Natty Boh brewer to be sold to Russian firm

The Baltimore Sun

It hasn't been brewed in Maryland since 1996, and now, National Bohemian beer likely won't even be American — the locally identified brew is among those a Russian company is acquiring in a deal to buy Pabst Brewing Co.

Russia's Oasis Beverages and a U.S. hedge fund have agreed to buy Pabst, that brewer's second sale in four years. Oasis Chairman Eugene Kashper called the company's flagship Pabst Blue Ribbon "the quintessential American brand" and said he was eager to work with Pabst's "trove of iconic brands."

Those 30 brands include the likes of Schlitz, Old Milwaukee and Colt 45 — along with what most know as PBR and Natty Boh.

The deal means Baltimore mascot Mr. Boh likely will take another step away from the Southeast Baltimore roots of the National Brewing Co., swept up in the continuing trend of consolidation in a global beverage market.

A takeover by Russian ownership could be tough for some drinkers to stomach, on top of the knowledge that cans of Boh now travel hundreds of miles before reaching their coolers and are brewed under contract by South African-owned MillerCoors.

"It's one thing when you can sort of say it's still American-owned, so you can close your eyes and say, 'That's a local beer,' " said Hugh Sisson, whose Heavy Seas Beer competes with Natty Boh alongside other local microbreweries. "It's absolutely another thing when it's owned by a Russian conglomerate. It's hard to say that's the local beer."

But many Boh drinkers are blissfully unaware of any changes in ownership of their hometown beer, especially as long as it stays cold and cheap.

"If you're in Baltimore, you've got to drink Boh. It's like culture here," said Stacey St. Clair, 23, of Canton, as she finished a bottle Friday afternoon at Mick O'Shea's on Charles Street.

The Baltimore region accounted for about 90 percent of Natty Boh sales as recently as 2011, according to Pabst.

Under the proposed deal, Oasis Beverages, which Kashper founded in 2008, would get a majority stake in Pabst, while the hedge fund TSG Consumer Partners LLC would take a minority stake. Pabst would remain based in Los Angeles. Kashper would serve as CEO.

Kashper got his start in the beer business in 1994 with Stroh Brewery Co. — one of many pairs of corporate hands through which Natty Boh has been passed over the years. He said the firms plan to "invest meaningfully" in Pabst.

Terms of the deal, announced late Thursday, were not disclosed. However, a report by The Wall Street Journal said the deal would value Pabst at $700 million to $750 million, citing people familiar with the matter.

Private equity firm C. Metropoulos & Co. paid $250 million to buy Pabst from the Kalmanovitz Charitable Foundation in 2010.

The latest deal comes amid talk of major beer mergers — as British brewer SABMiller courts Heineken for a possible deal and Anheuser-Busch InBev, the world's largest beer company, is reportedly eyeing Miller.

The National Bohemian brand dates to 1885, when the bankrupt Baltimore brewery of Frederick and Anna Wunder was taken over by their malt suppliers and dubbed the National Brewing Co., according to Rob Kasper, a former Baltimore Sun reporter who wrote the book "Baltimore Beer: A Satisfying History of Charm City Brewing."

By the 1940s, the company became the first to package cans of beers in six-packs, and by 1954, it controlled 60 percent of the Baltimore beer market, Kasper said.

But its slow exodus began in 1975, when National Brewing merged with Carling Brewing Co., which shifted production of the beer from what became known as Brewers Hill to a modern plant on Hammonds Ferry Road in Halethorpe. In 1979, Carling sold the brewer to the G. Heileman Brewing Co., and that firm was sold in 1996 to Stroh, which closed the brewery that year.

Stroh sold the Boh brand, along with Old Milwaukee, Old Style, Schmidt's, Lone Star and Schlitz, to Pabst three years later. When that deal was announced, Pabst expanded a contract brewing agreement with Miller, and Natty Boh hasn't been brewed in Maryland since. Even after this sale, it likely will continue to be brewed in the United States.

The brand has nonetheless enjoyed a renaissance in recent years, with the mustachioed character Mr. Boh as emblematic of Baltimore as the Oriole Bird. In 2011, National Bohemian was served on tap from kegs again for the first time in more than a decade.

Baltimore developer Obrecht Commercial Real Estate struck a deal with Pabst about 10 years ago to place the Mr. Boh sign on top of a tower in their Brewers Hill redevelopment, hoping the billboard would help place the project on the map by tapping into the "good feelings and fond memories" associated with the brand, said firm spokesman David Knipp. It's worked, he said, becoming such a landmark that people swear — incorrectly — that it existed when the brewery functioned.

"The news is so fresh, I'm not sure how to react," said Knipp, referring to Obrecht's deal with Pabst and whether it would continue. "We sure would hate to see the big head come down from the top of the building. What else could we put up there?"

The deal could raise uncertainty for some who work closely with Pabst distributing Natty Boh and other beers.

"I'm sure they're wondering what might occur," Nick Manis, deputy director of the Maryland Beer Wholesalers Association, said of local beer distributors. "We'll know more in a couple weeks."

But some already see the deal as a good one. Todd Unger, who licenses the Mr. Boh image from Pabst for his company Natty Boh Gear, said the current Pabst management has built a "stellar reputation" for its brands in the United States, and he expects the new owners to do the same.

One industry observer suggested that with craft brewers on the upswing, legacy beer brands such as Natty Boh could struggle to maintain market share.

"There's so much local beer that I think it's more a dying nostalgia for things like Natty Boh," said Thomas Cizauskas, who sells for a distributor in Northern Virginia and writes a beer industry blog called "Yours for Good Fermentables." "The people who are so loyal to it, I think it's a matter of attrition. That slice of the pie is growing smaller every year."

But he acknowledged it will be years before craft brewers take a significant market share — even as little as one-fifth or one-sixth — from large beverage corporations.

Those in the business say they don't expect the power of that nostalgia — or cheap beer — to fade.

"A lot of the Boh drinkers I know, as long as the price stays where it is, I don't think they care who owns it," said Volker Stewart, co-owner of the Brewer's Art.

That's despite the fact that Natty Boh really can't be considered a local beer anymore, something local craft brewers like to focus on. When Sisson launched a marketing campaign that used a pirate to put a twist on Mr. Boh along with a slogan about Heavy Seas actually being brewed in the Baltimore area, some customers were outraged.

"I don't think there's a local brewer who doesn't want to roll their eyes when you open the paper and people are talking about" Natty Boh, Sisson said.

Fans of the beer said Russian ownership wouldn't dissuade them from their favored brew.

"The Cold War is over. There's no hatred here," said John Walsh, 45, of Baltimore. "If they're not changing the product, I could care less."

Baltimore Sun reporter Natalie Sherman and Chicago Tribune reporter Jessica Wohl contributed to this article.

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