Friday, September 19, 2014

Let the Russians Have PBR

There's been a lot of activity on the Twittersphere today about the purchase of 170 year-old Pabst Brewing Company by six year-old Oasis Beverages of Russia. Yes, that's right folks, the Russians now own such iconic American brands as PBR, Colt 45, Schlitz, Ballantine, and National Bohemian ("Natty Bo"). Some see this as something to mourn for. I say, thank you Russia for the $700M in cash.

Dean Metropoulos, the billionaire who bought Pabst for $250M in 2010 and turned it from mere hipster darling into the force it is today, sold at the top. This graph from Huffington Post says it all:

PBR took off in 2008, around the same time that craft beer started exploding. What need did PBR fill that craft beer didn't? An alternative to big beer that was low in alcohol. Something that said you were not a mindless drone of the establishment that you could throw back a few of without getting wasted. Craft at the time was an arms race to produce the hoppiest, highest alcohol beers,. which was fine, but sometimes you just wanted a cold beer without supporting The Man. Enter PBR.

Around 2012-13, a new trend in craft beer emerged: the so-called "session beer." Lower in alcohol without compromising taste, you could drink 4-5 of them in a "session" without needing to be wheeled home (IMO it's impossible not to compromise some taste, but it's an acceptable compromise). The trend was a hit: Founders, who was one of the first to capitalize on the trend in a big way with the launch of their All Day IPA in 2013, saw it hit 27% of their sales in that first year. That's huge. Suddenly PBR, which had only the slightest taste advantage over Bud Light, wasn't needed. Metropoulos, smart man that he is, starts looking around for the greater fool and bingo, he finds one in the Russians. 

In the cycle of creative destruction it is better for us to sell at the top while we move on to the next thing. It's as true in hipster beer as in macro beer. Proust!

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