Pabst Blue Ribbon and Schlitz saved by MillerCoors settlement

MillerCoors has been brewing and distributing Pabst beers such as PBR, Schlitz and Lone Start since 1999 under a 20 year agreement. The original agreement, due to end in 2020, provided for extensions of the contract; but MillerCoors and Pabst disagreed on the obligations of the two companies to extend past 2020.

When Pabst sought to extend the partnership, MillerCoors said it wanted to terminate the partnership for financial reasons. In March 2016, Pabst filed a suit against MillerCoors, alleging the latter's intent to put Pabst out of business.

An 'amicable' decision

Jurors were ending their second day of deliberations on Wednesday when the two companies reached a settlement. Details were not immediately disclosed, but Pabst was seeking more than $400m in damages and for MillerCoors to be ordered to honor its contract.

MillerCoors said: “We have reached an amicable settlement in the case and are pleased to resolve all outstanding issues with Pabst.”​

In a separate statement, Pabst said it “will continue to offer Pabst Blue Ribbon and the rest of our authentic, great tasting and affordable brews to all Americans for many, many years to come.”​

Pabst was founded in Milwaukee, Wisconsin in 1884 but moved its headquarters to Los Angeles in 1996. Its namesake beer PBR peaked in popularity in the late 1970s and then saw a steep decline in sales and distribution. Its revival came when the company was sold in 2010 for $250m.

PBR has since seen a great resurgence among young beer drinkers, particularly in urban areas. It runs contests to feature customer artwork on its cans and is once again sold nationwide.

In the lawsuit Pabst accused MillerCoors of wanting to sever the agreement knowing that Pabst didn’t have the capacity to brew its popular beers on its own. MillerCoors maintained that its initial decision was strictly a financial one.

Consolidation in the beer market​

When the two companies struck the original brewing deal, the domestic beer market was larger and more divided. But with the rise of craft beer, mass market beers (such as Bud Light, Miller High Life, Coors Light and PBR) are often considered by consumers as one category; with these beers appealing to similar customers as they did in the 1990s. Meanwhile, this mainstream beer market has seen a lot of consolidation.  

Beer sales have been declining overall in the US over the last decade, and the traditional alcohol category has faced stiff competition from independent craft brewers and distillers.