Craft Brewers Alliance (BREW), Pabst Enter into Brewing Agreement

January 11, 2016 4:01 PM EST

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Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), a leading craft brewing company, and Pabst Brewing Company (“PBC”), the largest American-owned brewer, announced today that they have entered into a brewing agreement that supports strategic growth objectives for both companies. PBC subsidiary Rainier Brewing Company (“Rainier”) will begin brewing Rainier Pale Mountain Ale, as well as other Rainier brands, at CBA’s brewery in Woodinville, Washington in the spring of 2016. As part of the agreement, PBC has been granted an option to purchase the Woodinville facility at any time during the next three years.

The agreement between CBA and Rainier provides benefits for both companies. As part of CBA’s strategy to continue evolving its national brewing footprint and drive financial profitability, the company is making significant investments to increase production capability and efficiency and support its growth in key markets. The expansion investments include increasing capacity in its largest and most efficient brewery in Portland to 750,000 barrels per year and building a new 100,000-barrel brewery in Hawaii. The agreement with Rainier enables it to maximize capacity in its Woodinville brewery while pursuing these expansion projects. For Rainier, the agreement marks a true homecoming with the return of brewing to its home state of Washington.

“This partnership with Rainier represents an important next step in our overall brewery optimization strategy, which is focused on leveraging the unique strengths and capabilities of each of our breweries to better balance production across our footprint and support our long-term growth,” said Scott Mennen, Chief Operating Officer, CBA. “Our partnership with Blues City in Memphis has enabled us to meet consumer demand for core brands such as Kona Big Wave Golden Ale and Redhook Long Hammer IPA, freeing capacity in our Portsmouth brewery to support exciting new strategic partnerships with Appalachian Mountain Brewery and Cisco Brewers. As we complete our Portland expansion and continue transitioning more volume to that brewery, we have been looking for an opportunity to best utilize our production team and capacity in Woodinville. With this brewing arrangement, we not only deliver positive impact to our bottom line, we support another beloved Northwest heritage brand, which benefits the industry and beer consumers overall.”

“We are thrilled to be returning to Rainier’s home state and to begin brewing at this wonderful Seattle facility within sight of Mount Rainier. We are excited to revive many historic Rainier beers from our archives – starting with Rainier Pale Mountain Ale, which will be offered in the iconic 16oz. Rainier ‘pounder’ glass bottle,” stated Greg Deuhs, PBC’s Master Brewer, who served as Director of Operations at CBA’s Woodinville facility from 2008-2012.

CBA’s Woodinville brewery, known as the Redhook Brewery, was built in 1994 and features a 200,000-barrel per year brewing and bottling operation. For more than 20 years, the Woodinville team has brewed a variety of Redhook and Widmer Brothers beers, as well as other brands for contract brewing partners. In 2015, CBA announced that Redhook will open a new brewpub in Capitol Hill in the heart of Seattle to celebrate the brand’s 35th anniversary in 2016. The new Seattle brewpub builds on Redhook’s legacy of transforming historic Seattle sites into innovative destinations for beer lovers.

Under the terms of the agreement, CBA will continue to operate the Woodinville brewery and adjacent Redhook Forecaster’s Pub.

Additional information about the agreement will be included in a current report on Form 8-K to be filed by CBA no later than Thursday, January 14, 2016.



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