Pabst Brewing is one of the few companies that could put Star Wars’ smoothest space traveler, a nationally acclaimed barbecue pitmaster and hundreds of beer wholesalers in the same room without the entire event feeling like an the illegitimate love child of Comic-Con and South by Southwest.
Maybe it helped that the scene was in Milwaukee: that’s where the country’s fifth largest beer supplier hosted, for the first time in about three decades, a rather lavish and impressive national distributor convention.
Rather than trap distributors in a hotel ballroom for all-day business planning sessions, brewery owner Eugene Kashper and his team created what they called the “Pabst experience,” featuring a variety of brand activation stations, live DJ sets, old school arcade games and a seemingly never-ending supply of the company’s many beer, cider and hard soda brands.
But it wasn’t all Colt 45s and Billy Dee Williams photo opportunities. Company executives also spent more than three hours with wholesalers explaining how Pabst has “transformed” since Kashper, who, along with private equity firm TSG Consumer Partners, purchased the brewery in late 2014 for a reported $700 million.
“We challenge you to think about other companies that have made history with great brands and great cultures that are built to last, “ said chief growth officer Rich Pascucci, who kicked off the meeting.
Following Pascucci’s rallying cry to wholesalers, a parade of Pabst executives took the stage to discuss the company’s performance in 2015 and its plans for 2016.
Here are the major takeaways:
- Pabst grew revenues by 21 percent in 2015, according to Nielsen, and year-to-date the company is up 29 percent — making it the fastest growing major supplier, Kashper said.
- Pabst gained a 0.3 share of beer’s total dollar sales in 2015 and has already gained 0.4 share through the first quarter of 2016, Kashper noted.
- In addition to Pabst, the company’s heritage brands like Lone Star, Olympia, Schlitz and Rainier, among others, made up 83 percent of the company’s total volume and 71 percent of its revenue in 2015.
- The major shift in company revenues is in its high-end brands like Not Your Father’s Root Beer, Ballantine IPA and Old Tanker Ale which are priced to retailers at $25 per case and above. Those made up about 25 percent of revenues in 2015. That’s a major shift from 2014, when 99 percent of the company’s business was concentrated in its classic brands, which are priced below $25 per case. By 2018, Kashper said he expects high end revenues to climb to 55 percent of Pabst’s overall business.
- Pabst hosted more than 800 events for its local legends brands in 2015, a figure that Pabst executives said will increase in 2016 as it continues to build out its field marketing teams — Pabst itself has 38 dedicated field marketing reps.
- Pabst has grown from a company of 250 people in 2015 to 440, and growing, in 2016
So what’s on tap for 2016 and beyond?
Kashper couched his long-term vision for Pabst within the framework of how he sees the entire U.S. beer landscape evolving over the next decade. If his crystal ball is to be trusted, the segment will be dominated by super premium, craft, cider, flavored malt beverages and import beers — categories that Kashper projects will make up 70 percent of sales by 2025.
“Our goal is to turn our brands into ones that have a strong equity,” he said. “Our vision really is to be a leading high-end supplier.”
Brand extensions, heritage labels
In its effort to reinvent Pabst Brewing Company as a leading high end supplier, the company plans to innovate by broadening its heritage brand portfolios to include new product introductions like the Old Tankard Ale and Ballantine IPA offerings that it debuted last year.
For the Pabst brand family, that means increased investment into the Old Tankard brand, the opening of a 4,000 barrel innovation facility in Milwaukee and the introduction of a new, above-premium Pabst Heritage lager made with flaked corn grits and a blend of Hallertau and Styrian Golding hops.
New product introductions are also on the way for some of Pabst’s “local legends,” including Rainier and Ballantine. Rainier Mountain Pale Ale, currently being produced at Craft Brew Alliance’s Redhook Brewery in Woodinville, Wash., will begin rolling out as early as next month, Kashper told Brewbound. Ballantine, meanwhile, will introduce a new sessionable “Brewers Gold” offering to “balance out” that brand family.
The company’s Stroh’s Bohemian brand will get a new proprietary glass bottle and rebranded vintage labels, while its Old Style brand will add an Oktoberfest seasonal variety.
And in 2017, Pabst said, it also plans to resurrect other once-famous brands such as Lucky Lager, Pearl Lager, Jax Beer and Falstaff Beer.
“It is pretty incredible, the opportunity we have overall with our local legends and where we want to bring things,” said chief marketing officer Dan McHugh.
Partnerships, M&A
In addition to being known for its “great people,” “iconic brands,” and “profitable growth,” Kashper stressed the importance of establishing partnerships, especially within craft, as a means of fueling long-term growth.
“We want to participate in the craft beer segment with the right partnerships,” he told the group. “We want to be known for profitable growth and we have to find ways where we have an advantage versus the big brewers in this country. We can focus on what people are most interested in.”
Since acquiring the company, Kashper has demonstrated a knack for getting deals done.
A sales and marketing arrangement with the virtually unknown Illinois-based Small Town Brewery — the company behind the popular Not Your Father’s Root Beer label — quickly developed into an equity position and more than $100 million in off-premise sales for the alcoholic root beer brand in 2016.
Last December, Pabst inked an agreement with Vermont Hard Cider Company, a subsidiary of C&C Group plc, to distribute, market and sell all of the company’s domestic brands (including Woodchuck, Gumption, Wyder’s and Hornsby’s). That deal also gave Pabst an option to purchase Vermont’s U.S. cider brands and related assets at a later date.
In March, Pabst expanded the partnership with C&C Group plc to distribute and sell Pabst brands throughout the UK and Ireland. The company also signed a brewing contract with Craft Brew Alliance in January and secured the exclusive U.S. distribution rights to popular Chinese import Tsingtao last May.
“We don’t have traditional craft beer in our portfolio and that is a big hole that we want to fill,” he later told Brewbound. “We can partner, on an arm’s length basis, with people of any size — even if they were a similar size to us.”
Walmart
Speaking of any size, if asking a pair of Walmart buyers to discuss “winning with Walmart,” didn’t illustrate just how committed Pabst is to growing sales at the world’s largest store, take comments from Brian Smith, Pabst’s vice president of national accounts, as proof of the company’s dedication to expanding its shelf presence with the multi-national retailer.
“When we go into joint business planning with the Walmart team, we take that really seriously,” he said. “It is a better, more comprehensive planning process than any other retailer we call on.”
Pabst’s sales at Walmart were up 70 percent last year, to more than $47 million, and the company is projecting another year of 50 percent growth in 2016.
Walmart buyers Erin McCracken and Brooke Alexander said the goal is to become “the” destination for beer. Total beer sales at the retailer were up 7 percent in 2015, the pair said, and adult beverage is “still one of the biggest opportunities for growth,” said McCracken.
The ask? Sell “local,” keep product in stock and “win the weekend” — Walmart’s most trafficked days of the week are Thursday through Monday.
“We want to make sure that we are establishing a collaborative relationship with everyone in this room,” McCracken said.