Oo get a sense of where Kevin Kotecki’s coming from, consider this statement: “I’m not the guy who wants to put the 11th coat of wax on the Rolls Royce; I’m the one who wants to recondition the ’57 T-Bird.”

If there had ever been a beer company in need of some restorative maintenance, Pabst Brewing Company, which Kotecki now helms as president and CEO, was it.

Kotecki, who has a finance background and has worked at companies ranging from Procter & Gamble to Coors Brewing, joined Pabst in October 2005 after its board recognized that it was time to move the company in a new direction. Volume-wise the company had been in steady decline falling to overall barrelage of 6.2 million in 2005, from 9.5 million in 2000, according to Beverage Marketing Corp­oration. While it still ranks as the No. 6 beer marketer in the US (including both US-based brewers and importers), it’s a long way from its 19th century Milwaukee heyday when it quickly rose to the top of the beer industry and its only credible rival was Anheuser-Busch. The company’s late-20th-century history was marked by takeover bids (culminating in the purchase in 1985 by businessman Paul Kalmanovitz, whose death two years later left the brands in the hands of the charitable trust that bears his name) and brewery closing after brewery closing—including its Milwaukee flagship in 1996—with the final facility shutting its doors just over five years ago. All of Pabst’s brands, from the eponymous, once-No. 1 flagship, to its other age-old trademarks like Old Milwaukee, Old Style, Rainier, Colt 45, National Bohemian, Stroh’s, Schlitz and Lone Star, are now contract brewed, much by Miller Brewing.

All About the Brands
Armed with a hefty mandate for change, Kotecki and his team’s first order of business was to create a new strategic platform for growth. “We have a new vision, which is about being the fastest-growing company in the industry,” Kotecki notes. “We have new strategies, which revolve around harnessing the power of our truly unique portfolio of brands in ways our competitors cannot.”

Indeed, Pabst’s key advantage is a veritable treasure trove of venerable trademarks—75 in all, 37 of which Pabst currently sells in the marketplace. The fact that many of those products have underperformed in recent years is no reflection on their viability as brands, Kotecki believes, but rather on their wealth of untapped potential.

“Without a doubt our greatest asset is our brands,” Kotecki asserts. “They have strong residual awareness. They have equity. They are authentic. This is a key point of difference in an image category like beer. We have brands that have stood the test of time. It’s very difficult to create a brand out of thin air and market it and be successful in this category. New brands don’t have credentials—street cred—like our brands do.”

And that, Kotecki says, gives Pabst’s brands an edge in the marketplace. “[Competitors’] brands have a very large and very diverse base of users,” Kotecki explains. “Therefore they are somewhat limited on whom they can target and how they position their brands. Narrowing the focus of their target or brand positioning could potentially alienate existing users. So for Pabst, it’s all about leveraging the power of our brands against a focused consumer target with a unique brand message.”

Look no further than Pabst’s original raison d’etre, Pabst Blue Ribbon, for evidence of that power. The brew’s recent renaissance among no-nonsense hipsters is legendary. Everyone from graphic designers and bike messengers to tattoo artists and punk rockers, and many other subcultures in between, began rediscovering the brand in the first few years of the 21st century. They were attracted by its authentic image and under-the-radar profile, thanks to its miniscule marketing presence relative to the Big Three brewers. One could say PBR—the very fact that it’s known by those initials is a testament to its hipness—has become a counterculture icon of sorts.

It’s all about understanding the psychographics, not just demo­graphics, of its target consumers. That’s how the greatest opportunities can be unlocked for all the other trademarks beyond PBR. Generally beer marketers—and alcohol beverage marketers as a whole, for that matter—court the prized 21-to-29 demo, but, says Kotecki, “for us, it’s not just about going after a younger consumer, it’s going after the right consumer. Our targets are not a general 21-to-29 demographic, they’re much more specific than that.”

Marketing to those very specific psychographic groups can prove tricky, especially when many of them revel in the notion that they have ownership over a brand that they’ve “discovered,” rather than feel as though they themselves have been discovered by some corporate marketing department. Therefore, it’s not just the message that matters, but its method of delivery.

Grassroots promotion has been a core strategy for the company, especially for PBR. Branding consultants helped PBR boost its profile among the anti-establishment set, carefully highlighting its “authentic,” retro-chic positioning in and around their favorite haunts—tattoo parlors, snowboarding venues and pro shops, underground live music sites and the like—and planting the seeds for robust word-of-mouth.

Beyond PBR, another example of an iconic brand—albeit regionally—poised for growth is the company’s Lone Star trademark. Though the brand has been considered “the National Beer of Texas,” Kotecki admits the company really hasn’t marketed it that way. “Through consumer research we began to understand that loyal Texans—that group of 2 or 3 million people who believe in the Texas way and the spirit of Texas—are the real Lone Star drinkers,” he reveals. “These beer drinkers, who still believe that Texas is a country, gravitate toward Lone Star because it’s Texas-born and it’s Texas-brewed...Success for Lone Star would be dominating that segment of the Texas population and driving the business up two or three or four times its current size—not expecting to drive it to the same size as Bud, Miller or Coors. Lone Star is about Texas and Texas values. And no matter how many Texas flags the competition sticks on their cans, they can never stand for Texas in the way that Lone Star does.”

Structural Fortification
With Pabst Brewing Company’s brand-centric growth strategy in place, Kotecki’s team’s next task was to create a structure for the organization that would facilitate the achievement of that strategy. Realizing that a successful beer marketer is only as strong as the distributor network that gets its products to market, the new management team created a department whose sole focus would be network development. The company appointed Richard Bartlett, whose experience spans all three alcohol beverage tiers, to the newly created position of vice president of network development. “This group is charged with strengthening our communication and our relationships with Pabst distributors and finding ways to make our overall distributor network more effective in the marketplace,” Kotecki explains. “This move is absolutely essential to the success of the company long-term. It’s a big step forward for us.”

The company in late 2006 hosted distributor strategy meetings with representatives from its 800-strong wholesaler network. It had been many years since the company last hosted such a national meeting and distributor feedback, Kotecki says, was nothing short of “fantastic.”

“People appreciated our candor, our honesty, our approach to the meetings—no dog-and-pony show,” he observes. And, he adds, it was a long time coming. “Our distributor network has been waiting patiently for Pabst Brewing Company to take an aggressive growth stance and really push the envelope in the marketplace,” he continues. “That’s what we’re all about today and the message was received very well.”

For Bob Stevens, senior vice president of sales and marketing for Alaska Distributors Co. (Kent, WA), it was especially well received. “They didn’t try to put earrings on a pig,” offers Stevens, whose distributorship has carried Pabst products for about 20 years. “They acknowledged their flaws and challenges, but I think you couldn’t help but be impressed with the sincerity, enthusiasm and quality of the team.”

A-Team
The structural overhaul also meant significant changes in Pabst’s sales and marketing organizations. Management hired a new chief sales officer, Abbott Wolfe, who previously had served in leadership positions at Constellation Brands and Pacific Wine Partners, among others. He joins another new hire, Brad Hittle, who previously managed the Rolling Rock business for Labatt USA and now has taken over as Pabst’s chief marketing officer. Four new senior brand managers also have joined the ranks. To remain at the top of its game, the company has made substantial human resources improvements, including hiring new HR vice president Susan Lundquist and restructuring its management incentive plan to include more employees and base payouts more on company results than on individual achievement. The sales team’s incentive program also has been revamped to reflect a less volume-conscious mindset. “We’ve shifted the focus to retail success and now include a measure of profitability along with case volume goals,” he explains.

Another big shift is a geographic one: The company last spring moved its corporate headquarters from San Antonio, TX to the Chicago suburb of Woodridge, IL. Though Pabst personnel continue to staff the San Antonio site, the executive team, as well as the sales and marketing department, work out of the Woodridge location. The new base of operations, Kotecki notes, “brings the history of our brands to life,” and provides a venue in which to meet with and entertain visiting distributors, showcasing “what’s unique about Pabst Brewing Co.” and its vast portfolio. “We have our own bar and when customers visit, they leave their autograph on the ceiling, a new tradition for Pabst,” he says.

Virtual Reality
One thing visitors to Pabst HQ won’t be seeing is an actual brewing facility. With all the changes the company has made, one aspect that won’t change—definitely not on Kotecki’s watch—is its status as a brewery-less brewer.

“I can’t see any reason why I would want to own a brewery,” Kotecki proclaims. “We have an excellent relationship with our contract manufacturing partners, and with the help of our strong operational team we brew extremely high-quality products with great consistency and excellent flavors.”

Not to mention it takes a lot of operational headaches out of the equation. “We don’t have all the overhead [our competitors] have,” he says. “And it allows us to focus our resources on the most important things for our business, which are sales, marketing and relationships with our distributor customers.”

The company must be doing something right, otherwise, Pabst would not continue to win medals in major brewing competitions. At the September 2006 Great American Beer Festival (GABF), the company picked up a number of accolades, including Large Brewer of the Year, Brew Master of the Year and, for the second consecutive year, gold medals in the American-Style Premium Lager category for PBR and the American-Style Light Lager category for Old Milwaukee Light. The Lone Star and Blatz brands also took home medals. And that’s not all. PBR also took a gold at the 2006 World Beer Festival. “Since 2004 Pabst Brewing Company has won 19 medals in total,” Kotecki raves.

It’s a feat that has both baffled and impressed Maureen Ogle, author of Ambitious Brew: The Story of American Beer, which traces the history of the US brewing business—including the rise and fall of Pabst Brewing Co. (see On the Page, page 18). It’s not so much that Pabst wins the awards, but that the company gets such a warm reception at the largely craft beer-oriented festivals. Ogle witnessed this first hand while promoting her book at the 2006 GABF.

“If Anheuser-Busch would win a prize, which it did a couple of times, the 13,000 or 14,000 people who were listening would ‘boo’ pretty loudly,” Ogle recalls. “But Pabst also won some prizes this year and would get these enormous cheers from people in the audience. I remember thinking, ‘Anheuser-Busch, which actually owns breweries, gets booed and this holding company that happens to own and market a bunch of beer brands gets cheers?’”

Ogle’s research has given her a sense of kinship with the company’s 19th century namesake, Frederick Pabst. “On the one hand,” she ponders, “[Frederick Pabst] might be stunned and dismayed and on the other, as a smart businessman himself, he might say, ‘Well, you’ve got to grab the chance while you can and you guys are pretty shrewd.’ [Pabst] is one of the most blatant pieces of marketing I’ve seen in my life, but it works, so who can complain?”

Certainly not Kotecki, though he admits he once wasn’t a true believer in the contract model. “Frankly, when I joined the company, I was very skeptical about the relationship and the virtual brewing nature of our business and now I think it was a tremendously intelligent move that the company made.”

The caliber of Pabst’s management team and the strength of its reinvigorated organization should facilitate further intelligent moves that will get the company on the road to growth. To be sure, that path won’t be without its share of bumps and curves, despite its current energy and momentum. For one thing, its future ownership has, for many years, been a big question mark. The nature of its holding company as a charitable trust means it eventually has to sell its operating businesses. “You couldn’t ask for a worse set of circumstances,” believes Alaska’s Stevens. “You’ve got a company that’s owned by a charitable trust that has to, by law, divest of them. That creates major uncertainty...And then you’ve got the fact that all the production is contracted out, so they really are at the mercy of Miller and a few others. ”

Despite that, Stevens is comfortable knowing the company is in capable hands, having known Kotecki since his days at Coors. “We were glad to see the company hire him and probably more glad to see him take the job,” Stevens recalls. “Kevin’s surrounded himself with some good people. I think they’ve got a shot at really doing something with this company.”

And Kotecki knows that you can’t have a good shot without good aim: “My aspiration is not to be the next Bud, Miller or Coors. It’s to be the best Pabst Brewing Company, which means we’ll carve out loyal and growing segments of the category by leveraging our unique brands in unique ways.”

For more marketing insight from Pabst, visit Beverageworld.com.