Wisconsin brewer may buy Rolling Rock plant
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Six years ago, managers of City Brewing Co. and other investors took a chance and purchased the shuttered La Crosse, Wis., brewery from Stroh's, even though no big name beer brands came with the plant.
Yesterday, City Brewing said it was considering accepting the same challenge at Latrobe Brewing.
InBev, the Belgium company that owns the Latrobe brewery, said it signed a letter of intent giving City Brewing exclusive rights for an undetermined time to negotiate a purchase of the plant, where Rolling Rock and Rock Green Light beers are currently being brewed.
Production is expected to halt at the end of July when InBev completes its $82 million sale of the Rolling Rock brands to Anheuser-Busch, which intends to brew Rolling Rock at its Newark, N.J., brewery.
InBev said union leaders as well as local, state and government officials will be part of the talks. No time frame is set for completing negotiations, InBev said.
The announcement provides hope that the jobs of more than 200 workers at the Latrobe plant will be saved.
Industry analysts said the fact that Rolling Rock would not be produced there makes the plant a harder sell. They speculated that with beer-making capacity exceeding demand, few buyers would be interested in buying the plant without the Rolling Rock brands to provide a steady cushion of business.
But yesterday's developments indicate City Brewing may be interested in taking a chance on another long shot, this time on a brewery capable of producing about 1.2 million barrels annually.
The company didn't have any major beer brands to fall back on when it purchased the 148-year-old La Crosse brewery in 2000. Since then, it has grown from 35 employees to 250 full-time workers. Although it produces a variety of beers, non-beer drinks including Smirnoff Ice, Mike's Hard Lemonade and Arizona Teas account for the bulk of its production.
"I would imagine they're probably getting a pretty good deal because I don't see a lot of people lining up to buy it," said Harry Schuhmacher, editor and publisher of Beer Business Daily, an industry publication.
Mr. Schuhmacher said City Brewing may be interested in an East Coast plant to reduce the freight costs involved in serving East Coast markets. "It may make sense for them ... because that's where a lot of their customers do business," he said.
City Brewing officials did not return calls.
Gov. Ed Rendell said he will discuss possible incentives with City Brewing today. Mr. Rendell has hired investment banker Renaissance Partners to assess what improvements or modifications are needed at the Latrobe plant.
"I am hopeful that this letter of intent will translate into a contract to purchase the company," Mr. Rendell said. "This is not the final step, but it is a very good step in the right direction."
U.S. Rep. John Murtha, the Johnstown Democrat, concurred, saying the letter of intent "gives us all reason to be optimistic that a deal can be worked out and jobs can be saved.''
The La Crosse brewery was once a sister company of bankrupt Pittsburgh Brewing.
It was part of G. Heileman Brewing Co. when it was purchased in 1987 by Alan Bond, the Australian tycoon who purchased Pittsburgh Brewing a year earlier. Mr. Bond's financial empire subsequently collapsed and he was convicted of fraud by Australian authorities.
Mr. Bond's problems resulted in the sale of Pittsburgh Brewing in 1992 to Uniontown entrepreneur Michael Carlow, who was later convicted for his role in a $31 million check kiting scheme.
Heileman limped along, selling its brand names to Pabst Brewing Co. in 1999. Stroh's ended up with the La Crosse plant, which it closed before selling to City Brewing's current owners.
First Published June 22, 2006 12:00 am