Bruce Vielmetti

Milwaukee Journal Sentinel

As jurors were reaching the end of their first full day of deliberations in Pabst Brewing Co.'s contract case against MillerCoors, the two beer-makers told the judge they had agreed to a settlement.

Terms were not immediately available, but Pabst's CEO had testified that if MillerCoors didn't agree to extend its current contract to make Pabst's beers, it might go out of business.

MillerCoors spokesman Peter Marino offered no clue as to the nature of the settlement.

"The parties have amicably resolved all outstanding issues in the case," he said.

A spokesman for Pabst echoed that sentiment but hinted at a long-term resolution.

"The parties have amicably resolved all outstanding issues in the case. Pabst will continue to offer Pabst Blue Ribbon and the rest of our authentic, great tasting and affordable brews to all Americans for many, many years to come,” he said.

Because any damages would have been addressed at a second phase if MillerCoors had been found in violation of the contract, no hard money figures were discussed at the trial.

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The contract brewing deal, struck in 1999 and renegotiated in 2010, is set to end in 2020, with a two-year wind-down provision. After MillerCoors told Pabst in 2015 that it would not have the capacity to extend the deal to 2025, Pabst sued, saying MillerCoors will have the capacity and Pabst has the option to extend the agreement.

As Pabst read the contract, it has the option to extend the contract five years, but MillerCoors said the option only exists if it determines it will have enough capacity 10 years in the future.

The trial, before Milwaukee County Circuit Judge Timothy Witkowiak, began Nov. 2 and featured live and videotaped testimony from current and former executives from each firm, plus consultants and experts, along with hundreds of emails and documents.

Jurors on Wednesday had asked to review several specific exhibits before lawyers announced the settlement.

Though MillerCoors made $70 million to $80 million a year brewing Pabst's roughly 5 million barrels of Pabst Blue Ribbon and almost two dozen other Pabst brands, it claimed that was far less than the general market rate.

Pabst's CEO, Eugene Kashper, testified that he would not have bought the company in 2014 if he had any expectation MillerCoors would stop making its beer. The plaintiffs put on evidence suggesting MillerCoors, struggling itself in a changing and competitive beverage industry, wanted to force Pabst out of business and take over its place in the sub-premium beer segment.

And its 2015 actions regarding a capacity analysis and rejecting the contract extension amounted to breach of its duty to act in good faith under the contract, and amounted to unfair competition under Wisconsin law.

MillerCoors argued that it was looking to preserve itself, not put Pabst out of business, and that it needed to consider a much smaller brewery network 10 years hence, and didn't want to be locked into making Pabst products for a below-market price when it might need that capacity for its own new products.

MillerCoors introduced internal Pabst emails suggesting Kashper was very aware of the risk that MillerCoors might not extend the brewing deal and was actively negotiating to buy another brewery in 2015, when the contract required Pabst and MillerCoors to discuss the potential extension.

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