Ambitious Brew: The Story of American Beer (34 page)

B
UT IF
M
ILLER
B
REWING
and Anheuser-Busch represented one face of the brewing industry in the 1950s, Pabst exemplified another—one that was, although few recognized it at the time, more emblematic of Big Brewing’s coming fate. Pabst Brewing had ridden high and fast into the post-war era under the leadership of president Perlstein and board chairman Fred Pabst Junior. The brewery, ranked number three in the nation, owned a plant in Newark, and in 1953 opened a high-efficiency, ultramodern brewery in Los Angeles months before Gus Busch and Erwin Uihlein.

But in 1954, Fred Junior retired, an event that marked the first time since 1864 that no company officer bore the name “Pabst.” With him went the Pabst magic that had once made Chestnut Street in Milwaukee home of the world’s leading brewery. He had given up a role in daily management some years earlier, but his place on the board had rooted the company in its past. After all, Fred had joined the company back in the 1880s, and learned the business under his father’s tutelage. No one else could or would replace that connection to the past, and it’s not likely anyone cared. Since repeal, most of the company’s officers had been chosen from the ranks of superior salesmen, or from the cadres of college-educated young men interested in making a career in booming corporate America. Now a parade of presidents, vice-presidents, and marketing directors could not reverse the flow of red ink; they could not figure out how to market a beer in a world where beer drinkers proved few and fickle. By 1956 the company had slid to seventh place in the brewers’ ranks, and the stock had plunged from its post-repeal high of $32 to a mere $6. In 1957, the board of directors replaced Perlstein with a marketing executive from Colgate-Palmolive, who stanched the wounds with a combination of lower prices and gimmicks like coupons redeemable for salt shakers and barbecue tools.

It was too little, too late. Frederick Pabst’s beloved brewery, with its turrets, Gothic windows, and lanterns emblazoned with “P,” lay near death. A proxy fight erupted in early 1958, when one group of stockholders tried to sell the brewery to Pepsi-Cola and another group resisted, determined to resuscitate what was left of the company. In the end, the combatants reached a weird compromise: Pabst bought Blatz Brewing from its owner, spirits maker Schenley, not because it needed more brewing capacity—it most assuredly did not—but because it needed Blatz’s president, a whiz-kid accountant who had doubled Blatz’s sales and prodded the company from its position at number twenty-four up to number eighteen. Whether he could save Pabst remained to be seen.

If Pabst hoped to survive, someone needed to get cracking. A pack of aggressive mid-sized regional brewers were grabbing bankrupt breweries and using those and space on wholesalers’ trucks to bully their way up the ranks. They got a boost from consumers’ disenchantment with high-priced brews. No one worked this game better than the men at Hamm Brewing in St. Paul, Minnesota. They modernized the company’s one plant, then purchased Rainier’s San Francisco facility, which opened doors to wholesalers in coveted California. They dumped their old ad campaign and replaced it with one built around the phrase “the land of sky blue waters.” It was not particularly fresh, but it was transformed into sheer genius when paired with an irresistible animated bear and a jingle inspired by “voodoo rhythm” and pounded out on an empty Star-Kist tuna carton. Sales climbed 36 percent in 1955. The company rose to seventh place that year and to number five in 1956. After that, nothing seemed impossible. Over the next few years, Hamm continued to snap up bankrupt breweries and to hold its place in the top five. Hamm was joined there by Falstaff of St. Louis and Carling of Cleveland, regional breweries that elbowed their way up using similar strategies, although neither ever employed as seductive a jingle or as adorable a mascot as Hamm.

But even the Hamm bear could not catch up with Gus Busch and Erwin Uihlein, who resembled bulls on a rampage, building or buying breweries as fast as they could sign the checks, apparently oblivious to the stagnant demand that was killing others, banking on some far-off day when Americans would perform an about-face and fall in love with beer again. In 1956, Erwin Uihlein bought an empty brewery in Kansas City, Missouri. A year later, he broke ground on a new plant in Tampa, Florida, the company’s first foray into the rapidly growing Southeast. In July, Busch informed the world that he had purchased 160 acres about a half mile from the Schlitz site; there he planned to build a $20 million plant. Anheuser-Busch added to its Florida holdings in early 1958 when it bought a Miami brewery. The purchase didn’t last long—the Federal Trade Commission ordered A-B to shed the acquisition on grounds that it violated federal antitrust laws—but it’s not likely Gus Busch lost much sleep over it, especially when he ended the year 1.1 million barrels ahead of the Uihleins.

Other brewers questioned his sanity. Gus Busch wasn’t brewing at 100 percent capacity now. No one was. Why did he want another plant? Busch had an answer, of course. “You have to think about growth,” he said. “You have to plan for it.”

That was what it took to stay on top in the near-fatal 1950s: Aggression. Planning. Risk. But in such precarious times, risk sometimes proved fatal. Consider the case of the Liebmanns, Julius and Alfred, both in their eighties but still active, and Alfred’s son Philip, brewery president. The family had never sold its Rheingold anywhere except the urban Northeast, where the annual “Miss Rheingold” contests attracted millions of voters and generated as much excitement and anticipation as the Oscars did in California. The company’s two New York City breweries provided a capacity of 2.5 million barrels a year. During the early 1950s, that, plus the Liebmanns’ fine beer, business smarts, and the various but always beautiful Miss Rheingolds, enabled the company to power its way into brewing’s top five.

But in early 1954, the family paid $6 million for Acme Brewing’s Los Angeles and San Francisco plants. The decision to sell its beer on what might as well have been another planet led to disaster. The family opened its newly refurbished California plants in 1954, brewing Rheingold at the Los Angeles facility and Acme’s Gold Label in San Francisco. A year later, Philip Liebmann shut the Gold Label plant and pondered the dismal scene in Los Angeles, where sales of Rheingold had fallen 48 percent since opening day. Two years later, he sold the facility to Hamm Brewing.

To his credit, Liebmann owned up to his mistakes, most of which boiled down to his failure to understand the complexities of the modern market. First was the beer: It had been brewed for New Yorkers, and Californians turned thumbs down on its (relatively) heavy, (relatively) bitter flavor. Second was distribution: In New York, Liebmann relied on his own drivers and trucks. That didn’t work in California, where brewers had long since learned to coexist with union teamsters and powerful wholesalers.

Last, the company’s advertising and marketing missed its mark. Back east, Liebmann told a reporter, the family targeted its lager and its ads at neurotic, hard-driving New Yorkers and “a sophisticated market, where [people] work like hell so they can live in Scarsdale, and then drop dead in an elevator.” That message bombed with Californians, who, Liebmann recognized too late, prized “leisure and casualness. At 5 o’clock there is a rush to the barbecues, and at home they live in their backyards.” Liebmann had missed the point of the pun in the slogan attached to the state’s bestselling Lucky Lager: “It’s Lucky when you live in California.” Even the Miss Rheingold contest, which drew millions of voters in New York, flopped in the land of beauty queens and starlets. Lesson learned, Liebmann told a reporter. “You don’t sell soapsuds and beer the same way.”

The Liebmanns’ tale of California woe was symptomatic of a deeper problem. Many brewers were following the mid-twentieth-century equivalent of a saloon-era game plan: sports-oriented sales pitches aimed at the “worker,” a mythological creature believed to be (a) lower income; and (b) addicted to watching or listening to sporting events.

On the face of it, that seemed like a logical move. After all, sixty years earlier brewers had gotten rich selling beer to the workingmen who thronged saloons. Nor could anyone blame brewers for assuming the continued existence of a sizable and powerful working class, given their ongoing, head-to-head confrontations with union labor. But union membership peaked in 1955, and in New America, the “workingman” was almost as likely to be female as male, to wear a white collar rather than a blue one, and to favor three-martini lunches over bologna sandwiches out of a metal lunchbucket. Moreover, the new working class enjoyed more disposable income than previous generations. They tended to buy according to reverse pricing: Higher-priced brews conveyed status and signified, in their own minds if no one else’s, that they were just as able to enjoy life’s finer things as their suit-clad bosses.

Perhaps this workplace fluidity explains an unintentionally goofy mid-1950s magazine ad for Ballantine ale. “Enjoy the game with light refreshing Ballantine! THAT’S ALE, BROTHER!” read the headline. The accompanying photograph featured two men sitting in a posh den outfitted with a bookcase stuffed with rows of matching moroccan-bound volumes. The pair held glasses of foaming beer, wore suits and ties, and sat in front of a television tuned to a baseball game. Pictures of athletes in action hung on the wall. Whom, exactly, was this ad supposed to woo? Blue-collar workers who devoted their weekends to yearning for the high life? Corporate executives getting in touch with their hidden “Joe Regular”?

F
RED
M
ILLER
would never know. Just days before Christmas in 1954, he and his son headed for a holiday hunting trip in Canada. Minutes after taking off from General Mitchell Field on the city’s south side, the plane crashed. The Millers and their two pilots died. In one moment, Miller Brewing lost not just its dynamic president, but Fred Junior, twenty-one, a senior at Notre Dame, a high-school All-American quarterback, and, by all accounts, a near-clone of his father, so surely headed for brewing leadership, too.

Norman Klug, Fred C.’s able vice-president, carried on in his boss’s place. The company expanded, added more equipment, created the Miller High Life Open golf tournament, and aired its commercials during such TV blockbusters as Steve Allen’s
The Tonight Show
and the
Mitch Miller
sing-along program.

But the Champagne of Bottle Beer had lost its fizz and the Girl in the Moon her glow. The devotion to family and business that had sustained and inspired Elise, Clara, and the two Freds had run dry. This time there were no relatives eager to take charge. That included Buddy John, who was more devoted than ever to his Catholic charities and cared what happened in the brewhouse only insofar as it affected the stock dividends that fueled de Rancé, the foundation he had created to manage his philanthropic work.

From 1947 to 1953, Miller sales had risen 379 percent. From 1954 to 1960, they climbed a mere 13 percent. In-fighting and power struggles among various factions of the Miller family stymied Klug’s efforts to push the company forward. In the late 1950s, he investigated the possibility of several acquisitions, but followed through on none. Falstaff, sniffing disarray, tried to buy the brewery, but family members blocked the move. In 1960, Klug bid for Burgermeister, but family quarrels slowed the process and the California brewery slipped out of his hands and into the Uihleins’. The next year he succeeded in purchasing nearby Gettelman, but its 132,000 barrels hardly constituted a serious power play.

Where Miller Brewing might have wandered had it stayed in family hands is an unanswerable question. In July 1966, Lorraine Mulberger, the daughter of Elise Miller John and sister of Buddy John, startled Milwaukee and the brewing industry with the announcement that she was selling her company stock—by that time she held the controlling shares—to W. R. Grace, a billiondollar conglomerate whose holdings included shipping, chemicals, and chocolate.

The outside world may have been shocked, but insiders were not. J. Peter Grace, the company’s president, was no stranger to the Millers or their brewery. He was an old family friend and, as a fellow Catholic and philanthropist of the first order, had mentored Buddy John in the art of giving money away. Buddy had chosen Grace to serve as treasurer of de Ranc´ and, more important, as one of his two representatives on the brewery’s board of directors. Grace, in turn, wanted the brewery, a fact he never tried to hide. Once on the board, he hounded both Buddy and Lorraine to sell him their shares of the company, which he regarded as an attractive addition to his already diverse holdings. Brother and sister had wrestled with the idea of selling, but neither was willing to make the first move. Only God, it seemed, was going to push one of them off center.

Like the rest of the Miller family, Mulberger had been raised Catholic, but in the early 1960s she had left the family faith to join a Protestant fundamentalist church. And in July 1966, she told a handful of reporters that God wanted her to remove the evil of alcohol from her life. Price? Thirty-six million dollars, not a bad return on God’s will. Brewery president Norman Klug died not long after, perhaps of a broken heart, and Peter Grace installed his own man at the top.

The ramifications of the Miller—Grace merger would ripple through brewing for years to come: A few years later Peter Grace would in his turn sell the company to another, much larger corporate conglomerate that would rewrite the rules of engagement among brewing competitors. But in 1966 it was just another of thousands of corporate marriages. Between 1951 and 1968, nearly fifteen thousand American firms surrendered their independence, twelve hundred of them giants holding assets of $10 million or more. Seventy percent of the deals were “conglomerate” mergers like the Miller—Grace marriage, wherein a company that manufactured, say, copper wire, acquired one that produced nylon stockings.

Many small and regional breweries that had survived both stagnant demand and the national giants’ power seized on merger as a way to gain strength through diversity. Many had no choice: Every year it became harder to compete against the giants, and every year Americans, who had become accustomed to the still new but powerful sway of television advertising, turned their backs on “local” products in favor of ones with national name recognition. The biggest manufacturers, aware of that fact and that more Americans were changing residences more and more often than ever before, advertised regularly in national media, and it was their names—Hunt’s, Heinz, Colgate, Schlitz—that won out over names recognizable only to locals born-and-bred. Family-owned businesses with mostly local markets found it hard to compete.