Brewery Sells Off Beer Brands

A Stroh's Brewery Co. employee looks over the copper tanks used at the company's Lehigh Valley, Pa., brewery. Stroh Brewery Co. is selling its beer brands to Pabst Brewing Co. and Miller Brewing Co. to concentrate on its real estate businesses.

By A.J. Dickerson
The Associated Press
D E T R O I T, Feb. 8
Stroh Brewery Co., a 19th century Detroit tradition, is selling its beer brands and getting out of the beer business, the company said today.
Pabst Brewing Co. and Miller Brewing Co. will buy the brands, Stroh, the nation’s fourth-largest brewer, said in a statement.

“My family and I struggled with this decision,” said John Stroh III, the company’s president and chief executive officer and a fifth-generation member of the Stroh family.

‘Difficult’ Decision
“Emotionally, it was an extremely difficult one to make, knowing that it would impact our loyal employees, and recognizing that it would mean the end of our family’s centuries-old brewing tradition that had become, in essence, an important part of our identity.”

Stroh said no previous offers had been “compelling enough to pursue” in light of the family’s brewing heritage.

“However, in light of this attractive offer, and the long-term competitive outlook of the brewing industry, we concluded that it is the appropriate time to exit the beer business and focus on the family’s other ventures,” he said.

Stroh, headquartered in Detroit, has about 2,800 employees.

No Job Announcements Yet
It’s too soon to know how many employees will be affected, said Stroh spokeswoman Lacey Logan.

“As we get closer to the close, we’ll have a better understanding of how many people will be impacted, and when,” she said. “It’s our understanding that both Pabst and Miller planned to offer full-time employment to full-time employees.”

The privately held company reported a loss of $3.9 million on net sales of more than $243 million in the third quarter of 1998.

Shrinking Market Share
Stroh’s market share shrank from 7.9 percent to 6.7 percent last year, and Pabst’s from 2.4 percent to 2 percent. No. 1 Anheuser-Busch of St. Louis represented 46.7 percent, Miller had 21.2. and No. 3 Coors of Golden, Colo., 10.5 percent.

After the deals signed today are complete, Stroh will focus on its real estate businesses in Detroit and throughout the United States, the company said in its statement. It will remain headquartered in Detroit.

The deals are expected to be finalized in early April, and are subject to review by the U.S. Justice Department.

No. 2 brewer Miller has agreed to buy its Henry Weinhard’s and Mickeys brands, while Pabst will buy the rest of Stroh’s brands and its brewery in Lehigh Valley, Pa. Pabst, based in San Antonio, Texas, is the nation’s fifth-largest brewer.

Pabst Soaks It In
The brands to be sold to Pabst are Stroh’s, Old Milwaukee, Schlitz, Schaefer, Old Style, Schmidt’s, Lone Star, Special Export, McSorley’s, Schlitz Malt Liquor, and Rainier.
Stroh’s other breweries are in Seattle; Portland, Ore.; Longview, Texas; Winston-Salem, N.C.; and La Crosse, Wis.

The companies also announced that Pabst has reached an agreement to transfer its Hamm’s and Old English 800 brands to Miller. And Pabst has agreed to expand its contract brewing agreement with Miller.

Until the deals close, Stroh will continue operating its five remaining breweries under a transition agreement until production can be shifted to a Pabst or a Miller brewery.

The transition is expected to last about nine months. Afterward, Stroh will seek buyers for the five breweries.

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