Production has begun at City Brewing’s Irwindale, California-based facility, five months after the brewery’s acquisition from Pabst Brewing, the company announced today.
“We are thrilled today to commemorate the start of production at the iconic Irwindale Brew Yard,” City CEO Ross Sannes said in a press release. “With IBY now operational, City is in an even better position to serve the needs of our current and future customers as demand for their products accelerates.”
Both City, the country’s largest beverage alcohol co-packer, and 40-year-old Irwindale Brew Yard (IBY) have been subject to several financial transactions in recent years.
One year after announcing it would shift its production to City facilities, Pabst struck a deal to acquire the Irwindale Brew Yard from Molson Coors for $150 million in November 2020. That same month, rumors of City’s sale swirled following an anonymously sourced report in Bloomberg news, which then-CEO George Parke III shot down.
A murky picture became clearer in March 2021 with the announcement of City’s acquisition by a consortium of investors. That group includes Charlesbank Capital Partners, Oaktree Capital Management, City management, and Blue Ribbon Partners — “a new investment platform focused on the beer and beverage industry in the U.S.,” according to a press release about the deal. Pabst co-owner Eugene Kashper is the chair of Blue Ribbon Partners, which also owns Pabst Brewing Company and holds “a significant ownership interest in City Brewing,” according to the release.
City’s new ownership acquired IBY as part of a $630 million investment program announced in March that aims “to accelerate the company’s growth and fund its capacity expansion program to meet growing demand from key customers,” according to the release.
IBY has already launched one production line and will add another this month, City said in the release. A third will come online in January 2022, which will increase the facility’s capacity to 55 million case equivalents annually. Within the next five years, City expects capacity to reach 110 million case equivalents. City’s other three facilities — in Latrobe, Pennsylvania (formerly the Latrobe Brewing Company’s brewery); Memphis, Tennessee (a former Schlitz brewery); and LaCrosse, Wisconsin — produce about 130.8 million case equivalents combined.
City has hired 120 employees to staff IBY, which the company said will be “the largest full-service, low-alcohol beverage contract production facility in the western United States,” once it becomes fully operational. By the middle of next year, the brewery will employ 150 workers and eventually 400 as City follows its plans to build out the facility, a company spokesperson said.
“We have a talented team that is committed to maintaining and building on Irwindale Brew Yard’s storied brewing legacy while ensuring we are capitalizing on the tremendous market opportunity in the alcohol beverage marketplace through a tireless focus on quality,” Sannes said in the release.
The brewery’s output will include hard seltzers, flavored malt beverages, beer, craft beer, non-alcoholic beverages, and spirit-based, ready-to-drink offerings. IBY will offer automated variety pack capability, which is key for hard seltzer producers, as the majority of the segment’s dollar sales flow through variety packs.
IBY’s geographic location is a boon to City customers, including Boston Beer Company, which relies heavily on City facilities to produce Truly Hard Seltzer. Boston Beer founder and chairman Jim Koch explained that contract production at IBY and at Red Bull maker Rauch’s Arizona-based facility will help improve the company’s margins in the second half of the year during a conference call about the company’s Q2 earnings report last month.
“All of those freight costs will be reduced as we begin to supply the western half of the United States from western breweries,” Koch said.