A consortium of investors has reached a deal to acquire 100% ownership of City Brewing, the largest beverage alcohol co-packer in the U.S., and also acquire the former Molson Coors production brewery in Irwindale, California, from Pabst Brewing Company.
The investor group includes Charlesbank Capital Partners, Oaktree Capital Management, Blue Ribbon Partners and City management. Combined, their equity investment will take 100% ownership of City in a transaction expected to close in April 2021.
Among those investors is Eugene Kashper, who along with private equity firm TSG Consumer Partners acquired Pabst in 2014. Kashper is the chair of Blue Ribbon Partners, which is described as “a new investment platform focused on the beer and beverage industry in the U.S.”
Blue Ribbon “owns Pabst Brewing Company and holds a significant ownership interest in City Brewing,” according to the release. In November 2019, Pabst announced an agreement to transfer the majority of its production to City’s facilities by 2024.
UPDATE (March 17): Brewbound has confirmed that TSG Consumer Partners divested its stake in Pabst. Beer Marketer’s Insights first reported that Oaktree bought out the private equity firm’s stake, but it’s still an owner of the brewery.
Once the deal is completed, City’s chief operating officer Ross Sannes will take over as CEO for George Parke III, who is retiring. Former Royal Unibrew CEO Hans Savonije has also been appointed chairman of City’s board of directors. The company is also promoting Ryan Nelson to EVP, while Dave Poremba will remain CFO.
Rumors of a sale of City began circulating in late November 2020, including a Bloomberg News report, which Parke shot down, saying “there is no truth to the article.”
The new City also announced a $630 million investment program that will include the acquisition of the Irwindale brewery from Pabst Brewing Company, which purchased the 40-year-old facility for $150 million from Molson Coors in November 2020.
City plans to resume production at the “Irwindale Brew Yard” in the third quarter of 2021. The company said the facility will be “the largest full-service, low-alcohol beverage contract production facility in the western United States” with a capacity of 55 million cases annually. The company plans to increase production to 110 million cases annually by 2024.
“Strategically located on the West Coast, Irwindale Brew Yard perfectly rounds out our national footprint,” Sannes said in the release. “This investment will allow us to enhance our brewing, processing and production capabilities, positioning us for future growth while enabling us to better serve our valued customers. We are an essential component of our customers’ supply chains and we do not take that for granted.”
City plans to hire more than 150 employees over the next year.
The company will also add processing and packaging capabilities to the brewery, including automated variety pack capabilities, to produce hard seltzers, FMBs, beer, non-alcoholic beverages and ready-to-drink spirits-based offerings.
The Irwindale Brew Yard will join City’s operations in La Crosse, Wisconsin; Latrobe, Pennsylvania, previously the Rolling Rock brewery; and Memphis, Tennessee, a former Schlitz brewery. The three plants combined can package 130 million case equivalents per year, with packaging capabilities for cans, bottles, kegs, pouches and variety packs, according to the company’s website.
In La Crosse, City’s twin brewhouses can produce 1,100-barrel batches 16 times per day, bringing its annual capacity to 7 million barrels; its blending room can produce batches of 24,800 gallons.
Across its facilities, City employs more than 1,800 workers.
One of City’s higher profile clients is the Boston Beer Company, which invested in a new canning line at the Memphis facility in May 2020 to prepare for increased sales of Truly Hard Seltzer in the summer months.