Craft Beer News – 11/30/18

MillerCoors, Pabst settle lawsuit over brewing contract

•MillerCoors and Pabst Brewing settled a lawsuit Wednesday in which Pabst claimed the bigger brewer lied about its ability to continue brewing Pabst's beers to put that company out of business.

•"We have reached an amicable settlement in the case and are pleased to resolve all outstanding issues with Pabst," MillerCoors said in a statement. Settlement details were not disclosed.

•Since 1999, Chicago-based MillerCoors has made and shipped nearly all of Pabst's beers, which include Pabst Blue Ribbon, Old Milwaukee, Lone Star and Schlitz. Pabst's lawyers argued in the company's 2016 lawsuit that MillerCoors worried that Pabst would cut into its market share and devised a plan to stop brewing for the smaller competitor. MillerCoors' attorneys called Pabst's claim a conspiracy theory and said the company was simply deciding what makes economic sense.

•The 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 five-year extensions. The companies disagreed on how the extensions were to be negotiated: MillerCoors argued it had sole discretion to determine whether it can continue brewing for Pabst, whereas Pabst said the companies must work "in good faith" to find a solution if Pabst wanted to extend the agreement but MillerCoors lacked capacity.

•However, Pabst said internal documents from MillerCoors showed the company was worried about competition from Pabst and went as far as hiring a consultant to find a way to get out of the brewing agreement.

•Pabst needs 4 million to 4.5 million barrels brewed annually and claims MillerCoors is its only option. Pabst's lawsuit sought more than $400 million in damages and a court order for MillerCoors to honor its contract.

•MillerCoors and Anheuser-Busch, which have the biggest U.S. market share at 24.8 percent and 41.6 percent, respectively, have been losing business to smaller independent brewers, imports, and wine and spirits in recent years, according to the Brewers Association, a U.S.-based trade group. 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 association.


Trillium Labor Practices, Brewing Methods Questioned

Massachusetts craft beer maker Trillium Brewing Company’s labor practices and brewing methods are under scrutiny after accusations were lodged last week by a self-described former employee in an online beer forum.

According to the former employee, who used the name “Abagofit” in a Beer Advocate forum, Trillium required its retail employees to reapply for jobs that they already held prior to last month’s opening of the company’s new brewery, taproom and restaurant in Boston’s Fort Point neighborhood. The ex-worker wrote that the base compensation for employees who had worked for more than three years at the brewery was cut from $8 an hour to $5 an hour to “work the exact same job across the street.”

“We apologize that this has caused any of our employees, customers or friends to doubt, in any way, the integrity of Trillium or their ongoing support of us,” the company said. “We are fortunate that we’ve assembled such a talented team and remain committed to brewing exceptional beer that we can share with our family, friends, and customers.”

Since the issues were raised last week, customers have left scathing comments on social media posts advertising new release beers priced at as much as $22.20 a 4-pack. One commenter shared a photoshopped label of Trillium’s “Cutting Tiles” double IPA with the name changed to “Cutting Wages.”

Staff pay wasn’t the only issue raised in the Beer Advocate forum. The former employee also accused Trillium of cutting corners in the brewing process, including pouring tequila into kegs of a beer and promoting the beer as being barrel-aged to consumers. The commenter also claimed that management instructed workers to lie to customers about the beer’s origins and later tell consumers that the tequila flavor was “brewers magic.”

“They straight up dumped tequila into the kegs,” the commenter wrote. “I’m no lawyer, but I know that is illegal.”

Trillium has yet to address those allegations.

People Moves: Ex-New Belgium Brewmaster Joins Melvin’s Board

Melvin Brewing Adds Peter Bouckaert to Board
Former New Belgium brewmaster Peter Bouckaert has joined Wyoming-based Melvin Brewing’s board of directors, according to Forbes.

Bouckaert — who left New Belgium after more than two decades to join Purpose Brewing and Cellars last May — told the outlet that he approached Melvin founder Jeremy Tofte at the 2018 Great American Beer Festival to discuss the company’s growth and to learn about its response to allegations that an employee had groped a server at another brewery in Bellingham, Washington, earlier this year. That employee — who was suspended, sent to sexual harassment training and given drug addiction treatment — is no longer with the company.

Bouckaert’s addition to Melvin’s board follows the exit of sales director Ted Whitney, who departed the fast-growing Wyoming craft brewery for a similar sales role with Nug, a California-based cannabis company that sells edibles, flowers, concentrates, seeds and more.

As US Beer Shipments Decline, Off-Premise Sales Remain Flat

Shipments of domestically brewed beer are down about 2.9 percent, according to the Beer Institute, but year-to-date volume sales at off-premise retailers are still basically flat.

Dwindling sales of domestic premium beers drove much of the declines, as volume sales of those products were down 5 percent during the period.

Picking up some of that lost volume were imported beers.

Despite modest growth for the craft category as a whole, volume sales for some of the country’s largest craft breweries – including New Belgium, Gambrinus, Craft Brew Alliance and Deschutes – were all in decline during the period.

Nevertheless, other top-ranked craft beer companies are bucking category-wide trends. Founders
Brewing, Stone Brewing, Canarchy Craft Brewery Collective, Firestone Walker, Dogfish Head and New Glarus Brewing were all up double-digits.

Among craft beer styles, IPAs are still the largest product type in the category, with dollar sales up 12.8 percent.

Sales of craft golden ales and “other pale lagers” are also still on the rise – both categories were up 13.5 percent and 52.9 percent, albeit on smaller volume bases.

Stories courtesy of Brewbound (https://www.brewbound.com/) and CNBC (https://www.cnbc.com/

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Michael Potorti is the Host of Craft Beer Storm and Founder/Brewer at Beara Brewing Co. in Portsmouth, NH

Michael Potorti
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michael@bearairishbrew.com

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