Eugene Kashper made a fortune reviving several Eastern European breweries. Now he’s focused on a new beer project: Pabst Brewing — which includes Rainier Beer — where he’s dusting off old beer recipes and brands to capitalize on consumer desire for local products.
LOS ANGELES — Eugene Kashper looks the part of someone who likes to throw back a few PBRs 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. 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, 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.
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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.”
Kashper says he saw a big opportunity. “Beer, you know, it’s just fun,” he said. As the CEO, 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 MolsonCoors, last year controlled roughly 70 percent of the American market. Pabst was in fifth place, with 2.6 percent.
But Kashper offers no hint of doubt, and his partners say he has already put the company on the right path.
Among his moves: Pabst, which owns the local classic brand Rainier Beer, in January signed a deal to have Craft Brewers Alliance brew some Rainier varieties at the Woodinville brewery that’s home to Redhook. Pabst got a three-year option to buy the brewery as well.
Brian Krumrei, a managing director at TSG, said profitability at Pabst increased 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,” Krumrei said. “We view that as a huge positive for the business and its potential.”
Born in Russia, 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, he 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 trio 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. Kashper, it said, was the buyer.
Pabst, founded in Milwaukee in 1844 by Jacob Best Sr., had a pretty good run for more than a century. But in the 1980s, sales began sliding.
It went through several cost-cutting owners, contracted production out to MillerCoors, and spent virtually nothing on advertising.
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,” 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.
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. For example, Pabst will soon start selling Woodinville-brewed Rainier Pale Mountain Ale, 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,” 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.