Ambitious Brew: The Story of American Beer (31 page)

Richmond provided an ideal laboratory. First, about 75 percent of the city’s beer was sold in bottles, the reverse of what was true nationally but the ratio predicted to become the norm in another decade or so. Second, Krueger already owned a chunk of the Richmond market. Third, it shared the city with a handful of local and East Coast brewers as well as the three major shipping brewers, Anheuser-Busch, Pabst, and Schlitz, which meant that the Krueger cans would face limited but varied competition: national brewers supported by hefty advertising and regionals and locals backed by hometown loyalty and name recognition.

In June 1934, a crew of messengers hand-delivered four cans of beer and a questionnaire to one thousand households, chosen because they’d been identified as Krueger customers. The questionnaire cut to the chase: Did you like the beer? Would you drink it again? Is the no-deposit, no-return package worth the extra money?

The results surprised even Krueger: Eighty-nine percent liked the beer enough to drink it again. That was more than good enough to go ahead. Krueger and American created an advertising campaign complete with streamers, signs, window cards, and plenty of newspaper ads (“KRUEGER’S . . . in the amazing new KEG-LINED CAN.” “HAVEN’T TRIED IT YET? . . . youre missing something”), and on January 24, 1935, the beer went on sale citywide. Within a month, more than 80 percent of Richmond’s beer distributors were handling Krueger’s brew—and canceling orders for beer from Pabst, Schlitz, and Anheuser-Busch.

By late 1935, brewers could choose from two kinds of cans—the flat-top still familiar today and a short-lived version shaped like a bottle—as well as several sizes and shapes of thick-walled, lightweight disposable bottles. The new packages accelerated the trend toward shipping. Prior to Prohibition, the vast majority of brewers shipped no beer at all or limited their reach to perhaps fifty miles from their home base. By the late 1930s, three-quarters of brewers were transporting at least part of their brew over state lines. True, much of the interstate beer ended up in adjoining markets: a Brooklyn beermaker sending trucks of beer across the Hudson to Newark, a Milwaukee brewer shipping to Chicago, Philadelphia beer being sold in Baltimore. But every day more and more beer traveled farther and farther, and brewers who could afford to began thinking of their markets in national, rather than regional or local, terms.

The Miller siblings, who introduced their canned beer in March 1936, recognized that brewing’s future lay far from home. Pre-Prohibition, the brewery’s beer rarely traveled beyond Wisconsin and a half dozen other northern midwestern states. But in 1936 and 1937, the family made its first strike to push Miller Brewing into the industry’s top ranks, spending a half million dollars on radio and newspaper advertising. In 1937, Fred and Clara both retired, a move that injected new energy into the company in the form of Clara’s son, thirty-one-year-old Frederick C. Miller, who joined the board of directors and replaced his mother as vicepresident. In 1938, Elise, now company president, and her young nephew accelerated their campaign, advertising Miller High Life in forty states. The following year they made a run for the other eight when they purchased advertising, much of it full-page and in color, in a host of national magazines. By that time, they’d moved out of the crowded bottom tier of small, local brewers and into the top twenty nationwide. The Millers had grasped the essential dynamic of beer-selling in post-repeal America: The race would be won by he and she who moved quickly and decisively.

Building a shipping market required money most of all, and not every brewer could afford to make the same choice as the Millers. Nor did every brewer try to do so. A handful of small, family-owned breweries survived the rambunctious post-repeal period by sticking to their pre-Prohibition game plan: cultivate local markets and local loyalty. Small beermakers like Yuengling in Pennsylvania, Leinenkugel in western Wisconsin, and the Matt family’s West End Brewing in upstate New York endured in part because of hard work, careful management, and fine beer. But they were also protected by their location in rural areas characterized by sparse population and limited highway access. For many years, the largest brewers—Anheuser-Busch, Schlitz, and Pabst—simply ignored these isolated pockets in favor of the swelling urban centers that proliferated alongside increasingly congested highways. The Matts, Yuenglings, and Leinenkugels took advantage of that fact, and, rather than gamble on risky expansion and shipping, chose instead to pour all their resources into building customer loyalty in their own backyards.

As a result, it was small urban brewers who bore the brunt of the assault from shipping brewers and were the most likely to crumple when the Millers, or an even bigger gun like Anheuser Busch, already experienced in the complexities of retailing and distribution, released a barrage of advertising. Nor could the urban locals rely on low price to keep their customers. Thanks to Prohibition’s alley beer and the Wall Streeters’ tainted brew, shoppers shied away from bargains, fearing that low price indicated low quality. One grocery owner explained to a brewing trade journal that the women who frequented his store preferred quality over price, which was another way of saying that they preferred the consistently high-quality brews from old-line nationals like Schlitz and Pabst. This was more than one man’s anecdote. A survey in the spring of 1935 showed that, nationwide, half of all beers sold were in the medium price range ($1.60 to $2.00 a case), while the cheap brews (priced at less than $1.60 a case) captured only about 17 percent of the market. Premium beers like those from Pabst, Schlitz, and Anheuser-Busch snagged a full third. And those were only national averages. In Columbus, Ohio, for example, the lowest-priced beers accounted for only about 3 percent of sales, while the most expensive brands hogged a whopping 68 percent of the market.

The nature of post-repeal distribution exacerbated small brewers’ woes and inadvertently fueled the dynamic that favored giant breweries. Prior to Prohibition brewers sold their beer directly to saloon owners, but after repeal they handed it over to a middleman, the distributor, who resold the beer to grocery stores and taverns. In a perfect world, a distributor’s trucks left the warehouse loaded with cans, bottles, and kegs from a half dozen or more breweries. The more cases of Brand X that the driver unloaded at Sam’s Corner Grocery, the more money the distributor earned. If Sam’s Corner Grocery closed, or if Sam stopped carrying Brand X, or, worse, if Brand X Brewing closed its doors, the distributor’s income dropped and his employees drove half-empty trucks.

From the brewer’s point of view, the distributor owned the key that unlocked the door to Sam’s Grocery. If Brewer A wanted to break into the market in, say, El Paso, he had to find a distributor who was willing to carry his brand and place it on grocery store shelves.

But the biggest brewers’ command of larger and larger shares of the market enabled them to exercise an informal but lethal power over wholesalers. A giant could pressure his distributors to truck his beer and only his beer; to drop competing brands; or to drop soft drinks, liquor, and wine. If the wholesaler refused, a brewery representative would show up at the warehouse and threaten to cancel the carrier’s contract.

Most distributors caved to the pressure. How could they'refuse? Not with fleets of trucks and warehouses to pay for. And so the wholesaler informed his weaker, smaller customer—usually a local brewer—that he could no longer carry that brand of beer, leaving the beermaker with a brewhouse of woes in the form of unsold kegs, bottles, and cans.

Those who played the distribution card wisely created a buffer that sheltered them from hard times and other competitors. But no one could control the weather or the economy, and drought in 1936 and a recession in 1937 put even more pressure on the smaller players. When the drought began in the summer of 1936, there were 739 brewers in operation; by late 1938, that number had plunged to 625.

World War II proved another matter. Early in the conflict, federal officials ordered distillers to convert their plants to military production of industrial alcohol, but protected brewing as a vital component of the war effort. With spirits in short supply, beer consumption soared—or at least as much as rationing would allow.

Tin was rationed, so beer cans were banned except for sales to the military. Schlitz transformed shortages of glass and bottle caps into an advertising campaign. “When you share a quart of Schlitz and make one cap do the work of three it isn’t a question of patriotism,” the company’s advertisements announced. “You are just helping the other fellow get his share of the beer that made Milwaukee famous. That’s the friendly, American way.” When gasoline and tires ran short, Rudolph Schaefer bought one hundred draft horses and rented dozens more; it was the only way he could deliver his beer. Rainier Brewing of San Francisco hired teams of Clydesdales to haul wagons of lager through the city’s hilly streets.

In 1943, the Food Distribution Administration ordered brewers to hand over 15 percent of their production to the troops, a seemingly innocuous mandate that inadvertently exacerbated small beermakers’ woes. Fifteen percent of production from Anheuser-Busch, Pabst, and Schlitz was almost enough to meet demand, which meant that many small beermakers missed the opportunity to introduce their lagers to the people most likely to drink it: young men. Cut off from the front lines, the small fry focused on selling their beer to civilians at home, but they often ran short of bottles or kegs, or the gas needed to make deliveries.

Pinned down by rationing and ambitious national shippers on one side and a fusillade of federal regulations on the other, small beermakers joined forces in a Small Brewers Committee (later the Brewers Association of America). The twenty-five men who gathered in Detroit in the spring of 1942 appointed as secretary William O’Shea, a hot-tempered, loose-tongued wheeler-dealer whose Chicago printing company made labels for a number of breweries. He lobbied Congress for a graduated tax system based on barrelage and devoted the war years to railing against big brewers, whom he accused of ignoring the small guy’s plight. His members, he warned in what would not be the last of his hyperbolic pronouncements, would rather be put out of business by what was left of the enfeebled Anti-Saloon League than by rapacious cutthroats like the Busch brothers. “The big brewers are going to destroy the opportunity of young men who someplace, this very day, are giving their lives for one purpose; preserving the American way of life.” He demanded that the “paternal government . . . protect the weak like the police protect us from thugs.”

Others begged to differ. A man who had directed a brewing trade group during the dry years argued that too many small brewers clung to outdated business methods, content to coast along trolling for tavern trade and equating salesmanship with throwing a few bucks on the bar and buying a round for the house. Where were the small brewers during the push to conquer the home market? he asked. Nowhere to be found, and so the largest brewers had commandeered new territory around the country, filling grocery shelves from coast to coast with their beer, while the small boys whined about their poor sales and low profits. Another critic blamed the small beermakers’ woes on carelessness and ineptitude. Too often they hired an inexperienced friend or relative to manage the plant, and then exacerbated that mistake by refusing to pay good wages for a trained brewmaster. The beer went bad, sales plunged, and the brewery landed in bankruptcy.

Harsh words, but in many cases accurate ones. As one beermaker pointed out, anyone who failed during the war surely only had himself to blame. With distilling off-limits for the duration, most brewers were selling as much beer as they could make. Sales rose 10 percent in 1941, 12 percent in 1942, and another 12 in 1943.

Still, the shortages of brewing materials forced every brewer, large or small, to make a difficult choice: brew as much beer as possible using inferior substitute grains, or stick to high-quality but scarce barley, corn, and rice and reduce output accordingly. Many brewers took the path of least resistance and experimented with rye, oats, or potatoes. But rye produced a doughy wort, and oats resulted in a tongue-curling swill. One brewing chemist pleaded with brewers to avoid the potato, which produced beer that tasted as foul as it smelled. In the end, the brewers who created rationing-inspired recipes stuck with either yellow corn (oilier than the white corn that brewers typically employed) or unmalted barley. It was mostly marginal beermakers who tampered with their recipes; those with long histories and solid reputations didn’t dare.

Among them were the Millers. Back in 1937 when drought and recession had sent materials costs into the stratosphere, Elise, Clara, and Frederick had ordered their brewmaster to keep paying top dollar for the same fine materials that the family had been using for eighty years. In 1944, when the brewery turned out a record 730,000 barrels of beer, Elise made the same decision, but this time it forced her to curtail production. She slashed the advertising budget, pulled Miller beer out of seventeen states, and eliminated every label except the company’s flagship brand, Miller High Life, most of which was sold in slender bottles adorned with a gold-foil neck wrapper and Miller’s famous “Girl in the Moon” logo. The results were not as disastrous as they might have been: Because the family had positioned it as a national beer, Americans, back at work now and with hefty paychecks, passed up tencent bottles of lesser-known brews in favor of the fifteen-cent Girl in the Moon. The brewery earned a profit of $2.2 million in 1945, more than twice the amount of 1940, while selling in far fewer markets.

The war ended in 1945, but rationing did not. President Truman told Americans that Europe needed their help. Brutal weather there was killing both people and livestock. There was flooding in Italy and food shortages in Holland. Worse yet, the specter of communism lurked in every bleak street and dark alley of every European city. Better to endure Meatless Mondays and Wheatless Tuesdays here at home, Truman told the nation, than to allow the red menace to wrap its loathsome arms around the starving millions of Belgium or France.