Craft Brew Alliance to Produce for Pabst


Two beer companies quickly becoming known for their growing interest in partnerships today announced a tie-up of their own, one that will support the “strategic growth objectives for both companies.”

In a joint statement, Craft Brew Alliance and Pabst Brewing, Rainier Brewing Company’s parent, today announced a brewing arrangement that will bring production of a new Rainier product back to the Pacific Northwest for the first time in 13 years. The arrangement is slated to commence in the second quarter of this year.

Under the terms of the new agreement, CBA will begin producing a new Rainier Pale Mountain Ale offering, as well as other brands, at its Redhook brewing facility in Woodinville, Wash. Production of Rainier’s iconic namesake lager, however, will not take place in Woodinville, a CBA spokesperson told Brewbound. That brand has been produced at MillerCoors’ Irwindale, Calif. facility since 2003.

In addition to the ability to take over 100 percent of the capacity in Woodinville, should the Rainier brand need it, the contract also gives Pabst an option to purchase the brewery over a three-year time frame, a move CBA chief Andy Thomas said was likely to occur.

“I am really impressed with what (Pabst CEO) Eugene Kashper and his crew have done trying to bring back some heritage brands,” he told Brewbound. “They are currently brewing through third parties and trying to build an organization that has more control over that process.”

It’s unclear what would happen to the 40-plus brewery workers (excluding those who work in an adjacent pub) currently employed by CBA, but Pabst does have an option to hire those individuals should it opt to purchase the facility.

“They don’t have an army of brewers to move in there themselves,” said Thomas. “In addition to embarking on a good deal for CBA financially, we’re working with a company that gives workers the best opportunity to have some continuity in their employment as well.”

Thomas described the new partnership as one that has strategic advantages for both companies.

Pabst will get access to long-desired Pacific Northwest capacity — Kashper has publicly expressed his interest in returning production of the brand to the area — and can tap into master brewer Greg Deuhs’ familiarly with the CBA space; Deuhs served as CBA’s director of operations in Woodinville from 2008-2012.


CBA, meanwhile, fills tanks that would have otherwise sat empty; the company used less than half of the brewery’s 200,000-barrel capacity in 2015, Thomas said. It also gets the option to offload the facility altogether, should Pabst look to exercise its purchase option.

That second part will be a critical component of the company’s long-term strategy, as Thomas has long-stated that his top priority is improving gross margins.

In doing so, CBA has slowly been realigning its brewing footprint to more efficiently produce its flagship Widmer, Redhook and Kona brands, as well as those from partner brewers like Appalachian Mountain Brewing and Cisco Brewers.

“Being able to move volume out of Woodinville and into Portland — optimizing our footprint — is a huge benefit to CBA,” Thomas said. “if we are going to get to 35 percent gross margins by 2017, one of the ways we’ll do that is by getting the capacity utilization to a better place.”

Last April, CBA made a pair of expansion announcements: the company said it would spend $10 million to increase brewing capacity at its Portland, Ore. headquarters by 200,000 barrels — about the same size as its Woodinville capacity. At the same time, the company outlined the construction of a new $15 million, 100,000-barrel brewery in Hawaii, the groundbreaking for which is planned this quarter.

Both projects will enable the company to both expand production of larger core brands as well as smaller-batch seasonal products. The Portland expansion is expected to conclude in the coming months and CBA said it expect to open its Hawaii brewery in early 2017.

“This partnership with Rainier represents an important next step in our overall brewery optimization strategy, which is focused on leveraging the unique strengths and capabilities of each of our breweries to better balance production across our footprint and support our long-term growth,” Scott Mennen, CBA’s chief operating officer said in a statement.


CBA also operates a brewery in Portsmouth, New Hampshire and produces beers under alternating proprietorship at Blues City Brewery in Memphis, Tenn.

“Our partnership with Blues City in Memphis has enabled us to meet consumer demand for core brands such as Kona Big Wave Golden Ale and Redhook Long Hammer IPA, freeing capacity in our Portsmouth brewery to support exciting new strategic partnerships with Appalachian Mountain Brewery and Cisco Brewers,” Mennen added.

Both the AMB and Cisco partnerships are largely focused on expanding brewing and distribution for the smaller brands. Last September, CBA said it would take a minority stake in Cisco, though a deal had yet to be finalized. The two companies are still in “active discussions” and an announcement clarifying terms of that partnership is expected soon, Thomas told Brewbound.

Pabst, too, has established its fair share of partnerships in recent months. In December it formed a strategic partnership to distribute, market and sell Vermont Hard Cider products. Kashper and other Pabst principles also took a stake in Small Town Brewery and Not Your Father’s Root Beer, which Pabst distributes nationally.