How Eugene Kashper is transforming the 172-Year Old Pabst Brewing Company into an “Underdog Startup”


When the millionaire owner of the fifth largest beer supplier in the U.S. stands on stage in front of hundreds of beer distributors and describes his company as a “small, upstart, underdog brewer,” it’s extremely hard not to roll your eyes.

Let’s face it: underdog brewers don’t make nearly 6 million barrels of beer annually. Underdog brewers don’t have 440 employees. Underdog brewers don’t have dedicated national chain teams. Underdog brewers also don’t have the resources, the distributor network or the financial wherewithal to take an unknown alcoholic root beer and turn it into a $100 million overnight success. And underdog brewers certainly don’t have anyone in their organizations with the nickname of “the 7-Eleven guy.”

But that doesn’t mean Kashper, who together with TSG Consumer Partners, a private equity firm with offices in San Francisco and New York City, purchased the 172 year-old Pabst Brewing Company at the end of 2014, isn’t thinking like an entrepreneur.


Like many of the 4,300-plus craft brewery owners all betting on the continued consumer shift away from mainstream lagers, Kashper believes the entire U.S. beer landscape is going to evolve dramatically over the next decade. He believes the category will be dominated by super-premium, craft, cider, flavored malt beverages and import beers — categories that will make up 70 percent of sales by 2025, according to his projections.

What’s at stake, at least for Pabst, is the opportunity to own as much as 10 percent of total beer industry dollars. But in order to get there, he must first transform Pabst into a leading high-end beer supplier whose profits come not from affordable adjunct lagers, but rather above-premium priced brands like Not Your Father’s Root Beer and Ballantine IPA.

“For us, this is about building brands and building our portfolio to be much more than a lot of very similar sub-premium brands,” Kashper told Brewbound during last week’s national distributor meeting in Milwaukee, the first held in at least 3 decades. “In today’s world, without innovating or thinking outside of the box, it is not possible to grow your business.”

If it’s successful, Pabst could cut into Anheuser-Busch InBev and MillerCoors’ dominance over the marketplace — the two companies collectively own about 70 percent of total industry dollars. Pabst, by comparison, owned just 2.6 percent in 2015.

If it weren’t for Kashper purchasing Pabst and pushing the company to pivot, a bigger focus on above-premium brands might never have developed. Prior to Kashper — who made his money co-founding several companies in the beer and beverage industry, including Oasis Beverages, the leading independent brewer in Russia and the exclusive importer for Heineken in Ukraine and Kazakhstan — Pabst was owned by billionaire food industry investor C. Dean Metropoulos, a veteran turnaround expert who has been involved in more than 70 acquisitions and rarely holds an ownership stake for more than four years.


Under Metropoulos, the Pabst business was only built for a “five-year run,” according to Rich Pascucci, the brewery’s chief growth officer, who started with the company in 2011 and has worked for both Metropoulos and Kashper.

“The (Metropoulos) ownership had a good idea of bringing in great talent and wanted to do the right things for the company, but at the same time they were looking for efficiencies in the company and not investing long-term,” he said. “The biggest difference with Eugene is that he is really focused on people. We are now built for a 30-year run.”

Metropoulos bought Pabst in 2010 for $250 million. At the time, flagship Pabst Blue Ribbon was growing around 20 percent, but sales had flattened out by the time Kashper purchased the company in 2014.

Pabst in the Metropoulos era was “incredibly lean,” said Kashper, meaning that the company prioritized efficient growth over long-term brand value creation.

“It is very hard to get passion and focus for 25 brands with five people in the entire marketing department,” he said.


That’s why one of Kashper’s top priorities since acquiring the company included the addition of 250 new employees. Those individuals came from what Pabst executives described as “tier one consumer packaged goods companies,” including beer, wine, spirits and non-alcoholic brands, and have helped give the company the “underdog brewer” identity that Kashper envisions.

“We are becoming a destination for talent, because we are not a corporate brewer,” Kashper said. “We are a small, underdog brewer. We are 100 times smaller than InBev and 30 — 40 times smaller than Molson Coors or Constellation’s whole business. But at the same time, we do have the resources, the iconic brands and the capability to compete.”

With an army of brand reps fine-tuning the identities of brands like Old Milwaukee, Lone Star and Rainier, Kashper said he is now able to focus more of his attention on transforming Pabst into a leading high end supplier.

It’s not a craft play, however. For Pabst, long-term growth will come in two ways: higher priced brand extensions — like Old Tankard Ale and Rainier Mountain Pale Ale — and partnerships, like the ones they’ve already established with Small Town Brewery and Vermont Hard Cider.

“We are creating new brands that are in the above-premium space that are based on an authentic look and feel, an authentic brand recipe and can be a halo for the below-premium brand — helping to elevate that brand over time,” said Kashper. “We have also made big strides in expanding outside of our heritage portfolio with these new brand partnerships and have shown the blueprint for how we want to build our business and participate in lots of different, attractive segments of the market.”

The most obvious gap in the Pabst portfolio, however, is true craft brand.

“We don’t have a traditional craft beer in our portfolio and that is a big hole that we want to fill,” Kashper said.

But don’t expect him to write the biggest check just to plug the hole.

“We are not arrogant enough to believe that if some brand owner — whether it is a craft brand owner or otherwise — just wants a check and wants to cash out, that we are going to take that brand, and roll it in and be able to keep the DNA and passion that the brand needs for sustainable growth,” he said.


Rather, Kashper believes the best partners are ones who “believe in their brands and want to participate in the upside of a larger scale organization,” he said.

And while Pabst’s relationships with Small Town Brewery, Vermont Hard Cider and even Craft Brew Alliance (CBA) all include an option to purchase brand rights or brewing assets (in the case of CBA), Kashper said his merger & acquisition strategy within could also include “arms’ length partnerships” similar to the import agreement Pabst has with Tsingtao Brewery.

“If there is a cultural fit and we believe in the partner, and their knowledge of their brand and their ability to add value, that is totally fine as well,” he said, adding that Pabst can do the “dirty work” in the marketplace.

So how eager is Kashper to get involved in the space?

“It depends on the opportunity,” he said. “We are not going to do a 100 percent cash deal for some brand at some high valuation.”

Nevertheless, Kashper believes Pabst is already participating in craft via its popular Small Town Brewery and Not Your Father’s Root Beer brands. For him, craft is all about pricing — anything $34 per case (retail) and above is “craft.”

“Given all of the deals that are taking place in the marketplace and how the lines are blurred — what is a traditional brewing process and what is non-traditional — I think it is a subjective opinion,” he said. “We are in the craft segment because, for us, it is a price segment.”

Cases of Not Your Father’s Root Beer are currently priced at about $44, according to market research firm IRI Worldwide. But Kashper still wants to participate in craft with more higher margin offerings and hopes to be selling products above $50 per case in the future.

In fact, his ultimate vision is to transform Pabst into a company where 50 percent of revenues come from high end products priced above $25 per case. By comparison, the company’s largest volume brand, Pabst Blue Ribbon, is priced at about $17 per case.

“As we build out our portfolio, we’d like to be a real participant in the growth of the industry,” he said. “Long term, we want to be a 10-share player.”