Pabst Brewing and MillerCoors have been in a legal dispute over an impending 2020 contract renewal and will go to trial this November according to CNBC.
MillerCoors has brewed for Pabst under contract for many years, making well-known Pabst beers such as Pabst Blue Ribbon (PBR). However, MillerCoors may terminate their contract with Pabst in 2020, citing potential capacity issues.
Pabst has a lot to lose and has already begun to fight hard against contract termination by MillerCoors. Among the potential losses for Pabst are intellectual property rights. Specifically, the trademark system is a use it or lose it system in the U.S., and Pabst could be at risk of losing trademark protection if marks go unused for too long.
That being the case, if the contract with MillerCoors is terminated, Pabst may be in the expensive situation of quickly procuring a brewing facility, both to meet sales orders and to protect their trademark rights. Further complicating the situation, Pabst products are in the value beer category, making cost efficiency extremely important.
Co-packers are common in the food and beverage industry and can be a great option for start-ups or businesses growing quickly. Co-packers may be especially appealing to brand-forward businesses, as the co-packers handle manufacturing details and allow businesses to focus on sales and marketing.
However, when your business is brand-focused (as in Pabst’s situation), supply chain contracts are critical. Although supply chain and branding protection may not seem closely related, as discussed above, they directly impact each other.
So, as you develop manufacturing agreements, take into account the intellectual property portfolio of your business. By taking this big picture approach, supply chain contracts may be proactively structured to reduce their impact on your intellectual property rights.