American beer is in the midst of a global identity crisis. Domestic sales of light beer fell again last year, while imported lagers, spirits and wines climbed. The biggest beer brands in the United States — think Budweiser, Miller and Coors — are now owned, respectively, by people in Belgium, England and Canada. The nation’s two most popular American-owned beer brands? Corona and Modelo. Both are brewed in Mexico.
Now comes a new bombshell for flag-waving American beer drinkers: Pabst Brewing, owner of some of the most well-loved, all-American, blue-collar brews in the country, will soon be bought by a Cyprus-based beverage conglomerate that calls itself the biggest independent brewer in Russia. The iconic brand behind Pabst Blue Ribbon, the red-white-and-blue-canned lager founded in Milwaukee before the Civil War, announced late last week that it will be bought by Oasis Beverages, which runs breweries in Moscow, Kazakhstan and Ukraine.
Even in a country where beer ads are typically marked by stock cars, soldiers and patriotic horses, few breweries have American credentials as deep as Pabst’s. The largest private brewing company in North America, its beers include cheap malts such as Colt 45, Schlitz and Old Milwaukee, as well as regional favorites such as Lone Star (“The National Beer of Texas”), National Bohemian (a Baltimore classic from the “Land of Pleasant Living“), Rainier (“We Heart Seattle”) and Old Style (“Chicago’s Beer since 1902.”)
Oasis has voiced no plans to change that. It will partner with TSG Consumer Partners, an American private-equity firm, to buy Pabst for about $700 million from billionaire food-industry investor C. Dean Metropoulos, who bought Pabst for $250 million in 2010. Oasis Chairman Eugene Kashper, a U.S. citizen who lives in New York and will become Pabst’s chief executive, said he will keep the company headquarters in Los Angeles. In a statement, he extolled the brewer’s American virtue, calling Pabst Blue Ribbon “the quintessential American brand — it represents individualism, egalitarianism and freedom of expression — all the things that make this country great.”
But the announcement of Pabst’s sale to Oasis, which brews a bevy of Russian beers as well as soft drinks and juice, was quickly painted as an American betrayal. Fans of PBR unloaded on its Facebook page, with one critic pledging to dump all of what he called “the new Communist beer” down the drain. Drinkamerican.us, a blog that ridiculed the foreign-owned Budweiser and celebrated Pabst’s American heritage, was replaced, briefly, on Monday with a large four-letter word.
“I was actually surprised at how frustrated I was . . . that an American icon was even considering something like this,” said David Lauterbach, the New Yorker who started the Drinkamerican blog after Anheuser-Busch’s sale to foreign buyers in 2008. “That a red, white and blue beer can that so long had symbolized America would consider essentially selling out.”
Pabst executives have gone on the defensive, issuing a statement poking holes in media reports touting a Russian takeover and saying, “Our new colleagues will remain vigilant in staying true to the brand’s identity.” Publicly, Pabst has doubled down on its American roots, posing a can of PBR like Gen. George S. Patton in a flag-draped tweet saying, “Pabst will remain American owned and operated.”
— Pabst Blue Ribbon (@PabstBlueRibbon) September 23, 2014
The brewer’s purchase, though, is only the latest drop in the long-swirling sea of the nation’s hyper-globalized beer industry. Miller Brewing became SABMiller when it was bought in 2002 by South African Breweries. Coors merged with Canada beer giant Molson in 2005. In 2008, Anheuser-Busch, the St. Louis-based maker of Budweiser that had run ads poking fun at Miller’s international roots, was bought by InBev, a Belgian-Brazilian beer conglomerate.
The all-American small-brewer business model that Pabst rode to mainstream glory has changed dramatically, and the alcohol business, once so heritage-driven, has become knotted in a tangle of globe-trotting mergers and mega-deals. Anheuser-Busch Inbev, the world’s largest beer maker, wants to buy SABMiller, the second-biggest. SABMiller made an offer to buy the Dutch brewer Heineken — also the second-largest brewer in Mexico, where it brews Dos Equis and Tecate — but the deal was shot down.
And it’s not just beer. Beam Inc., the parent of classic Kentucky bourbons Jim Beam and Maker’s Mark, was bought in January for $16 billion by Suntory Holdings, the Japanese whiskey giant Bill Murray’s character shilled for in “Lost in Translation.” A Beam spokesman said then, “We operate in a global economy, and the fact is, international ownership is relatively common among successful Kentucky distilleries and bourbon brands.” (It’s true: Another big distillery, Wild Turkey, is owned by Gruppo Campari, maker of SKYY Vodka and Italian liqueur.)
There are online communities and detailed guides on how to find out whether a beer is American-made. And drinkers can still buy beers from big American brewers such as Yuengling, based in Pennsylvania, and Samuel Adams, from Massachusetts’ Boston Beer Company. But American beer drinkers today boast “increasingly global palates,” analysts at Euromonitor International said, and that’s leading them to turn away from light Americana domestics such as Old Style, once advertised as “pure brewed in God’s country.”
Pabst Blue Ribbon has surged among the hipster set, and sales have doubled since 2004, but the broader Pabst brand is still weak in sales. Last year was Pabst’s slowest for beer shipments in at least a decade, according to data from Beer Marketer’s Insights. Constellation Brands, the New York alcohol giant and parent of Mexican cervezas such as Corona, Pacifico and Modelo, saw shipments more than triple over the same time period. Mexican beers, as Euromonitor analysts wrote, “have an aura of vacation and relaxation that appeals to many US consumers.”
Pabst’s losses are tied to the larger trend of light domestic lagers losing ground to wines and spirits. Even darker brews are looking better: Americans drank more than 1 billion liters of dark beer last year, making it the nation’s fastest-growing type of alcohol. U.S. drinkers also are opting against buying from big brewers and instead turning to a growing flood of craft breweries. The country had 2,822 running breweries last year, up 39 percent from 2011, and more than 1,000 new craft breweries are in planning nationwide.
The United States is far from losing its status as a brewing heavyweight: About 85 percent of the lager Americans drank last year was made in the United States. (For brewers, that’s less a patriotic strategy than a logistical one: Americans drink more lager than nearly every other country, so brewing it here helps keep shipping costs low.) Not many consumer favorites can boast such a high made-in-America share. So why do some drinkers show such a feeling of loss when an American brand extends overseas?
“I buy an iPhone even though it’s made in China, but it’s designed in California. I buy Fords even though the parts are made globally but still assembled in the U.S. But there’s just this historic, iconic value to a can of beer,” said Lauterbach, the Drinkamerican blogger. “All these old brands my father used to drink, they’re burnt into my head, back to this time when this was the American way. They hung in with us in for a couple generations, and then it gets to my generation, and I feel like — what happened?”
Analysts don’t expect the new owners to change too much about the Pabst’s golden brand. Like Pabst, Oasis has specialized in developing brands tied to city heritage, and its beers command big market share in Moscow and Astana, the capital of Kazakhstan. Instead, they are likely to try to make more money off Pabst’s strengths: its cool factor, its roots and the public perception it’s still linked to the tiny craft breweries it long left behind.
“Pabst has got a history, it’s got a heritage, it has a vintage factor,” said Amin Alkhatib, an alcoholic beverages industry analyst for Euromonitor in London. “They’re not going to change the brand, what it stands for. . . . They’re going to push to increase market share, take on those craft-beer [profit] margins and add a premium factor to the brand.”
But will Pabst weather the worries about foreign tinkering with an American classic? Benj Steinman, president of the trade publication Beer Marketer’s Insights, said it’s just a matter of time. When the Miller and Busch brewers were bought, “there was a lot more noise than impact at the time. And I’m sure the Pabst folks hope it’s the same case this time,” Steinman said.