Pabst Brewing Company Slashes 18 Percent of Workforce

For the second time in as many years, Pabst Brewing Company will undergo a major round of layoffs, today announcing that it has eliminated a total of 70 positions from the company.

The cuts — which impacted employees across all areas of the organization, including sales, marketing, operations and administration — are being made to help the company reduce its cost basis by 15 percent.

In doing so, 50 employees have been let go and another 20 open positions will not be filled.

The company will also cut its budget, focusing its efforts on fewer internal projects – such as reducing complexity in the supply chain and overhauling its social media strategy – while simultaneously shifting investment toward areas of the company with greater opportunities for growth, including the New Holland Brewing and Tsingtao brands.

“During 2017, many of the PBC brands grew, our culture flourished, our innovation pipeline strengthened and we developed real momentum, despite industry trends and a tough competitive environment,” Pabst CEO Simon Thorpe said via a statement. “After careful review, we believe it is in our best interest to take a series of strategic actions now, in order to reduce complexity, cut costs, simplify priorities, and reallocate resources, so that Pabst is well positioned for success as we go into 2018.”

The decision to cut its workforce by 18 percent comes less than nine months after Pabst let a number key executives go, among them, chief sales officer Bruce Muenter, and chief growth officer Rich Pascucci. Six other employees were also laid off last April, and former CMO Dan McHugh was replaced last September.

Those moves came several months after Pabst terminated dozens of workers who had been hired to help manage the breakout success of Small Town Brewery’s Not Your Father’s Root Beer, which grew to $100 million in off-premise sales just six months after Pabst began nationally distributing the brand.

“In August 2016, we needed to adjust the size of the company to compensate for the rollercoaster ride that we experienced on Small Town,” Thorpe told Brewbound. “And then in April 2017, I made some decisions to reshape and refocus the leadership team. This change is about right-sizing the company to make us healthy and agile, and anticipate some of the opportunities and challenges over the three to five years.”

After the initial round of layoffs in 2016, Pabst hoped that it could retain approximately 70 employees as it worked to return the Small Town business to growth, Thorpe said.

But sales continued to lag — off-premise dollar sales of the flagship root beer offering declined 60 percent in 2017, to $33 million, according to retail data provider IRI Worldwide — forcing Pabst to once again downsize the organization.

At its peak in mid-2016, Pabst employed 440 people. As of press time, the company employs 310.

Despite the headwinds, Thorpe maintains that Pabst is well-positioned for greater success in 2018, and in a “much better place” with Small Town.

“The fundamentals have stabilized and we are now playing in some much bigger, flavor opportunity areas,” he said of the Small Town brand.

According to Thorpe, who cited Nielsen data, portfolio-wide sales of Small Town products declined 42 percent in 2017. But sales of brands like Lone Star, Rainier and Tsingtao were up seven percent and two percent, respectively.

Moving forward, the company plans to be more strategic with its spending, as it works to become “more lean and agile” during a period of slower category growth. It will also continue to look for merger and acquisition opportunities, Thorpe told Brewbound.

TSG Consumer Partners, which owns a stake in the brewery, as well as members of the Pabst Brewing Company board, approved of the layoffs, Thorpe added.

A number of other beer companies also grappling with slower category-wide sales have been forced to make cuts over the last 18 months. Anheuser-Busch InBev laid off as many as 350 employees last September. Last April, Bridgeport Brewing, owned by The Gambrinus Company, cut 13 brewing staff positions. And in October 2016, Stone Brewing Company laid off more than 50 employees as part of what it called a “restructuring.” That same month, Craft Brew Alliance laid off about 20 employees at a Woodinville, Washington, brewery that would eventually be sold.

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