USA: InBev in talks with City Brewing over sale of Latrobe Brewing Co.

InBev USA said June 21it has signed a letter of intent with City Brewing Co. of La Crosse for the sale of InBev’s Latrobe Brewing Co. brewery in Latrobe, Pennsylvania, La Crosse Tribune posted June 22. If completed, it would be City Brewing’s first acquisition of another brewery.

“The two parties will now enter into an exclusive period of negotiation in an effort to reach agreement on a final deal regarding the sale of the brewery,” InBev said in a press release. “Union leadership will be included in the discussions, and local, state and federal government leaders will also be consulted.”

InBev has said it will close the Latrobe facility by July 31 if it is not sold.

Last month, InBev sold Latrobe’s Rolling Rock beer brands for $82 million to Anheuser-Busch, which plans to brew Rolling Rock at its Newark, N.J., brewery. The sale did not include the Latrobe plant.

The Latrobe brewery has about 200 employees, compared with 400 at the City Brewery in La Crosse.

The City Brewery has its own brands of beer. But beverages it makes for other companies by far account for most of its production. The brewery’s production is expected to increase 30 percent this year, led by growth in flavored malt beverages and nonalcoholic drinks such as tea and energy and soft drinks.

“This fits with our strategy,” City Brewing Chief Operating Officer Kenn Yartz said of the proposed purchase of the Latrobe brewery. “We believe our co-packing model is consistent with where the growth in the beverage industry is. We’re at a point in our business growth where we certainly need to entertain these opportunities as they come up.”

Company officials think they need a presence in the East, he said.

“The letter of intent provides for a period of exclusivity to investigate the purchase,” Yartz said. “It is not a purchase agreement.”

In March, City Brewing confirmed it might buy the Coors Brewing Co. brewery in Memphis, Tenn., which Coors plans to close. That would have been the La Crosse company’s first acquisition of another brewery.

But in May, City Brewing President Randy Smith said the Memphis acquisition was off, after that brewery’s union membership rejected a City Brewing contract offer that would have paid them what La Crosse brewery employees receive. He said workers at City Brewery are paid $16.22 an hour, less than the Memphis workers are making.

“We will be asking them to make changes” in the union contract in Latrobe, Yartz said. He declined to say what changes City Brewing will ask for.

News that Rolling Rock will be leaving Latrobe, a town of about 9,000 people, upset residents who have seen generations go to work at the brewery where the beer has been produced since 1939.

The brewery has undergone equipment upgrades in recent years, including the installation of a $14.5 million packaging line six years ago that was expected to double the plant's production capacity.

City Brewing Co. makes City Lager, City Light and La Crosse Lager and other beverages.

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