprecher and Spotted Cow are for drinking.

No comments: