USA: Latrobe Brewing Co. might be sold, according to beer experts

InBev USA’s subsidiary Latrobe Brewing Co. and its two brands, Rolling Rock and Rock Green Light, could be attractive additions to a brewer's portfolio, according to beer industry observers The Pittsburgh Tribune-Review posted on March 21.

Experts believe InBev USA, parent of Latrobe Brewing Co., is shopping the Westmoreland County brewery, based on the company's decision to focus sales and marketing resources on its high-profit specialty import brands.

"It's a good time for them (InBev) to be the Cinderella at the ball. The (Rolling Rock) brand is kind of floating along. ... It's not growing, but it's iconic. It has wide and deep distribution. My thinking is that they're sending up a trial balloon to see what they could get for the brewery and/or the brand. They don't necessarily have to be sold together," Harry Schumacher, publisher of Beer Business Daily in San Antonio, said Monday.

Last week, InBev USA said it started examining opportunities, inside and outside the company, to determine how to optimize the potential of Rolling Rock and Latrobe Brewing. The company said no decisions have been made.

Schumacher speculates that St. Louis-based brewing giant Anheuser-Busch Cos. Inc., which claims responsibility for 48.8 percent of the beer sold in the United States, could be interested in the "quirky" Rolling Rock brand, while Boston-based Boston Beer Co. Inc., brewer of Samuel Adams beers, could be interested in adding brewing capacity.

Latrobe Brewing produced about 852,000 barrels of beer in 2005. This year, the plant expects to produce 755,000 barrels. Officials there said the brewery has the capacity to produce 1.3 million barrels, due in large part to a high-capacity bottling system introduced in 2003.

Anheuser-Busch spokesman Tom Santel said yesterday that the company would neither confirm nor deny such reports. A Boston Beer spokeswoman said last week that it always is seeking opportunities.

Schumacher also raised the possibility that Latrobe Brewing may be attractive to a private equity group "who just have money and want to get into the beer business."

"The sense I get is that it's being shopped. Globally, InBev is profitable, but they're a relatively small player in U.S. markets," said Ben Steinman, editor of Beer Marketer's Insights in Nanuet, N.Y. Steinman also said the brewery only is producing at a 58 percent capacity utilization rate, indicating slow sales, while 90 percent and over is considered a good rate.

InBev USA has been "winnowing" its portfolio for the past couple of years and is likely shopping Latrobe Brewing, said Peter V.K. Reid, editor of Modern Brewing Age, based in Norwalk, Conn.

"The drum beat they've been sending is that they have too many brewers. They've been shedding breweries in Europe. But they're going about this (Latrobe Brewing) quietly, maybe approaching certain players who may be interested in a specialty domestic beer," Reid said.

Reid said Rolling Rock is an "unusual" brand in that it has the potential to be marketed as a "high end" beer outside Pennsylvania.

Reid agrees that Anheuser-Busch may be interested because they have been looking at high-end beers, recently having purchased stakes in Widmer and Red Hook beers, both specialty brewers on the West Coast. He said San Antonio-based Gambrinus Co. may also be interested. Gambrinus distributes Corona Extra, a leading imported beer.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .