Pabst Blue Ribbon – Q3 2021 Update & On- & Off-
premise Consumption Trends – 28 July 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Colin Baker (CB)
Former National Account Manager at Pabst Brewing Co LLC
Agenda:
1. Pabst Blue Ribbon's product line, portfolio diversification and ability to capitalise on new trends
2. Health-conscious consumer shifts, focusing on better-for-you products and impacts on beer
3. Distribution trends throughout big retailers, highlighting Walmart’s promotional support
4. Innovation into cannabis products, new flavours and hard seltzers
Contents
Q: Can you outline how innovation and the competitive landscape have evolved during your time in the beer
and alcoholic beverage industry?
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Q: How important is location and fragmentation across the US? Are the big players more focused on certain
geographic areas, which provides opportunities for small players such as Pabst Blue Ribbon to enter local
markets?
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Q: How would you split the market between big players such as MillerCoors vs regional, more local
breweries?
Q: How do you think coronavirus impacted the brewery industry and beer in general? Could you pinpoint
the winners and losers, players who fared well and those that were able to break even?
Q: Why do you think Pabst was so oversubscribed to on-premise?
Q: What do you think are Pabst’s strengths or weaknesses across its brand portfolio? What are your overall
thoughts on how competitive or successful the company’s big push into whiskey is?
Q: How would you assess Pabst’s ability to jump onto the next new trend, such as hard seltzers or – as you
suggested – canned cocktails?
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Q: Could you discuss Pabst’s disadvantage from not being able to compete at a larger scale?
Q: Can you outline Pabst’s strategy of playing at a more premium level? What is needed for the company to
get to that level and be able to raise pricing? Is there still a competitive grab at market share, as you
suggested?
Q: How well does Pabst keep up with the younger generation? You said that many people consider it a
grandfather’s beer, given it’s a legacy brand. What branding changes could attract new consumers?
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Q: Could you describe Pabst’s channel strategy within grocery retailers? How does the company consider its
channel strategy domestically or regionally?
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Q: You mentioned that Pabst contracts a lot of its production. What is the possible rationale behind that
operating model? What are the potential long-term risks to the business from its close relationship with
MillerCoors?
Q: How should we consider beer on a macro, long-term timeline? Growth is stagnant over the long term,
with many people moving away from the category as consumers become more health conscious. What are
the key health trends and how they have impacted the category?
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Q: What can you tell us about other types of innovations in the market? We discussed canned cocktails, but
cannabis and CBD seem to be in every other area at a state level. Are you monitoring any other innovations? 9
Q: What freight costs, pricing and inflation do you notice in the industry overall? Is it still difficult to move
products around or could we start to identify some relief on inflation pressures?
Q: Have you reached a point where the glass shortage stops you from meeting demand?
Q: Why do you think Pabst is proud to avoid product marketing? What is the missed opportunity for the
company to market more aggressively? You said we shouldn’t expect a commercial.
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Q: Could you elaborate on Walmart’s support in promoting the Pabst brand, including the cost of doing
business with such a strong player? In other industries, Walmart seems to exert pressure rather than helping
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brands to push their products.
Q: Could you outline Pabst’s opportunities with spirits throughout the pandemic, considering the struggles
that some independent smaller breweries faced because they also sell beer towards on-premise? How did
being better-capitalised and with a better-diversified product mix enable Pabst to take over another player or
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expand market share?
Q: Do you expect any other budget beer companies to gain a stronghold in the market or move up in this
share-for-share game?
Q: Could you elaborate on the success of Pabst’s coffee-flavoured beer?
Q: Is there anything that you think is commonly overlooked in the brewing industry or around the next big
thing, such as canned cocktails? What should investors pay attention to across H2 2021?
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Pabst Blue Ribbon – Q3 2021 Update & On- & Off-
premise Consumption Trends
Transcription begins at 00:00:06 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Pabst Blue Ribbon – Q3 2021 Update & On- & Off-
premise Consumption Trends. I am Nyree Hinton, and I will be facilitating today’s Interview with Mr Colin
Baker, former National Account Manager at Pabst Brewing LLC.
Colin, before we get started with today’s Interview, please state I agree or I disagree to the following
statement: You understand the definition of material non-public information and agree not to disclose any
such information, or any other information which is confidential, during this Interview.
CB: I agree.
NH: Thank you, Colin. Could you start with an overview of your background?
CB: My name is Colin Baker. I graduated from the University of Arkansas, and when I graduated with an
advertising and public relations degree, I went into a field that had nothing to do with that at all, and I ended
up working for Walmart, as a lot of people do in that area that need to pay college bills. I went there and I
worked on cigarettes and tobacco, I worked with the buying. I worked in the cigarettes and tobacco buying
department, and I did that for a while until my company that I really worked for, was McLane, which was sold
away from Walmart, and at that point, I was labelled a misplaced employee, so then I ventured out into the
vendor community. I worked in category, customer marketing, I worked on long-term business insights roles,
bounced around to a few Fortune 100 companies, PepsiCo, Frito-Lay specifically. I was with Wrigley. I helped
to open up an office for the Wrigley company as they entered northwest Arkansas, which they were eventually
sold to the Mars family.
I worked at the Tyson home office in long-term business insights projects, and then I had the opportunity to
go work for Pabst in the adult beverage industry, which I had not had at the time. Came over as a Category
Manager, then I was somewhat forced into sales, but then I found out that I was actually pretty good at it from
my data background. Then I did that for, total stint at Pabst was a little under five years, and then I moved on
to become a Sales Director for a wine company, and I did that for a year or so, until COVID hit, and then for
the last year, I have been running a liquor distributor, small distributor and liquor store. There are eight liquor
stores under this one banner and they have a small distribution business. I’ve been running that for about 80
people for about a year now.
[00:02:58]
Q: Can you outline how innovation and the competitive landscape have evolved during your time in the beer
and alcoholic beverage industry?
CB: Yes, for beer specifically there are always the big boys. It’s Constellation, AB, MillerCoors and a few others
that bounce around, but essentially they share the market share of the shelf and they trade real estate. Every
few years, it cycles back and forth. It is competitive in that standpoint, but then you have a group underneath
them that Pabst would fall in, the budget tier, and Pabst has always tried to elevate themselves to the top of the
budget tier. They always thought of themselves as that middle ground between those big boys and the budget
ones, and I would say that a lot of the numbers say that. I think Pabst means different things to different
people in different parts of the country. I think in the Pac Northwest, it’s your hipster beer that’s sold for USD
Private and confidential 3
1 within the bars and six-packs are USD 4.99 in a convenience store, and then I think in the south, it’s your
grandfather’s beer, and a lot of people continue to drink it. Pabst does have its special little place. I do think
there are times whenever the company has a little bit of an identity crisis, but, for the most part, they know
what they are.
As far as the innovation is concerned, I would say all of the innovation is moving to what I’ve heard a few
people refer to as beyond beer, so anything, we’re talking any seltzer. It started with malt-based seltzers like
Mike’s Hard Lemonade and those types, and then everyone started coming in with the Trulys and the White
Claws, were the first two big ones. Everyone’s followed suit and had different versions of it and tried to crack
the code and figure out where they fit in within that world. Pabst, before I left, they came out with a harder
seltzer that was, I want to say 10% ABV, where most of them are around 4.5-5%. I don’t know if that sold well.
I know I’ve seen some singles in convenience stores, so it’s out there still. Maybe they found their little area
within the seltzer world, but everyone’s, their innovation, they’re having to take away from their, quote,
unquote, yellow beer to go ahead and bring in innovation within the real estate they already own, and then,
every once in a while, like I said earlier, the big boys change space over time.
[00:05:45]
Q: How important is location and fragmentation across the US? Are the big players more focused on certain
geographic areas, which provides opportunities for small players such as Pabst Blue Ribbon to enter local
markets?
CB: I think what you’re asking is, is there a regional play, because Pabst is really good at that. They have a
local legends portfolio, and if you’re familiar with Pabst, and maybe not, you’re just familiar with your
grandfather’s beers, I would say their national ones are obviously Pabst Blue Ribbon is the flagship brand and
then the other national one is Old Milwaukee, and it, throughout time, does better than other times. I know
Old Milwaukee non-alcoholic does phenomenal, funny enough, across the country, but Old Milwaukee is a
national brand. Then you get into the regional players. You get into what they call local legends. In the Pac
Northwest, you have Rainier and Olympia, which are two very strong brands in that footprint. Lone Star, out
of Texas, and I think maybe it’s starting to creep a little bit into Oklahoma and Arkansas, but, for the most
part, they try to keep a fence around Texas. I never really understood that strategy, because if they were going
to take another one national, Lone Star would be the one. Then let’s see what else they have. In Hawaii, at one
point, they had Primo. I don’t know if that’s still around.
What they’re doing with these local legends is they’re innovating on those. Originally, it was just always Lone
Star and Lone Star Light. Then they came out with a lower ABV because all the data showed that millennials
want to stay in control. They want to be at the party and they want to be present, and they don’t want to lose
control, so they prefer a lower ABV. I don’t think that went very well. Maybe it did. I haven’t seen it, but I’ve
seen a few of the other innovations that Lone Star has come out with. Some of them actually look pretty cool,
and now they’re starting to innovate to the beyond beer or outside of it. They’re doing seltzers, and I know
Rainier has a seltzer that’s on fire, I’ve been told, in the Pac Northwest, but I think a lot of people in the Pac
Northwest are very brand loyal to that local legend. They even have a gin that they released after I left that I’ve
been told is doing well. Olympia, I don’t know if they’ve innovated on Olympia, other than the original
Olympia beer, but I do know they came out with a, what they called artisan vodka that supposedly is doing
very well. They’re innovating not only in beyond beer but now starting to move into spirits from their local
legends to regain some of that regional foothold that the big boys don’t have time or can’t attack like they can.
[00:08:57]
Q: How would you split the market between big players such as MillerCoors vs regional, more local breweries?
CB: I would say between, I don’t know, I can’t give you exact numbers because it’s been a little bit, but I would
say, and based on my stores that I buy for now, 70% are going to make up Anheuser-Busch and MillerCoors,
Private and confidential 4
and Constellation probably in there as well. I would say, when it’s all said and done, you put Constellation
Brands, you put MillerCoors, you put AB in there, and you’ve got about, I don’t know, 15% maybe, for the rest
of the industry to fight over. I know Pabst hovers between 1%- and a 2%-share, and when I was selling to
Walmart, depending on the time of year, we were the number, between number six, fifth in a good year, but
sixth- to eighth-ranked beer supplier at the time. We were always trying to fight for that last, the beginning.
How they position themselves, how they see themselves as within the line when you’re looking at premium
beer down to budget beer, that’s how they perform as well. They’re in that little mid-range area.
[00:10:30]
Q: How do you think coronavirus impacted the brewery industry and beer in general? Could you pinpoint the
winners and losers, players who fared well and those that were able to break even?
CB: I think COVID probably hurt tremendously a company, I know it hurt Pabst in the sense that they were
over-SKU’d for on-premise. We had big teams selling to big customers on on-premise, but on-premise, when
they were selling into the clubs and bars, and restaurants, for that matter, Chili’s, Applebee’s, Topgolf, that was
a big portion of our business, probably too much, and I think that was hit very hard during COVID. I know
that a few of my friends had to be furloughed, and a lot of them came back, and a few of them moved onto
other companies, and I had a few other friends that worked within the liquor industry that were on-premise
only and they were also furloughed. I think that hit it pretty hard. I think I’ve heard we had aluminium tariffs,
we had all kinds of other things that slowed down production. I know, within my current job, I could not get
enough Modelo and any of the cervezas, and a lot of the reason they were saying for that was initially COVID
but then glass shortages. I definitely think there were production issues all around. I also think that
consumption was up so much, that caught everybody by surprise. Even though we knew it would go up, I don’t
think we knew it’d go up as much as it did. I think the factor of those two things slowed production down, and
then I think that a lot of other companies were forced to innovate. I think that people saw the way it was
moving to the other products that they had capabilities to produce, and they dumped a lot of their money into
that innovation. You see it on the shelf now when you go look at those seltzers out there.
[00:12:46]
Q: Why do you think Pabst was so oversubscribed to on-premise?
CB: I think that the product itself lends itself to it. If you have ever been to a grungy bar where you can get a
USD 0.99 PBR, they fly through those. You don’t know it. It’s amazing how many of those they sell. Then you
can go to a Chili’s, you can go to a Topgolf and you can get a tallboy PBR, a 24-ounce, or anything like that, for
USD 1.99-2.99 or something like that. On-premise seems to really be in love with the PBR brand specifically
and it’s always done well. When I say they’re probably a little too over-SKU’d in there, I mean you take want
you can get and you run with it. I don’t know how they would have changed it. It was a success, and I think it
hit them pretty hard when that went away.
[00:13:42]
Q: What do you think are Pabst’s strengths or weaknesses across its brand portfolio? What are your overall
thoughts on how competitive or successful the company’s big push into whiskey is?
CB: I would say when I was with Pabst, sometimes they’d get a little ahead of themselves. Definitely, with
PBR, I think that it’s a strong brand, it’s been around forever. It’s the oldest, right now, American-owned
brewery, if you want to call it that, because they contract brew, but oldest American brand, American-owned.
It is an old, old brand, and when people see it, I don’t think that they flinch at it like they would a lot of the
other, quote, unquote, premium, or budget-brand beers. I think it does have a little bit of, it has staying power,
Private and confidential 5
but I think sometimes they try to premiumise it. I know that was a big plan during one of the regimes that was
were. That changes any time someone comes down and starts running the company a little bit differently.
They bring their guys in, they bring their ideas in. I know they’re going through a transition right now, so I
don’t know what the new idea or the new regime, I don’t know what their strategy is going to be, but the last
one, I know they definitely wanted to up the price. They wanted to bring it up to those Bud Lights, Budweisers.
They wanted to get into that premium price range and, to me, I thought that was like, “Why don’t you do what
you do well and concentrate on that?” I think they had aspirations to make it something that it’s going to be
hard to become. That’s my personal opinion.
I think if they hold back Lone Star, the local legends are great. All the brands do really well in their regions, but
use it as a test kitchen to define that next product that you could launch nationally. Lone Star could go national
tomorrow if they wanted to. For some reason, they don’t want to. That’s fine then. That’s their strategy. I think
that they’re doing a good job with their innovation. They did what everyone else did. They followed the
formula, release a seltzer, then release a seltzer with a little bit more alcohol, and I think the next trend is
going to definitely be a seltzer, but instead of malt-based like all the other ones, I would say cocktail-based. A
canned cocktail, in essence, I think is going to be the next big trend for everybody. You’re going to start seeing
it. I’m already seeing it from some brands. Boulevard, I think, partnered with a vodka company to do one
that’s really good. That’s going to be the next big thing and that’s probably what they’re going to do now.
I don’t know how well their spirits are doing. I’ve been told that the two in the Pac Northwest, Olympia vodka
and the Rainier gin, I’ve been told that it’s doing really well, but I think you slide those two brands on anything
up there, they’re going to do great. I know at one point, there was a plan to do a Lone Star tequila. I had not
heard anything about that, so that might have gone away, and the white whiskey, I think the whiskey could
become something one day. I think they probably rushed that to market. There’s not a big, I would say, crowd
for white whiskey. Whiskey is so fragmented already, there’s no one out there looking for a whiskey that hasn’t
been aged yet, from what I can tell. I don’t expect that to be a big hit, but age it, five years from now, four years
from now, they could have a big hit.
[00:17:29]
Q: How would you assess Pabst’s ability to jump onto the next new trend, such as hard seltzers or – as you
suggested – canned cocktails?
CB: I would say the company, I was there from right before they bought Not Your Father’s Root Beer, and it
shot up like nothing I’ve ever seen. I’ve never seen something sell like it, and I think that they maybe learned
their lesson with that one. In my opinion, I think that brand was ruined just because it was so hot, they
continued to release product after product, line extension, one after another, and none of them were as good
as the original. I think that that killed the brand. I think they’ve learned their lesson, and the new stuff that
they’re coming out with, because what I was saying, excuse me, hold on one second, what I was saying is at
that time, we were a 200-people company, I think, 200 people within the company, and we shot up to 600
people. Then the brand plateaued off and then we had to start laying people off. I think it settled in probably
around 300 people, but, all in all, it is a super-small company and pretty agile. Based on my other companies,
the big, big companies I’ve worked for, you have to go to a committee to get anything changed at all, whereas
Pabst, there are just a few people you really have to bring in the loop and you can do it or try it. That’s led to
some of their success, but it’s also led to some of their misses. As far as having an idea and putting it into
production pretty quickly, I’d say that’s a strength of theirs.
[00:19:27]
Q: Could you discuss Pabst’s disadvantage from not being able to compete at a larger scale?
CB: I’m going to talk out of both sides of my mouth here, because I just said they’re agile because of the
amount of people that they have to take through committee and get it done. I would say the downside to them
Private and confidential 6
is that they contract brew. Just like any business, someone’s going to go in and brew the beer that they need
and want for their company, and then after that’s finished, then they’ll take a look at their contracts and
everybody else’s beer they have to produce. You’re always going to be a little bit second-fiddle. When you have
an innovation, a hot product, it’s weird because you want to put it in production, you want to put it in line, you
want to put it in the queue, you want to try it out, but I know in the past there have been situations where an
idea that was on one of the innovations ended up with another company, just because it’s out there for
everybody to see. I think that maybe the lesson has been learnt there as well, and I think that I don’t know if
they went through with, I know they had a brewery in Milwaukee and I don’t know if they’re going to turn that
into a test kitchen. They moved everybody down to San Antonio. I don’t know what they have going on down
there, but I would imagine that if they needed to get an innovation, something turned around pretty quick,
that they could do it themselves, and then once it’s sold in, start mass-producing it. It is a trouble to have
someone else produce it for you, but that’s a little (audio distorts 21.10) and a lot of other people are too.
[00:21:17]
Q: Can you outline Pabst’s strategy of playing at a more premium level? What is needed for the company to get
to that level and be able to raise pricing? Is there still a competitive grab at market share, as you suggested?
CB: I think the goal would be to be grouped within IRI or Nielsen or whatever syndicated data you’re looking
at. They group them. They group them in budget, and they group them in 1,000 different ways, but the way
that you go from budget to premium is definitely price. There’s no other way to be priced in. Going from, like I
said, we’re at the top price tier, I say we’re like I’m still there, they are at the top price tier of the budget, so
they’re right there, they’re between it already. They’re halfway there and they want to jump up to that, but I
would say the judge on success or failure on that is getting to that price point, and when you get to that price
point, what do you do? Does that kill your success? Where do you get that from? Do the people come with you?
Do you take that out of the market share? Boy, I don’t think they know that. I think that they’re slowly trying
to creep their way up to that. Can they do it? Yes. I don’t think it’s an overnight thing as much as they would
like it to be, but I think they’re going to have to slowly increase price over the next few years. Maybe one day
they’ll wake up and they’ll be within that same price group, but that’s essentially what they want. That’s what
they need if they’re going to be called a premium beer.
[00:23:13]
Q: How well does Pabst keep up with the younger generation? You said that many people consider it a
grandfather’s beer, given it’s a legacy brand. What branding changes could attract new consumers?
CB: The last guy that was running the company that is no longer there, he was, I would say, overly focused on
millennials. I think he was obsessed with it, and he’s a marketing guy, so he’s looking at the numbers and he
knows that’s where it’s going, and they’re going to be the next group to have money. I wouldn’t say he was
wrong, but yes, he leaned heavily into alternative lifestyle, like punk bands and skateboarders and sometimes
even surfer and extreme sport-type stuff, but yes, they always sponsor a lot of outdoor activities, whether it’s
the finish line at a race or any of that stuff. I think that they know how they want to market to it, but you’re not
going to see any commercials. They’re not going to put a commercial up there. That’s one of the things that
they’re all very proud of, and I never really understood that either, but there won’t be any commercials. You’re
going to get advertising on, when I was buying advertising for things, we were doing it at Walmart, most of it
was digital. We moved a lot of it to digital, so a lot less in-store branding, but then when we did start coming
back with some of our in-store shelf talkers and things like that, it was all QR-coded to take you to here, to take
you to there, to take you to a coupon. We were doing geotagging with some of our advertising too. It was
getting pretty in-depth, I would say, for the Walmart team specifically, and that was not company-wide, and I
think Walmart, a lot of the vendors working with Walmart had more capabilities than, say, the Kroger team or
whatever. I think they have a pretty good grip on advertising to the next generation, from what I can tell. I
would say they probably ignore the older generation.
Private and confidential 7
[00:25:35]
Q: Could you describe Pabst’s channel strategy within grocery retailers? How does the company consider its
channel strategy domestically or regionally?
CB: I think that they’re trying to be, I can speak to Walmart. I worked on the Walmart team, I worked on the
Sam’s team, I did all the Costco work and I was close with the guys that ran Kroger and all the others, so I have
a little bit of knowledge about it. I think that they’ve always, always, always had good relationships. I think the
guy that was running the sales team at the time, he really understood the importance of relationships. We had
a lot of top-to-tops, we had a lot of meetings, I would say, that we did not deserve when you take a look at the
fact that we were a 1.5%-, a 2%- share at Walmart, but we’re getting full-day innovation summits with their
GMM and their DMM. Just crazy amount of people would spend six hours or half a day, or we’d come in with
innovation and we’d show them our ideas of what we want to come out with, and we’d get their thoughts on it,
so they’d get a little excited about it, and it’d be part of their decision as well. We knew pretty much how to sell.
Sometimes they’d commit, sometimes they wouldn’t, but I think that the guy that, when I was there, and he’s
still running it, the sales side of the organisation, I think he really understands how and what to do with these
guys. They’re always going to be strong for what they are. They’re always going to get the meetings they don’t
deserve. They’re always going to get more time than they deserve, they’re going to be a 1%- to 2%- share at
most places, and they’re going to have strong relationships with the buying team because they’re not one of the
top five that are just on their back all day. Pabst is a welcome relief, I think sometimes, from dealing with the
big guys. They always have a good relationship.
[00:27:43]
Q: You mentioned that Pabst contracts a lot of its production. What is the possible rationale behind that
operating model? What are the potential long-term risks to the business from its close relationship with
MillerCoors?
CB: I would say I know that I’m not fully aware, so I’m halfway speaking about this as knowledge. I’d say it’s
probably something to look into. I know that Eugene Kashper, who owns Pabst, I’ve been told that he brought
a brewery. I don’t know that they even know what they’re going to do with it, and I don’t know where it is. I
think it might be maybe Irwindale, I have no idea where it is. Maybe California. I have no idea which one he
bought, to be honest with you, but we’re told he bought a brewery and they just have no idea what they’re
going to do with it. Now, does that mean they contract brew with his brewery? I don’t know exactly what it
means and I don’t think they know either. I do know for the longest time they’ve been trying to buy a brewery
because the reason of that model is because it’s expensive to buy a brewery. I don’t think you’re going to see a
lot of national companies in the position that Pabst is in being able to buy a brewery, but Eugene, he did it, and
I think that that’s going to probably set them up for the future. I would say if that is true, if he did buy one,
then they’re set up for the future. I think that they’ll probably finish up their contract. I’m sure that’s what a lot
of what has to do with it too. They probably have to go and finish up their contract with MillerCoors. There
was just a big hubbub about that a few years ago, and they settled that at the last hour, that didn’t result in a
lawsuit. I think whatever is contracted out will probably be there, they’ll figure a way out of it. If he did buy a
brewery, if that is the case, then Pabst is set up for a while.
[00:29:57]
Q: How should we consider beer on a macro, long-term timeline? Growth is stagnant over the long term, with
many people moving away from the category as consumers become more health conscious. What are the key
health trends and how they have impacted the category?
Private and confidential 8
CB: I think a lot of people are just getting tired, are just tired of beer in general. I think it will eventually
continue. Right now, Ultra is just on fire, continues to be on fire because they market themselves as a beer you
drink after you jog. There will always be that aspect and they’re going to continue to do their thing and they’re
going to be great at it. I think overall, macro, I think that the beer industry is going to continue to dwindle. I
know that, within Pabst, one of their goals currently is to be the last man standing of the budget beer group,
where they are. I think a lot of companies are preparing for brands to go away, and I think you’ll see it, other
brands go away, because it’s just like anything else, you have expensive real estate that you are renting from
the companies, from the stores and what do you want to put there? You want to put something that’s going to
sit there for six months or you want something you’re going to change six times a day, that you’ll have to refill
six times a day? They’re going to continue to move in that fashion, whatever sales they’re going to continue to
do, but they’re going to have to get rid of a ton of brands. I know that’s Pabst’s strategy, is just hold the fort
and just be the last man standing because you’re about to see a ton of them just fall off.
NH: Could you discuss the competition among big players such as Miller and Anheuser? As you noted, Pabst
is always ready to take share. How would you describe competition from some of the more local players? What
successes or trends have played out at the smaller level?
CB: I just think, like I was talking about how Boulevard partnered with the vodka company, I think you’re
going to see a ton of crossovers, I think you’re going to see a ton of beer companies realise they can’t do it
themselves and partner with some of these spirit companies. That’s a regional drink. You’re not going to get
that everywhere, you’re going to get that in the Midwest. They’re out of Kansas City. You’re going to have a ton
of those around. I’ve been told that Coors is about to pull the plug on their seltzer already, which is the worst
of the three. I think Bud Light does pretty good, their seltzer, but they’re just rotating flavour after flavour
after flavour. They’re going to kill that one too. At the end of the day, it’ll settle out that the big boys will have
an offering but it won’t be anything. There will always be the leaders are Truly and White Claw and after that
it’s going to be a bunch of canned cocktails. That’s the foreseeable future from what I see and from what I’m
being shown from all the vendors in my current job and what I’ve been purchasing for my organisation. I
would say that yes, that’s where it’s going to end up. The big guys that are dipping their toes in it, and they
were late to the game and they don’t really have anything. I don’t know anyone that drinks Coors Seltzer, and I
don’t think that we sell a ton of it in our stores. Yes, they were really late, and I don’t know how willing they are
to keep that or if they’re going to flip that over and do some kind of new innovation, but they’re not doing well
and it’s going to end up with a lot of the locals.
[00:34:22]
Q: What can you tell us about other types of innovations in the market? We discussed canned cocktails, but
cannabis and CBD seem to be in every other area at a state level. Are you monitoring any other innovations?
CB: Yes, for sure. Right now, we’re not buying any CBD or cannabis. I’ve never even been asked. We’ve even
been pitched microdoses of THC that apparently are legal in Arkansas, where I live, and we just said, “You
know what? We’ll wait a little bit longer.” In the green states, as they call them, they’re all starting to launch
seltzers and they’re going through distributors. I don’t necessarily know how that’s set up, if it has to go
through a distributor, does the distributor have to have some kind of… I’m sure I probably need to look into
that a little bit further, but I know that Pabst released a High Seltzer that was a 5-milligram seltzer, which,
honestly, sounds pretty small in THC, because if you go, if you’re getting gummy or anything like that from
any of those places in Colorado or California, they’re all standard, they come out at 10% milligrams [sic]. Pabst
went back and they released a higher seltzer, and it’s a 10 milligram. I was told from someone, one of our
buddies out there, that they’re having a hard time keeping it in stock. I know Seth Rogen released, and I want
to say he partnered with Constellation for the US, but in Canada first, he released a pot brand called
Houseplant, but then he did it as a seltzer as well. I think those just hit California and I think they’re doing
pretty good too.
Yes, everyone, depending on how it’s legalised, if it’s recreational, if it goes recreational, then a distributor will
do whatever it takes to get that government paper they have to get to distribute it and then they’ll send it to
dispensaries. I don’t know if they’ll go liquor stores, I don’t know how that’s going to work out, but anywhere
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there’s a dispensary recreationally, I think you will start to see everyone have at least a CBD, but probably a
THC as well, seltzer. It’s inevitable.
[00:37:13]
Q: What freight costs, pricing and inflation do you notice in the industry overall? Is it still difficult to move
products around or could we start to identify some relief on inflation pressures?
CB: No, none. No one’s going backwards. Price increases come weekly at my current job, and, for the most
part, I’m passing it on to the consumer and, for the most part, I’m not seeing any pushback whatsoever.
NH: Where do you notice the most pressure around pricing or cost?
CB: At first, it was glass shortage, which that’s just everyone’s go-to, so that’s just to buy more time. Then now
a lot of it is trucking, a lot of it is actual transportation of the product. I do believe that because I have buddy
that runs a local distributor and I hear the things he’s having to go to just to get a truck diverted. Because he
lives in Walmart country and he has a lot of Walmart ties, so sometimes he has to pull Walmart rank and say,
“We need to get it here,” but I think that the distributors are fighting for trucks. I think a lot of it’s hiring. I’m
having a hard time hiring, I can’t hire anybody right now. McDonald’s is giving bonuses to people, sign-on
bonuses. I think it’s a combination of all that. I don’t know how much the glass shortage is actually… That’s
everyone’s go-to, but I think a lot of it’s just not having enough people.
[00:40:52]
Q: Have you reached a point where the glass shortage stops you from meeting demand?
CB: Yes, without a doubt. I bought 50 pallets of Coronas and Modelos a month or two ago. It was going to last
me, from our projections, four months, and we’re out. I bought everything they had and now I can’t get any
more. Yes, it’s not slowing down at all. Obviously, we will have classes and books written on how COVID has
changed people’s buying habits because it is not going back to normal, it’s changed completely, and people are
pantry stocking and we’re consuming more, which is scary, but people are buying differently. It has not slowed
down from COVID, it’s just continued to tick up every month.
[00:42:00]
Q: Why do you think Pabst is proud to avoid product marketing? What is the missed opportunity for the
company to market more aggressively? You said we shouldn’t expect a commercial.
CB: Yes, they view themselves, and I’d say why they have a little bit of an identity crisis, they view themselves
as these guys they’re marketing to, these millennials, as punk renegades or against-the-system people, and I
think they view that as selling out. The group that was there at the time when I was there, and I was there
through three regimes and a lot of the same type of guys were rolling through there. It’s hard whenever you’ve
got to, me, when I’m bringing someone in to sell to a buyer at Walmart, the world’s largest retailer, and I have
to tell them to, “Please wear a collared shirt.” It’s because they want to show their sleeves and their tats, and,
“Take your piercings out.” The marketing department at Pabst is very much like that. You’re dealing with not
only trying to talk sense into people when it comes to marketing, but it’s also I was considered square because
I sold to Walmart, and a lot of times I don’t think the marketing guys would give a crap about Walmart, but
sure like a bonus. The way I look at it.
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[00:43:48]
Q: Could you elaborate on Walmart’s support in promoting the Pabst brand, including the cost of doing
business with such a strong player? In other industries, Walmart seems to exert pressure rather than helping
brands to push their products.
CB: The cost of doing business with Walmart is essentially nothing because you can’t give them anything.
What they will do is if you have a relationship, they’ll go to an off-site. You want to get them out of their offices
so they don’t have the distraction, another vendor looking at them through the window of the office. You’ve
just got to get them out. The cost is how extravagant do you want to go? That, in itself, is its own strategy. Do
you want to show Walmart that you’re spending tons of money to do some extravagant dog and pony show at a
hotel down the road? Some buyers like it, some of them look at it like, “I asked you for an add and you didn’t
give…” you know what I mean? I’ve seen it go both ways, but the cost of doing business is whatever those cost.
I’ve seen them cost USD 30,000, I’ve seen them cost USD 5,000.
It can be whatever you want to make it, but the only way you’re going to get an audience, the only way you’re
going to get that kind of opportunity is to have sales guys, a lot like myself and my counterparts, who are
really, really good relationship guys that didn’t beat down the buyer’s door, could read a room, could tell when
it was time to ask for something and when it was not. We were not nuisances, we were helpers. We weren’t
category captains, so we didn’t have data, so we weren’t Walmart slaves. We couldn’t do everything they
wanted us to because we didn’t have the capabilities, but yes, we’d step in, we’d try to help. We’d let them
know if we thought something was good or bad for the category, if it did or didn’t hurt us. As corny as it
sounds, we just tried to be the cool guys, if that makes sense? Once you get that relationship with the buyer
and the national sales manager, then the next level comes in, and maybe the sales director, and then you’re
moving up to the DMM, and then you’re moving up. We had pretty good relationships up and down the line.
Whatever level we were looking at, we were really good, and so we got a lot of meetings we didn’t deserve and
those themselves are good and bad. You put a lot of spotlight on yourself for a 2%-share company, but then
you get to selling some pretty cool things that normally you wouldn’t get to if you didn’t have that audience.
You had to have the relationships and then whatever it is that that cost, that’d be the only cost, that’s it, and
make sure you supply them, because if you don’t supply them, that’ll be your last time you get that meeting.
[00:47:21]
Q: Could you outline Pabst’s opportunities with spirits throughout the pandemic, considering the struggles
that some independent smaller breweries faced because they also sell beer towards on-premise? How did
being better-capitalised and with a better-diversified product mix enable Pabst to take over another player or
expand market share?
CB: I think Pabst did something super smart. I think that they went and they got the Jack Daniel’s Downhome
Punch line. I don’t know the current terminology for that product, but it’s been around since I was a kid. It’s a
30-year-old product that has continued to stay where it is through all of the wine coolers, through the coffees,
through the root beers. It’s always been there. It’s never gotten bought up, no one pushed it. I think they’re
having pretty good success with it. I think they’re having really good success with it and I think that was a
smart move. They didn’t have to create anything that’s new, they just took something that’s been around for
forever and propped it up a little bit.
NH: Do you have anything else to add on Pabst’s ability to take advantage of opportunities?
CB: Yes, I think they’ve done that in the past, they’ve gone and bought products in the past that are sleeping
giants and they just need a little bit of love. It’s such a Pabst move, and they did it. When I saw it, I was like,
“That’s great.” The next time I was at Walmart, there was a pallet of Jack Daniel’s punches. They had the team
to push it and give it the love it needs, and I thought that was a budget-friendly way of just going after
something that’s already there.
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[00:49:56]
Q: Do you expect any other budget beer companies to gain a stronghold in the market or move up in this
share-for-share game?
CB: Busch Light, a lot of people love Busch Light because they think it’s Bud Light, and it probably is, so
Busch Light is always a strong player. Especially in the Nebraska area, that little four-state area, they do really,
really well. I would say it’s been different for the different (audio distorts 50.42), I think Natural Light, of all
beers, I think they did great with their Naturdays seltzers. They’re budget-friendly seltzers and they are part of
the Natural Light portfolio, so you get what the name says. They’ve done really well. They’ve rotated players
out and I think they sell a ton of that stuff. They were one of the first ones to jump in. I think Pabst, they did
alright. Pabst did really well with coffee as well. I don’t know if we’ve talked about that. They released a coffee,
and it tastes more like a Yoo-hoo, but it’s an alcoholic-based coffee. There’s a lot of that. There’s another
company out there that does it, and they do it pretty well too, but I know they just had a new line extension,
like salty caramel. That’s something that a lot of people aren’t doing right now. I think you have to find your
spot, and Natural Light did it because they were early on and they got a lot of the college crowd, and that took
off at that price point. I think Pabst did it with Downhome Punch and their coffee. Other than that, to me,
they’re the only budget brands I can see that are actually making a move within the innovation.
[00:52:05]
Q: Could you elaborate on the success of Pabst’s coffee-flavoured beer?
CB: I’ll tell you something. Here’s the process. When I was there, we partnered with a company called Cafe
Agave, out of California or Arizona or something. They had a coffee, an alcohol-based coffee, and it was pretty
high, I want to say it was 8% ABV or something, but it tasted great, it was awesome. They had three flavours
and we were going to take them national. We had a deal to take them national. We did, we took them a few
places, but something in their formula did not work out and it was separating within the can and just getting
gross. Something happened. This was years ago, maybe three years ago. I guess the contract was terminated,
and then, as I was leaving Pabst, Pabst launched the coffee. I guess they took the lessons they learned or
whatever. They launched a coffee. I personally don’t think the Pabst coffee is as good as the Cafe Agave coffee
was, but it was still pretty good. It was a national coffee and they launched it, and it obviously has been well
enough to stick around in liquor stores. It’s in all of mine, and we just put the second flavour in. I don’t know.
The difference between the two, the Cafe Agave was a wine-based coffee, so the liquor in it was wine-based,
clear, vodka-type liquor. Very much like Mike’s Hard Lemonade. I think there’s is also wine-based. Walmart
would not allow us to sell it to the beer buyers. They pushed it off to the wine buyers. The wine buyers said
they didn’t have enough room, so it was in no man’s land. I think when Pabst relaunched their own version of
it, I think they did a malt-based, in fact, excuse me, I misspoke, that malt base is what Mike’s is, so you didn’t
have to go to the wine buyers, you could sell it to the beer. They learned their lessons with their little side road
they had with Cafe Agave. Since then, Cafe Agave was just presented to me, I guess they reformulated and
relaunched, and they sold to our company. They came and presented to our company and sold a week or two
ago and it was still really, really good and I’ll probably end up buying it. I think they’re the only two players
that I’ve seen that actually do anything with coffee.
[00:54:51]
Q: Is there anything that you think is commonly overlooked in the brewing industry or around the next big
thing, such as canned cocktails? What should investors pay attention to across H2 2021?
CB: I picked up a canned cocktail, I think it was a vodka-based cocktail, yesterday, out of the cooler, and it was
4%, and I was like, “I don’t even know why they make this.” If you’re going to get a canned cocktail, it has to
Private and confidential 12
be, everything seems to be coming out at 5%, and that is something that people are screwing up left and right.
I don’t think I’m going to buy another seltzer or canned cocktail at 5% alcohol. That’s done. There’s a few of
them. Svedka Vodka just came out with one that is an 8%. I think that that is probably going to be the sweet
spot going forward. You don’t want to get 10%, you don’t want to get 12% because then you’re getting in that
Four Loko, crazy, gross stuff, but I do think that there will be a rash of products coming out. In fact, I’ve been
told that White Claw is coming out with an 8%. Anything 8%, they overlook that, they’re now going to correct
it. I think Pabst was early in, I think that they decided, “Let’s make ours the harder seltzer.” Again, I don’t
know how it’s done, because I’m not there, but I think that anything going forward, you’ve got to pay attention
to serving size, you’ve got to pay attention to ABV, alcohol by volume. I think you’ve got to make sure that it’s
strong enough that people are going to pay for it.
[00:56:53]
NH: Colin, I think that is a great place to conclude. Let me close by saying thank you very much for your time
today. Clients, thank you for joining Third Bridge Forum's Interview. If anyone would like to speak with Colin
in a private call or meeting, please let your relationship manager know. Colin, thanks again.
CB: Alright, thank you.
Transcription ends at 00:57:05 of the recorded material
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