Pabst Brewing Company has struck yet another strategic partnership, this time with the struggling Vermont Hard Cider Company, a subsidiary of C&C Group plc.
The company today announced an exclusive, long-term agreement to distribute, market and sell all of Vermont Hard Cider’s domestic brands, including Woodchuck, Gumption, Wyder’s and Hornsby’s. Pabst will also gain access to Vermont’s portfolio of international cider brands from Ireland and England, including Magners and Blackthorn.
Specific financial terms of the transaction — which is slated to begin on March 1, 2016 — were not disclosed, but Pabst will have an option to acquire Vermont’s U.S. cider brands and related assets.
Vermont will retain full ownership of its U.S. cider brands and related assets, including the cidery in Middlebury, Vermont, and the distribution rights for the U.S. cider brands in all markets outside the U.S.
According to a press statement, Pabst’s “field sales and national accounts organizations will be responsible for sales of the Vermont portfolio to distributors and retailers in the U.S.”
Vermont’s sales and marketing organization, meanwhile, will “continue to operate as an independent business unit focused on marketing activation and driving the performance of the Vermont brands.”
Reached by phone, Terry Hopper, Vermont’s vice president of sales, said that in exchange for access to Pabst’s sales and marketing resources, the brewer will share profits.
“We’re a skeleton crew and everyone is work their tail ends off,” he said. “We just can’t get everywhere. Some of my guys are covering two and three states and 25 wholesalers. It is difficult to make an impact. By combining organizations, it raises our awareness at wholesale and retail.”
Hopper said Vermont already shares a number of distributors with Pabst, adding that potential distributor changes are still being discussed.
“We will look at every market individually and pick the right markets for the brands,” he said.
The decision to partner with Pabst comes more than three years after Irish Cider company C&C Group acquired the Vermont-based cider maker for $305 million. At the time, Woodchuck was the number one cider brand in the country and sales were climbing, up 24 percent.
But introductions from Boston Beer Company, which makes the Angry Orchard line of hard cider, as well as large beer companies like Anheuser-Busch InBev (Johnny Appleseed) and MillerCoors (Smith & Forge), sent Woodchuck sales into a tailspin – down as much as 29 percent midway through 2014.
According to market research firm IRI, year-to-date U.S. sales for C&C Group in multi-outlet and convenience channels are down more than 19 percent through November 29. And the company’s largest volume brand, Woodchuck, doesn’t even crack IRI’s list of top 100 beer, cider and flavored malt beverage brands.
That’s where Pabst, which inked a similar agreement with Small Town Brewery/Not Your Father’s Root Beer (NYFRB) six months ago, could help Vermont turn it around.
“To add this muscle and bolt on to their platforms, it gives us renewed energy and excitement for bringing the brands back to where we feel they need to be,” Hopper told Brewbound. “I’m excited about bringing these two iconic companies together. I have a lot of respect for those guys and what they have been able to do with Pabst, Not Your Father’s and their iconic legacy brands.”
Since taking over the sales and marketing efforts for NYFRB Pabst has generated more than $90 million in sales, according to IRI, and climbed to no. 3 on the research firm’s list of top “craft brands.”
“This partnership is another key milestone as we look to collaborate with independent brand owners to build a best-in-class portfolio of craft and import brands,” Eugene Kashper, the chairman and CEO of Pabst said in a statement. “We are thrilled to be working with the team in Vermont and I am confident that together we will be able to return these rich heritage brands to growth.”
In June, Kashper and other Pabst executives exercised an option to acquire an undisclosed stake in Small Town and the NYFRB brand. A similar deal could be the company’s long-term goal, said Hopper.
“If it all works and Pabst does what we hope they can do, it would be in their best interest to buy it,” he said, when asked if C&C Group had considered selling off the U.S. division.
Pabst, the country’s largest American-owned brewery, will sell about 5.5 million barrels of beer in the U.S. in 2015, it said.