Eugene Kashper looks the part of someone who likes to throw back a few P.B.R.s from time to time — hipster glasses, scruffy facial hair, faded T-shirts and jeans and well-worn sneakers.
Talk to him for a few minutes in his office here, though, and you hear a shrewd businessman who blithely weaves in discussion about market shares, stock keeping units and distribution channels.
The talk is not all talk, either. Mr. Kashper, 46, is a millionaire many times over, having made a fortune reviving several all-but-moribund Eastern European breweries.
Now he’s focused on a beer project on another continent. The project is Pabst Brewing Company, which declares itself the largest American brewery. He bought Pabst in 2014 with the private equity firm TSG Consumer Partners for a reported $700 million, a deal that instantly made him one of the most-watched figures in the beer industry.
It also made people wonder: What in the world was he doing?
Pabst Blue Ribbon, far and away the company’s top-selling beer, had a loyal
following among skate punks and ski bums, and some currency in hipster enclaves. But it was still classified in the industry as a “sub-premium” beer and business was not booming. The company’s share of the beer market hovered in the low single digits.
“Eugene has a million ideas and a lot of energy, and he’s very engaging,” said Benj Steinman, publisher of Beer Marketer’s Insights, a trade publication, and a longtime observer of the beer market. “But I did wonder what he saw in Pabst.”
Mr. Kashper says he saw a big opportunity. “Beer, you know, it’s just fun,” he said. Now chief executive, he is pushing an aggressive effort to leverage the company’s distribution network, a part of the business that had been built up under previous owners, and dusting off old beer recipes and brands to capitalize on consumer desire for local products.
“We’re ideally suited for the whole locavore thing,” he said.
Whether he can pull it off is another question. After decades of consolidation, two big players, Anheuser-Busch InBev and Molson Coors, last year controlled roughly 70 percent of the American market. Pabst was in fifth place, with 2.6 percent.
But Mr. Kashper offers no hint of doubt, and his partners say he has already put the company on the right path.
Brian Krumrei, a managing director at TSG, said profitability at Pabst increased by 50 percent in the first year of the firm’s ownership, though he would not disclose dollar figures.
“Eugene is a pretty passionate guy, and that has permeated the culture — the 400 people who work at Pabst today are pretty passionate about it,” Mr. Krumrei said. “We view that as a huge positive for the business and its potential.”
Born in Russia, Mr. Kashper grew up in New Jersey speaking Russian and English at home. After graduating from Columbia University in 1992 with a degree in East Asian studies, Mr. Kashper, an American citizen, went to work for Ernst & Young, which quickly capitalized on his language skills by sending him to Moscow.
Soon after that move, he left Ernst & Young and moved into the beer industry, getting a job as the lead salesman in Eastern Europe for Stroh’s, an old beer brand coincidentally now under the Pabst umbrella. He then joined forces with two Russian brothers, Alexander and Arkady Lifshits, and in 1998 they co-founded the Ivan Taranov Breweries.
After a series of deals in Russia and Eastern Europe that netted the partners hundreds of millions of dollars, the three men created Oasis Beverages, a brewer and distributor based in Cyprus. Oasis also serves as an umbrella for other offshore investment vehicles they control.
In September 2014, Oasis was announced as the buyer of Pabst, together with TSG. News outlets had a field day, portraying the deal as a Russian takeover of a quintessential if somewhat down-market American beer.
But a couple of months later, a different news release went out, saying that Oasis had never been the buyer of Pabst. Mr. Kashper, it said, was the buyer.
Why the mistake occurred in the first place and why it took two months to set the record straight remain mysteries. But in so many ways, it matched the history of Pabst, which is also filled with unusual twists and turns.
Founded in Milwaukee in 1844 by Jacob Best Sr., the brewery had a pretty good run for more than a century. But in the 1980s, sales began sliding, and in 1985 Pabst landed in the hands of Paul Kalmanovitz, a beer entrepreneur from California. He died shortly after acquiring the brewery — but not before he had taken a hacksaw to costs.
Mr. Kalmanovitz left his money to his pets and his breweries to a charitable
foundation, which sold the company to the billionaire investor C. Dean Metropoulos in 2010, when it had roughly $500 million in sales. By that time, Pabst had contracted production of its beers to MillerCoors and spent virtually nothing on marketing. Mr. Metropoulos also moved the company from Chicago to Los Angeles.
The lack of marketing became a sort of renegade promotion in and of itself,
increasing Pabst’s appeal among consumers who were turned off by advertising and looking for beer that was more “authentic” — even though Pabst no longer made its own beer. Sales rose, at least slightly.
“Forty years on, many brands had ground to a halt in terms of increasing market share, and that’s where the business stands today — the biggest beer companies aren’t selling more beer,” Mr. Kashper said. “Pabst was.”
The trick now will be to take advantage of those strengths. For one thing, the company is opening a microbrewery and tasting room at the site of the former Pabst brewing complex in Milwaukee, where it will serve up special selections.
Mr. Kashper is also looking to sell more of the 77 beer brands and the recipes it
owns — many of which have not been brewed in decades — and ride the coattails of the craft beer craze. Pabst will soon start producing Rainier Pale Mountain Ale at a brewery in Washington State, for example, using a recipe derived from the one for a Rainier beer that was last brewed in the 1930s and 1940s. Other brands include Lone Star, Schlitz, Olympia, National Bohemian, Colt 45, Schmidt and Pearl.
“We can take advantage of the heritage embedded in our brands,” Mr. Kashper said. “We don’t have to spend money convincing consumers our brands are authentic — they already know they are.”
Stephen Rannekleiv, an investment analyst at Rabobank, said these old brands might put Pabst in a good position.
“Pabst in the past has been able to buck trends by playing up its retro feel and being a little offbeat, and those same things are helpful today,” he said.
The company is also putting more energy into leveraging its distribution system, which had been nurtured and honed by Mr. Metropoulos.
Serendipitously, he found one hit to pump through the system right after buying Pabst, in Not Your Father’s Root Beer, a “hard” or alcoholic soda made by Small Town Brewery that became the beer industry’s sleeper success story of 2015. The product helped raise Pabst’s overall sales in 2015 by 20 percent and pushed its market share up by a percentage point — even as sales of its main brand declined.
But Mr. Kashper, with his faded Pabst Blue Ribbon logo T-shirts and dilapidated sneakers, says he’s not going to forget about the company’s primary brand, either.
“We’ve become an affordable, lighter beer that appeals to people who like craft beer,” Mr. Kashper said. “And, look, selling sub-premium beer is a very profitable business for us, no matter what else we may be doing.”
ABOUT TSG CONSUMER PARTNERS LLC
TSG Consumer Partners, LLC is a leading investment firm with
approximately $5 billion of assets under management, focused
exclusively on the branded consumer sector. Since its founding
in 1987, TSG has been an active investor in the food, beverage,
restaurant, beauty, personal care, household and apparel & accessories,
and e-commerce sectors. Representative past and present partner
companies include Duckhorn Wine Company, vitaminwater, thinkThin,
popchips, Muscle Milk, Yard House, Stumptown, Pabst, Planet Fitness,
REVOLVE, PAIGE, Smashbox Cosmetics, Pureology, Sexy Hair, e.l.f. Cosmetics
and IT Cosmetics.
Meghan Gavigan / Dan Goldstein
Sard Verbinnen & Co
Meghan Gavigan - 212.687.8080
Dan Goldstein - 310.201.2040