Will a Public Pabst Blue Ribbon Still Be Hip?

It will be ironic if blue-collar beer's owners cause sales to fall by going public.

Mar 3, 2014 at 6:20PM


Brooklyn hipsters, who lately have taken to getting beard implants to attain that ironic look, previously adopted Pabst Blue Ribbon beer -- PBR, to those in the know -- allowing the brewer to grow from more than $500 million in annual sales in 2010 as volumes regularly rose by double-digit percentages, according to Beer Marketer's Insights.

In addition to PBR, the brewer sells more than two dozen brands of so-called sub-premium beer and malt liquor, including another hipster favorite, Schlitz, along with Old Milwaukee, St. Ides, and Colt 45. It's in decided contrast to the overall trend in beer, which has favored the premium craft brews over the cheaper mass-produced beers by Anheuser-Busch InBev (NYSE:BUD) and Molson Coors (NYSE:TAP). How ironic.

But now its private equity owner may be looking to shed the brewer, which actually contracts out its brewing to MillerCoors, the joint venture of Molson and SABMiller (NASDAQOTH:SBMRY). According to a weekend report by Reuters, food industry investor Metropoulos is seeking to either sell or even IPO the brewer in a transaction that could ultimately be worth anywhere from $500 million to $1 billion.

As Pabst is the fifth-largest brewer behind Bud, MillerCoors, Crown, and Heineken, it's right to wonder whether hipsters will find a more corporate Pabst that has to answer to both Wall Street and investors still a hip beer to drink.

U.S. beer shipments reverted to the same downward trend they've been experiencing for the past few years, with the lone exception of 2012, when they barely inched higher. Craft beer production soared 9.6% last year, compared to a 1.4% decline in the overall beer market, say the market analysts at Technomic, which means mass brewers suffered a more significant fall-off than the totals suggest, since they're buoyed by the craft segment. 

Anheuser-Busch saw total volume drop 2% and MillerCoors' domestic sales to retailers fell 1.9% in the fourth quarter while domestic sales to wholesalers were down 2.2%. On the other hand, craft brew leader Boston Beer witnessed a 23% hike in depletions, or sales made by distributors to retailers. The mass brewers themselves have been acquiring craft brewers hand over fist, and just last month Bud picked up another one in Blue Point Brewing, a 15-year-old East Coast craft brewer. The Brewers Association expects industry growth to hit low double-digit rates again in 2014.


Yet Bud has also kept its eye on the success Pabst has enjoyed as it recently unveiled Busch Signature Copper Lager, once again tapping into the sub-premium market currently occupied by its own Busch Light and Natural Light. MillerCoors will similarly be going downmarket with Keystone Light while also trying to steal some hipster flair with Hamm's. But that's largely been a losing proposition, as market research firm IRI says domestic sub-premium brews lost more than 15 million cases in 2013 while dollar sales dropped 3.7%.

Pabst has had enviable success because not only do hipsters drink it, but so does the blue-collar crowd, as summed up by one of my favorite old songs, "Rednecks, White Socks, and Blue Ribbon Beer." Ironically, one can well imagine that long after the facial-hair-implant crowd moves on to a different brew, Pabst Blue Ribbon will still command a popular presence at the local dive bar. If there's an IPO, that might be a beer investors would want to tap into.

I'll drink to that
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Molson Coors Brewing Company. It recommends and owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information