Yuengling Nears Purchase of Memphis Plant - may distribute in Ohio

By DAVID KESMODEL

Scott Lewis for The Wall Street Journal

The can filler in the Yuengling Brewery allows for 820 cans a minute to be made, a small amount compared with larger domestic beer makers.

D.G. Yuengling & Son Inc., one of the fastest-growing U.S. beer makers, is close to acquiring a former Coors plant in Memphis, Tenn., to help the company meet rising demand and increase distribution beyond the eastern U.S.

Yuengling, the oldest brewer in the U.S., has signed a letter of intent to buy the Memphis facility from Hardy Bottling Co., which purchased it from Molson Coors Brewing Co. in 2006.

Acquiring the facility would give the Pottsville, Pa., company—the seventh-largest U.S. beer supplier by sales volume—a fourth manufacturing facility and help it expand distribution beyond its current 13 states in the eastern U.S.

"Memphis is an ideal location," said David Casinelli, chief operating officer of Yuengling, in a phone interview. "At some point we're going to run out of room" at its existing plants in Pennsylvania and Florida.

Mr. Casinelli said the closely-held company hopes to close the deal in the next few weeks.

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Scott Lewis for The Wall Street Journal

The historic Yuengling brewery overlooks Pottsville, Pa.

Hardy has used the plant to package teas, energy drinks and other products on behalf of beverage companies. Carolyn Hardy, who runs the Memphis facility, could not be reached for comment. The plant was acquired for $9 million from Molson Coors.

Yuengling, a household name in such states as Pennsylvania, New Jersey and New York, has long taken a conservative approach to growth. Its brands' cult-like appeal have prompted consumers from as far as California and Washington to send letters and place phone calls urging executives to expand distribution.

The company said in a statement Thursday that it doesn't have a "definitive timetable" to introduce its beers to additional states. Executives said in an interview earlier this week that they likely would add at least one new state in the second half of next year, and that Ohio was a possibility.

Yuengling, founded in 1829 and owned by fifth-generation brewer Dick Yuengling, sells its beers in 13 states and Washington, D.C., and accounts for about 1% of the U.S. beer market, which is dominated by Anheuser-Busch InBev NV and MillerCoors LLC. Yuengling's sales volume rose about 12% last year to 2 million barrels, according to industry newsletter Beer Marketer's Insights.

The brewer's sales in food, drug and other retailers—excluding Wal-Mart Stores Inc. outlets—were up 11% to $121.2 million through Sept. 5 against the year-earlier period, according to market-research firm SymphonyIRI Group. The data also don't include sales in bars and restaurants.

The maker of Yuengling Traditional Lager and Lord Chesterfield Ale currently operates two breweries in Pottsville and one in Tampa, Fla. It bought a former Stroh's brewery in Tampa in 1999 that helped it expand into the southeastern U.S.

The Memphis facility opened as a Schlitz beer plant in the 1970s.

Write to David Kesmodel at david.kesmodel@wsj.com

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Posted via email from Tony Burkhart