Category Archive 'Business'
26 Nov 2018

Pabst Blue Ribbon, Soon to be Extinct?

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Grub Street has bad news for the residents of Portland and Brooklyn.

There was a time, not so long ago, when Pabst Blue Ribbon and the term “hipster” were more or less synonymous. The watery budget brew was catnip for urban creatives, and business was thriving. In 2003, when the Times first took notice of PBR’s bike-messenger cachet, the paper reported that sales had risen 5.3 percent the year before. It was the start of a boom. By 2009, sales were growing by 25 percent. In 2011, someone went on record with the Chicago Tribune to call it “the nectar of the hipster gods.” David Chang put it on tap when he opened a Momofuku outpost in Toronto.

The beer’s cultural bona fides were always something of an instant cliché, but now PBR is in danger of receiving the ultimate badge of hipster credibility: being killed by big business.

Despite the name of the Pabst Brewing Company, they don’t brew the PBR that was beloved by everyone living in Williamsburg in 2009. For years, Pabst has outsourced its beer-making to MillerCoors, a relationship that has suddenly gone sour. The two companies are locked in a half-billion-dollar court battle that, some say, could spell the end of PBR, as well as many other beer brands that Pabst owns. Pabst currently pays MillerCoors nearly $80 million a year to brew its beer; MillerCoors says that, after 2020, it may no longer have the necessary resources available, and is threatening to let the contract expire unless Pabst agrees to a fee that’s closer to $200 million per year, an amount that Pabst contends would “bankrupt us three times over.” …

Pabst closed its flagship Milwaukee brewery in 1996. When Pabst’s last brewery, in Fogelsville, Pennsylvania, closed in 2001, it shifted brewing responsibilities to Miller. In the meantime, Pabst was also focused on buying plenty of beer brands that weren’t PBR, including Lone Star, Schlitz, and Schaefer (“the one beer to have when you’re having more than one”). “We own 77 brands, and 50 of them are dormant,” current owner Eugene Kashper told a New Jersey paper in 2015. “We have a virtual monopoly on American heritage brands.”

What Pabst doesn’t own is a brewing complex to make its beer. The company did recently offer $100 million for a shuttered facility in North Carolina, but that brewery’s owner, which is — wait for it — MillerCoors, made a counter offer of $750 million, effectively ending negotiations.

Pabst is stuck. Its products are brewed, packaged, and distributed by a rival who seems to have no interest and, MillerCoors’s lawyers argue, no obligation to keep the relationship alive. Now, according to the AP, Pabst “is seeking more than $400 million in damages and for MillerCoors to be ordered to honor its contract.”

RTWT

Hmmm. Hiring your competitor to make your product, then sitting back and essentially collecting rent, has a down-side! Who would have imagined?

02 Aug 2018

Working For the Large Corporation

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17 Jun 2016

A Muddled Business

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BadBookeeping

In The Story of a Norfolk Farm (1940), Henry Williamson recounts the story of his own less-than-successful efforts to straighten out the tangled business affairs of his bumbling brother-in-laws to be.

When Papa died, the Boys, as Loetitia called them, would have some money from the trustfund of their parents’ marriage settlement. One of them had an idea, How about trying to get some of that money now? Only a little part of it, of course, about one hundred pounds. It was fatiguing work, pushing on the treadle-lathe hour after hour. Now with a hundred pounds they could buy an oil-engine, and two more lathes, and turn out more work. Keen on the idea, they went to see a lawyer.

Certainly, said the lawyer, he would make inquiries on their behalf. The inquiries were so thorough that in less than a week he gave them the good news that much more than a hundred pounds could be arranged, if they liked. Why not sell all their reversions? Then they would have nearly three thousand pounds, with which they could enlarge their engineering shops more profitably. They thought him an awfully nice fellow to have taken such trouble for them, and agreed that it would be fine to have a big Works in the garden, right by the house, so convenient for business. So they signed the document; and a few months later, when Loetitia left to share the precarious life of an unknown and unconventional author, building began. They gave the job to a small local builder, to help them. There was no contract, no price agreed between them. When the building was finished, the little builder hired a cab, bought a barrel of beer, and drove around town visiting his friends. For a whole week the little man celebrated: the dream of his life had come true: suddenly he had a lot of money.

As for the Boys, inexperience and trust in human nature had resulted in a factory being erected with walls of only a single brick in thickness. Part of those walls fell down, and had to be rebuilt. Only the roof held them together. This had cost about £1600, but when the fire insurance inspector came to look over the completed building, he said that in the event of a total loss his company would indemnify them only to the full value of the building, which was £600.

Read the rest of this entry »

14 Apr 2016

The Expert at the Business Meeting

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Hat tip to Tom Weil.

02 Apr 2016

Investment Banks Get No Respect

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BankBuildings

Robert Arvanitis explains that their utility and functions have changed.

This begins with the historical merchant banks. These were firms that helped fund the Age of Exploration, and grew along with their clients during the Industrial Revolution.

A merchant banker was knowledgeable in one or more lines of business, put his own money into investments, and gathered more investors based on his own reputation. A merchant banker was the finance department for his clients. He not only lent and invested, he advised on markets, delivered correspondent services, knew the broader economy, and participated in the risks.

That was a lot of hard work, and a lot of sincere risk taking, and the merchant bankers were well-respected. …

as government grew, it had a baleful impact on banking. Government imposed increasing regulation, it set ever more complex tax schemes, and it used capital markets for its own deficit financing. The classic “elephant in the bath tub” of economic distortions.

By the 1970s, the investment banks, starting with Drexel, responded to these new signals. Investment banks began to disintermediate the commercial banks, with high yield bonds. Here, the investment banks acted as agent, not principal. They matched borrowers to investors but took no principal risk. That removed the need for capital, but also left the investors with both the default and liquidity risk. This further detached banks from clients, and in fact made them competitors in trading.

It turned out there were more — and more profitable — opportunities in arbitraging tax and regulation than there were in actually serving businesses. …

[T]he new-style investment bankers sold bonds to investors, and then traded against both the investors and the issuers, making a relatively safe turn on each sale. Or else they read the tax code, and fabricated deals that were tax-deductible debt for the IRS, but counted as regulatory capital for the other parts of government. That’s easier and more profitable than actually building something.

In short, rather than solving real challenges, today’s investment banks work to exploit the growing incoherent web of government intrusions on the market. Profitable, yes, but not worthy of our respect.

07 Mar 2016

Trump, the Winner

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SomeWinner

Brett Arends, at Marketwatch, debunks Donald Trump’s claim to being sooo much more competent that all those professional politicians.

The Republican front-runner has made much of his supposed “success” in business and says he now wants to do the same for America.

But the only part of his business track record for which we have the full picture shows that Trump wasn’t a successful executive but an absolute catastrophe.

For 10 years between 1995 and 2005, Donald Trump ran Trump Hotels & Casino Resorts — and he did it so badly and incompetently that it collapsed into Chapter 11 bankruptcy. His stockholders were almost entirely wiped out, losing a staggering 89% of their money. The company actually lost money every single year. In total it racked up more than $600 million in net losses over that period.

Trump was chairman of the board throughout the entire time, and CEO as well for about half of it.

This is the sort of record usually associated with an Enron or a WorldCom or a Pets.com.

Meanwhile, over the same period, all his competitors were enjoying an enormous boom. Take a look at our chart. …

Donald Trump ran the worst performing casino company on the stock market. This isn’t a matter of “opinion.” This isn’t speculation or politics. It’s a matter of plain fact.

However, one person associated with Trump Hotels & Casino Resorts did make money:

Donald J. Trump.

A review of the company’s public filings show that over that period, while his ordinary investors were getting hosed, Trump himself was siphoning millions out of Trump Hotels & Casino Resorts through salary, “bonuses” — yes, really — and cozy “service agreements” or side deals with his private corporations.

In total, Donald Trump pocketed $32 million over nine years, while his public stockholders lost more than $100 million.

Follow the money. It really isn’t that complex.

Now his supporters want to put him in charge of the federal government. They actually hope he will do for America what he’s already done for his business.

Heaven help us all.

27 Aug 2015

Cheap Flights

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21 Aug 2015

Love Gov: 5 Episodes

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A series of videos from the Independent Institute depicting Alexis’s relationship with Gov, from first date to mandate.

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28 Jan 2014

Dilbert

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Hat tip to Karen l. Myers.

02 Jun 2013

Advice for Goldman Interns

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Obligatory Zegna tie.

Niccolo Machiavelli, Vice President at Goldman Sachs, offers some helpful career advice to this year’s male summer interns via the GSElevator blog:

1. If your boss smokes, smoke.

2. If your boss is Indian or Pakistani, learn the rules of cricket. He probably also smokes, so see #1. But be careful, if he doesn’t, he’s a vegetarian yogi.

3. Don’t wear Hermes ties, ever. You have to earn it.

4. Buy a decent suit or 3, but no cuffed or pleated pants. And don’t wear a tie unless you might have a meeting. No one likes that kind of kiss-ass.

5. Learn how to tie a double Windsor; just make sure the knot’s not too fat.

6. Keep your shoes shiny, but don’t let anyone see you having your shoes shined. You have to earn it.

7. If you went to a decent boarding school, subtly find out if anyone who matters went to the same school. Boom, he’s your rabbi. At this point, no one cares about college credentials; it’s a given.

8. As it relates to fellow interns, make no mistake about it – it’s war:

    Let’s be clear. It’s impossible to compete with female interns. And it’s not cool. So don’t bother trying.

    When a fellow intern leaves his desk, change his screen (or screens) to rolex.com, porsche.com, or morganstanley.com.

    Come up with dismissive nicknames for fellow interns (Chico, Bud Fox, Fredo, Bubba, etc.). Hope that it catches on.

    When a fellow intern leaves his computer unlocked at the end of the evening, change the signature on his Email settings. Using white font, add any variety of obscene words. No one will see it… except for IT and HR.

9. Don’t be too good to do the coffee runs. It shows confidence. Just don’t fuck it up. If you can’t be trusted with coffee, how can you sell bonds or manage risk.

10. Call Bloomberg and have them give you a tutorial on functions. It’s free. And most EDs and above are still using functions and short cuts from 5+ years ago. It’s an easy way to impress them. And many of the Bloomberg girls are hot.

11. Leave a jacket on the back of your chair at all times. While you are at it, keep a tie in your drawer. Zegna is a good choice.

12. Ask the secretary for the travel schedules of the senior members of your group for the week ahead. She’s dumb enough to think you are being proactive. But now you know when you can sleep in, hit the gym, or beat the traffic to Southampton.

13. Never tell racist jokes. Always repeat racist jokes in the proper company and be sure to credit ‘the other intern’ who told you.

Read the whole thing, Bubba.

Hat tip to Lynn Chu.

24 Feb 2013

Gun Companies Increasingly Refusing to Do Business With Gun-Grabbing Governments

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CNS News

A growing number of firearm and firearm-related companies have stated they will no longer sell items to states, counties, cities and municipalities that restrict their citizens’ rights to own them.

According to The Police Loophole, 34 companies have joined in publicly stating that governments who seek to restrict 2nd Amendment rights will themselves be restricted from purchasing the items they seek to limit or ban.

Hat tip to Theo.

16 Nov 2012

Hostess is Shrugging

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HuffPo:

Friday could very well go down in history as the death knell for an 82-year-old Chicago-born American classic snack cake: The Twinkie.

Hostess Brands, Texas-based maker of Twinkies and a number of other snack foods, announced Friday that, on the heels of a nationwide worker strike, it will be going out of business, closing its production plants and laying off the vast majority of its 18,500 employees nationwide. As for the Twinkie brand? It will be going up for sale.

Three of the company’s plants — including one in St. Louis — closed earlier this week as workers went on strike in response to wage cuts and new limitations in worker participation in pension plans. Now, 1,415 workers at the company’s three Illinois bakeries — in Schiller Park, Hodgkins and Peoria — are losing their jobs, the Chicago Sun-Times reports.

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