The background photo was the former Ohio Union Brewery before Prohibition. It became the Bruckmann Plant Nol 2 after Prohibition was repealed. Briefly, the plant was owned by Herschel Condon Brewing Co. in 1949 - 1950. It was then sold to Bavarian Brewing Co. in April, 1950, for possible use as a Warehouse and Garage for their Cincinnati Branch.
9. TURNAROUND EFFORTS (1953 - 1958)
Whereas, in the previous 15 years Bavarian was on the offense, enjoying increased sales and expanding their production, in the following several years starting about 1953, the brewer was on the defense. In a period of greater competition and reduced sales, they needed to reduce costs to be profitable and viable. But they were met with a headwind that had several different currents.
The acquisition of the Heidelberg Brewery in 1949 created multiple problems for Bavarian as their sales declined a few years later. Foremost, they effectively duplicated their work forces and equipment without expanding their trade area, which created higher labor costs without increasing their potential customer base. Bavarian also had substantial assets that were placed into Heidelberg (Plant No. 2), which lost significant value and that were rather illiquid. By 1954, it was apparent Bavarian no longer needed a second brewery. However, this would cause challenges with workers they no longer needed and their unions.
The unions representing Bavarian's employees wanted the brewer to participate in a pension program and other fringe benefits. This was done. (Please see the photo on the side with the first Bavarian employee to retire with a pension.) But it was also necessary to make more investments in order to reduce costs and remain viable. Further, Bavarian needed to modernize and expand their main Plant No. 1, which was estimated at a cost of over $1 million at the end of 1953. This required additional capital and debt, revisions to their organizational documents and changes in management. Additionally, it necessitated the acquisition of adjacent property, new equipment and new buildings. At the same time, Bavarian was involved in litigation trying to protect their Bavarian's Old Style Beer name, against two larger brewers. One wanted to prevent their use of "Old Style" and another wanted to use the name "Bavarian" with a new and competitive brand. Since Bavarian's advertising may have been partly responsible for their sales declines, more funds needed to be devoted to this area and their overall marketing needed to be improved. Ultimately, beginning in mid-1956, Bavarian would need to create an entirely new image and brand, introduced in 1957. These challenges are discussed in more detail as follows, accompanied by photos and other relevant images.
1954. On the left, Mr. Wagner, a truck driver, was the first Bavarian employee to retire on a pension. He is in the Tap Room with Joe Ponzer, Sales Manager.
MANAGEMENT CHANGES & OWNERSHIP
In January, 1953, there was some modest change in the officers of the Bavarian Brewing Co. The eldest son of William C. Schott (Will), Wm. R. Schott (Bill), became Secretary. Will's youngest son, Louis, became Treasurer. Previously, Bill held both positions as Secretary and Treasurer, and Louis was the Assistant for both of these positions. The other officer positions unchanged were Will as Vice President, his brother Lou as President and Ray Hoffman as the Vice President and General Manager. However, in November of 1954, Lou became Chairman of the Board and Bill became President, with Louis becoming both Secretary and Treasurer. Another significant development at that time, was that Louis L. Schott became a a Director, replacing Joseph Vehr who had served in that capacity since 1945. The four Directors for Bavarian, all with the last names of Schott, then became Lou, Bill, Will and Louis. Evidently Vehr left the firm in late 1954 and disposed of the few shares of stock he held in the company, which were primarily so that he could be a signatory for payroll checks and other financing. Vehr's departure as controller was filled by Melvin Aichholz.
As Bavarian's production and profitability declined in the early 1950s, it appears the two older Directors were willing to step back, and the management of Bavarian was mostly left to Will's sons, Bill and Louis. These brothers were also the grandsons of Bavarian's founder, Wm. Riedlin, by being sons of his daughter Lucia. With the closing of Plant No. 2 and the need for a consolidation and modernization program, changes were needed. The fate of the company, involving difficult decisions needed to restore profitability, was not left to both of Will's sons rather equally, but as President, Bill had more influence. Apparently due to some disagreement in the aforesaid program Bavarian decided to pursue, Ray Hoffman, the V.P. and G.M, resigned in December, 1955. Becoming unprofitable in 1955 and to conserve cash, Bavarian did not provide any bonuses to key employees in that year as they had each year for nearly two decades. Not surprisingly, some attrition of key employees occurred, as was evident by several different key employees when bonuses resumed the following year. Instead of the bonuses being somewhat arbitrarily decided, they were provided on a performance basis. The 16 key employees receiving such bonuses at that time were; Mel Aicholz, Perry Austin, Lyle Baker, James Caldwell, Herman Determan, Frank Hamilton, Harld Klink, Carl Moeller, Joseph Ponzer, Larry Rinck, Larry Schrand, Jack Shannon, C.H. Wimberly, Paul Wettig, John Wuest and Walter Zanis.
Besides controlling the management of the firm, Will's family also controlled about 70 percent of the ownership in Bavarian and his brother Lou and his family owned the remaining 30 percent. Will and his wife owed about 30 percent of the company with Will's sons, Bill and Lou, each owning about a 20 percent interest in trust for their families. Will's brother Lou's family consisted of his wife Melba and daughter Melba Ann. For voting purposes, the closely held family ownership of Bavarian was divided in different proportions among seven shareholders; Will, Lucia, Lou, Melba, Melba Ann, Louis and Bill.
A DECLINE IN SALES VOLUME & PRODUCTION
The acquisition of the Heidelberg Brewing Co. by Bavarian Brewing Co., creating Bavarian Plant No. 2 in 1949, was a short term solution to meet Bavarian's growing sales. It helped Bavarian achieve its peek annual production of about 350,000 barrels in their September 30th fiscal year, ending in 1950. But beginning around 1952, Bavarian began to suffer a decline in sales when production evidently dropped to around 300,000 barrels. By the end of 1954, sales began to drop more precipitously to about 275,000 barrels, and after the closure of Plant No. 2 in late 1954, production declined somewhat under 250,000 barrels by 1955. However, the largest decline was in 1956 when production dropped to only about 211,000 barrels. However, due to a new advertising campaign and warehouse in 1957, sales and production began to improve.
It should be noted that in other writings by T.J. Holian in Over the Barrel and Rob Musson in Brewing Beer in the Queen City Volume IX, indicated that Bavarian's production decline was much more severe; from 350,000 barrels in 1952 to 200,000 barrels in 1953, largely due to a price increase in 1953. However, it appears the production number they cited in 1953 was only for Plant No. 1, excluding Plant No. 2. And, it wasn't until three years latter than previously indicated in those writings that Bavarian's production declined to about 200,000 barrels. (Please see Corporate Material.) In addition, the price increase significantly damaging sales didn't occur until in April,1955. Another factor causing sales to decline later that year was because Bavarian experienced some changes in the taste of their beer, making it a little "too hoppy" for some of Bavarian's customers. This was corrected near the end of 1955, but it impacted sales for the fiscal year ending in 1956.
The major problem attributable to Bavarian's sales decline beginning in the early 1950s was its relatively high expenses in contrast to its main competitors. This was primarily a result of operating two plants in the same trade area concomitantly, which created a duplication in their work force, equipment and bookkeeping. All of Bavarian's local competitors by 1950 had been operating only one plant and spending money to reduce their production costs. Unfortunately, Bavarian's investment in Plant No. 2 did the opposite. Another critical issue was that overall demand for beer in the U.S. in the early 1950s, and within Bavarian's market area, was nearing a plateau. So, expanding sales basically required the need to cannibalize sales from other brewers. Without lower production expenses, allowing a brewer to more effectively compete on the basis of cost, and that also allowed for more funds to continue to modernize and increase and improve advertising/marketing, Bavarian found itself at a competitive disadvantage. However, in an effort to revitalize their sales, they made some modifications to their advertising between 1952 and 1956 as explained next. Most importantly, they knew it was necessary to make fundamental changes, as explored under Consolidation and Modernization Program.
Bavarian had used "A Man's Beer" advertising theme from 1946. Along with slumping sales and changing times, Bavarian realized they needed to modify their advertising message. As shown by the coaster and ad below, Beginning around 1953, their slogan was transitioned to emphasize "...and Hers Too!" (See below.) But "A Man's Beer" slogan was not completely dropped until 1955.
c. 1954. Above is a coaster and to the right is an ad in a local paper. Note the women in the ad is similar to those in the photo above. Source: Schott Family Collection.
Bavarian sponsored a variety of other television programs. As shown on the invitation below, these included the News and A Favorite Story. Others added were Monday Night Fights and Abbott and Costello. However, their main emphasis was with radio programs that covered primarily news, sports and music. In the photo lower left, nearly all the radio and TV announcers involved with the programs Bavarian sponsored are gathered together in the Bavarian Tap Room with two Bavarian officers, the brothers Wm. R. Schott and Louis L. Schott, seated 3rd and 5th from left, respectively.
1954. Most of the men mentioned in the invitation above are shown gathered around a table in the Bavarian Tap Room. The exceptions are two Bavarian Directors and brothers seated at the table, third from the left, Wm. R. Schott, President, and Louis L. Schott, Secretary / Treasurer. Source: Schott Family Collection.
Particular attention is give to the man seated second from the left in the photo above, Paul Dixon. Dixon had just finished his own his own national show for a year on Dumont Television in New York on April 8th, 1955, appearing in this photo about a month later, on May 5th. Becoming homesick, he returned to Cincinnati to have his own shown with Avco Broadcasting on WLW-T, which appealed to housewives. The show featured Bonnie Lou and Colleen Sharp. Dixon was not mentioned in the "invitation" ad appearing above, which appeared in March of 1955, because Dixon was still in New York. However, it is believed that Bavarian's Beer was one of his shows sponsors shortly after he returned to Cincinnati to begin his own show. The show ran for 20 years, until 1974. (See Cincy TV/Radio Talents.)
Bavarian had been using the local ad agency of Ruthrauff & Ryan, coordinated by Wm. R. Schott with Bavarian. However, in late 1954, it was decided that a newly established local firm would be used, Peck-Heekin. This resulted in a new theme:...Flavor at it's finest." A decision was also made for Bavarian to discontinue their television sponsorship of Midwestern Hayride in December, 1954, which began in about 1948. Instead, Bavarian sponsored Monday Night Fights, which had previously been sponsored by Wiedemann's, which in-turn took over Midwestern Hayride. So, the two brewers effectively just swapped sponsorships with one another. To support their new TV program, Bavarian released a series of posters featuring fighters that were taken from old lithographs created by Currier & Ives. One of these is shown on the side. For a couple other examples, please see Posters.
Another important form of advertising for all brewers, including Bavarian, was cafe and bar signage. The most common were neon and backlit signs, the latter becoming more common in the 1950s because there could be more varied in size, colors and design. Besides lighted signs, there were Non-lit Signs, Pictures / Posters and Back Bar items.
& Sales Meetings
To help supplement marketing efforts, it was important to have sales meeting and entertain clients. On the side are various distributors and sales associated in front of a Bavarian's trailer and old car. As mentioned in the previous 1946-1952 period, there were often sales meetings at some of the local hotels and restaurants. Below is a photo that was taken at the Netherland Hotel, and a photo jacket, in which it was placed.
Company Parties & Athletic Teams
Bavarian provided company outings and parties to show their appreciation for the workers and increase company morale, even before Prohibition. (See The Early 1900s.) This tradition continued with the Schott Family management and ownership. Shown below are pictures from an event that was held at Mergard's, which was a innovator involving bowling alleys. They had four locations in the Cincinnati area, and it is presumed that this was a summer party at their Covington, Ky location at 25 W. 7th St. (Please see the match cover below.) It is believed this location is now the home of Braxton Brewing Co. Bavarian also hosted a winter event for employees and their families at an auditorium, where talents of some of employees and their children were showcased.
1954. The older man in the center is Adolphe Menjou, an actor who hosted My Favorite Story on WCPO-TV sponsored by Bavarian Brewing Co. He is accompanied by Bavarian Executives including Joe Ponzer, Sales Manager, on his right, and on the far right (r. to l.) are Wm. R. Schott (President) and Ray Hoffman (V.P. & G.M).
To support athletic interests of employees and to provide some publicity, baseball and bowling teams. In particular, the baseball team supported was in the very competitive semi-pro Buckeye League, which often included teams from the other brewers. The expanded the competitive nature of Cincinnati area brewers from business to recreation and sports. To maintain good relations with some local cafes and distributorships, Bavarian would occasionally joint sponsor some baseball teams. A very successful team that was sponsored by both Stanley Distributing Co. and Bavarian Brewing Co., known as Stanley's Bavarian, played in the late 1940s and early 1950s. Afterwards, these teams only used they Bavarian name. They were very successful in winning various championships. For more information about the amateur and major league teams the Bavarian supported, please visit Sponsorships.
On the far left is a store window with championship trophies won by some of Bavarian's baseball teams, along with a promotional display for Bavarian's Old Style Beer. The nearest photo was a jacket award ceremony at the Bavarian Brewery for the 1955 Bavarian's Buckeye League Champions. Please enlarge it. Note the "Man it satisfies" wall poster behind the team.
CONSOLIDATION & MODERNIZATION
Bavarian became aware of the burden their Plant No. 2 could have on their profits by late 1951. They had hoped that their sales decline would reverse or stabilize in 1952. When that didn't occur, it became evident by mid-1953 that substantial changes were needed. The V.P. and G.M., Ray Hoffman, was asked to analyze the situation and prepare a proposal. Options considered were 1) do nothing, 2) liquidate the company or 3) adopt a Consolidation and Modernization Program. (Another option may have been accessing the capital markets, but this alternative was evidently not considered.) Conceptually, the Bavarian Directors decided to adopt option 3 at a Special Board Meeting in September, 1953. According to a cost study prepared in conjunction with this proposal, by disposing of Plant No. 2 and consolidating all operations at Plant No. 1, annual net savings of $354,000 could be achieved, before deducting loan interest. However, this would require a new building at a cost of about $600,000, approximately $500,000 in new equipment and other costs that would total about $1.25 million. To construct the building, it would be necessary to acquire the adjacent ice cream plant to the north estimated at about $35,000. The new structure was envisioned to include beer and bottle storage, new corporate offices, general storage facilities and a garage for trucks. New equipment proposed was material handling equipment, replacement of the wood fermenting tanks, a new yeast room, etc. Two companies were contacted to prepare designs for these improvements. Bavarian had transferred a considerable portion of their profits into surplus earnings over the years that could have nearly covered the entire estimated program cost. However, self funding this amount would not leave sufficient funds available for working capital or cover potential operating losses and other costs. Consequently, the firm's legal counsel, Richard Todd, explored some financing options for Bavarian by contacting a local bank and a couple insurance companies, requesting a loan of $1.25 to $1.5 million. Unfortunately, the amount requested was too small of a loan for an insurance company. Bavarian had an existing loan with Fifth Third Union Trust, and they advised Todd that they considered the brewer's working capital was too small for a sizable loan. But if several hundred thousand dollars of surplus earnings were converted to capital stock, the bank indicated they could be able to provide a loan of about $600,000. Still, before any future financing could be obtained, it was necessary for the brewer to change its capital structure by amending a couple of its corporate provisions, as discussed below.
Amending the Articles of Incorporation
In Article IV, the corporation was formed with $152,000 in capital common stock in 1938. Bavarian had previously raised this amount to $302,000 in December, 1945, primarily due to the addition of 1,500 shares of preferred stock. Both the common and preferred shares were at a par value of $100, but the preferred was non voting and carried a 5% annual dividend payable quarterly. However, Bavarian needed to considerably increase its capital account. They transferred $1,064,000 of its accumulated surplus to its capital account to create a total of $1,140,000. Correspondingly, the total number of common shares were increased from 760 to 11,400 shares at a par value of $100 each. As a result, the holder of each share of common stock received 14 more shares. Including $150,000 of preferred stock, the total capital stock of the company became $1,290,000. A major concern with the transfer of surplus earnings was whether the IRS would consider it taxable. In early 1954, notification was received that the common stockholders would not incur any taxable income. Accordingly, Article I was modified to allow the aforesaid increase in Bavarian's capital account at a special shareholders meeting in May, 1954.
Another change Bavarian needed to make was to increase its corporate indebtedness. Article VIII originally limited the corporation's debt to $80,000 in 1938. This amount was raised to $600,000 in 1946. But for future expansion, Bavarian needed to be able to have greater borrowing capabilities. Apparently, the provision addressing corporate debt did not need to state a specific limit. To avoid modifying this provision again, the indebtedness was changed as being unlimited by a special shareholders meeting in August, 1954. (Please see the original Articles.)
While the above noted articles were being changed in 1954, refinements were being made to the original proposal for consolidation and modernization, as presented below.
Modifying the Consolidation & Modernization Program
During the first half of 1954, additional efforts n considering plans to expand the production facilities at the main plant were considered by Ray Hoffmann, V.P. and G.M. On July 1,1954, he proposed that the Directors approve a first phase involving the purchase of certain equipment that would boost production and reduce costs. He also recommended that certain real estate should be acquired, adjacent to the brewery property. A loan to finance these efforts was approved up to $150,000. Additional collaboration occurred during the remainder of 1954 to refine Hoffmann's consolidation program with two of Bavarian's officers; William R. Schott (Bill), Secretary, and Louis L. Schott, Treasurer. A modification of the original program emphasized the need to maximize cost reductions while minimizing both investment and risk to the stockholders. It was prepared and presented by Wm. R. Schott, not Hoffmann, at a Board meeting on September 28, 1954. This seemed to be a turning point in the management for Bavarian, with the two noted brothers assuming more responsibility. Less than two months later Wm. R. Schott became President, the non-family member that was a Director, Vehr, left, and Louis L. Schott became a Director, assuming both Secretary and Treasurer positions. Hoffmann resigned at the end of 1955. The results of these efforts, and subsequent changes to these modifications to consolidate and expand in the ensuing years, are noted in the following.
Machinery and equipment that Ray Hoffmann recommended to be purchased in July, 1954, amounted to a total of $68,664, and included: $22,000 for the palletization of the Cincinnati Branch with fork lift trucks and pallets; $28,664 for a (Super Semco 50) filler at the main plant, which would increase the line feed from 153 to 180 pints and 64 to 78 quarts per minute; and, $18,000 for two wort clarifiers, saving 5 barrels per brew. In September, 1955, an additional total of $65,000 for new equipment was approved, consisting of: $26,000 for new labelers, $5,000 for a new bookkeeping machine and $34,000 for miscellaneous improvements to Plant No. 1. In the summer of 1956, a flat top line was approved for a cost of $23,000, as part of the $65,000 approved noted for new equipment in 1955. This eliminated the use of Bavarian's cone top cans processed through the Bottling Dept.
Acquisition of Adjacent Real Estate
In order to consolidate operations from Plant No. 2 into Plant No. 1, it was necessary to expand the main brewery site in order to accommodate new and more functional buildings. This required the acquisition of a major parcel, used as an ice cream factory, and ultimately some other parcels, shown below.
c. 1955. The aerial photo on the left and site plan on the right display the Bavarian Brewery before the construction of a warehouse in 1957. Please click the images to enlarge.
In conjunction with the equipment recommendations mentioned above in July, 1954, Hoffman had recommended the acquisition of certain real estate adjacent to the brewery. The amounts and properties included: $14,000 for two houses located on W. 12th Street immediately east of the Mill House and Bavarian's offices, which were available for purchase from Lummel Realty Co. and that would allow for some off street parking; $7,500 for the house located to the west of the boiler room; and, either or both the ice cream plant, previously proposed for about $35,000 and/or the property owned by Mrs. Rehkamp located north of the bottle shop. A few months later on September 28, 1954, it was reported that the Monarch Ice Cream Company building located at 520 Lehmar Street was purchased. The final sales price was $60,000, about $25,000 more than expected, and was to be made available for Bavarian's use by March 1, 1955. The new structure would be connected and built on the west side of this property. It is identified as Parcel c as shown below. It is also believed that the two residential properties east of the Mill House were acquired, labeled Parcel e. The house west of the boiler plant may have been purchased, as well, identified as Parcel d. The total cost of these real estate acquisitions to expand the brewery's site was at least about $75,000, and may have been closer to around $100,000. As shown, in the aerial photo, these acquisitions complemented the earlier purchases of Parcels a and b. By 1957, the main Bavarian Brewery site was significantly larger than it was twenty years earlier and conducive to greater expansion.
Closing & Liquidating Plant No. 2
A formal decision to dispose of Plant No. 2 was made by Bavarian's Directors at their meeting on September 28, 1954. It was decided that this plant would be closed effective November 1, 1954. However, it was to be kept in stand-by condition to be reopened, if needed, until the spring of 1955. A study by W.F. MacConnell & Co. indicated that the minimum amount this property should bring was $250,000. As it turned out, this plant was not reopened, it was listed for sale in 1955 and sold in late 1956. For more information about this plant and the history of Heidelberg Brewing Co., please see Plant No. 2 / Heidelberg.
Cincinnati Branch Sale / Leaseback
On September 28, 1954, a decision was made to sell this property for not less than $150,000 and lease it back to Bavarian under a long term lease in late 1954 or 1955. As noted previously, the Cincinnati Branch, located at 1212 Streg Street, was purchased in 1950 for $172,500. Performing this sale / leaseback helped Bavarian reduce their reduce their lending needs, while maintaining their key distribution center. In 1958, with limited office space at the main brewery, arrangements were also made to create some office space at this branch for the marketing group, including Louis L. Schott, Marketing Director, Larry Rinck, Advertising Manager, and a small support staff.
Engaging an Engineering Firm to Create Plans & Confirm Costs
In the original 1953 consolidation proposal, the firm of Schatz, Elliston, Hall, McAllister and Stockwell located in Cincinnati was one of two firms recommended in the consolidation program to design a new building. They were hired in early 1954 to develop detailed plans for the the construction of a new building at the main plant and develop accurate overall costs. As mentioned, the younger Bavarian officers and brothers, Wm. R. Schott and Louis L. Schott, became more involved with the consolidation program. As a result, the original plans as proposed by Ray Hoffmann, the V.P. and G.M., were scaled back a few hundred thousand dollars as approved by the Board on September 28, 1954, and were forecasted to be no more than $850,000. The estimated annual savings were projected to be $288,000 after depreciation and interest payments, but before taxes, based on annual production of 300,000 barrels annually. The noted program would require additional financing of approximately $200,000. Despite this significant reduction from the original proposal, an article in the Cincinnati Enquirer appearing a week later, on October 3, 1954, indicated that Bavarian was planning an expansion of $1.5 million, according to Hoffmann.
The New Warehouse
& Plans for a New Bottling Department
Instead of building a large multi-use building originally proposed by Ray Hoffmann in late 1953, it appears that after the two younger Schott brothers collaborated with Ray Hoffman several months later, they favored a smaller warehouse building that would be constructed and connected to the building formerly belonging to Monarch. It was hoped that construction of this building could be started in 1955 or 1956. Especially after the closure of Plant No. 2 in late November and its sale in late 1956, a new warehouse was sorely needed.
Part of the delay in building the warehouse is that it took longer than expected to acquire part of the site where it was built, the Monarch property. Shortly after this needed parcel was acquired in 1956, plans were created and construction began on the new warehouse in early 1957, as shown by the photo in the upper right. The warehouse would be located on the far left of that photo. The two aerial photos above show other perspectives of the brewery complex and the 11,000 square foot warehouse under construction in approximately May of 1957. The warehouse was completed later that same year at the end of June. In order to lower their operating costs and have the capabilities to provide for increased sales, Bavarian believed they needed a new Bottling Plant. Funds were approved to design such a building in 1958.
The Other Local Brewers
There were over 15 brewers that operated in the Cincinnati area after Prohibition, mostly starting between 1933 and 1935. But only six remained by the early 1950s. The names and years of brewers that closed were: Old Munich (1937), Foss-Schneider (1939), Vienna (1940), Schaller (1941), Clyffside (1945), Delatron (1946), Jackson's (1947), Cincinnati Brewing (c. 1948), Heidelberg (1949), Bruckmann (1949) and Herschell Condon (1950). The six brewers remaining were Redtop, Burger, Schoenling, and Hudepohl in Cincinnati and Bavarian and Wiedemann situated in Northern Kentucky. A year after the photo on the side was taken in 1956, Redtop went out of business leaving five breweries. Bavarian had been about the third largest of these in 1950, but by 1957, had declined as their sales decreased.
1956. Obtained from slides used in Bavarian's Advertising & Packing Program. Source: The Schott Family Collection.
A similarity with most of the Cincinnati area local breweries is that their labels were rather similar, all having white backgrounds as shown in the photo above. The flagship beer for all the remaining beers were lagers, but most had an ale and some had a secondary beer brand.
Some of the large regional and national brewers had a presence in Cincinnati even before Prohibition, such as Pabst. In order to penetrate markets with local brewery favorites, the national breweries had economic advantages. They could engage in more advertising, offer discounts, provide special promotions and obtain advantageous relationships with distributors. The allegiance Cincinnati area residents had in supporting local breweries began to fade, especially after 1950 and in the following two or three decades thereafter, as the national brewers took advantage of national advertising on TV, radio and magazines. The national brewers also offered both premium and discount brands to penetrate different market segments. In particular, their lower priced beers helped abscond market share from local brewers. One such beer offered by Anheuser-Busch, as an alternative to Budweiser, was Busch Bavarian Beer, introduced in the early 1950s. This was particularly troublesome for the Bavarian Brewing Co. when they learned that this beer would soon be introduced into their market area around 1954. Not only would the name of Busch Bavarian conflict with Bavarian's Old Style Beer, but the Anheuser-Bush beer would be offered at a price that would be under what Bavarian could offer. Consequently, Bavarian believed their survival depended upon defending their beer name against Busch Bavarian, and filed suit against Anheuser-Busch.
BAVARIAN BREWING LITIGATION
Billed as a battle of David versus Goliath in local papers, Bavarian filed suit against Anheuser-Busch (A-B) in September, 1955, for name infringement and trade-mark violations. Additionally, Bavarian sought damages from improper trade practices used against them by A-B. The trial began on October 15, 1956 in the U.S. District Court in Cincinnati, OH, with with Judge John H. Druffel presiding, and lasted nine days. Clarence B. Des Jardins was the attorney for Bavarian Brewing Co. It was established that the brewer obtained a trade mark for their use of "Bavarian's" in 1947. The attorney for A-B, Wallace H. Martin from New York, contended that Bavarian was a type of beer, that anyone should be able to use that name and that there were several brewers already using the term Bavarian (Style or Type) in their beer names. A-B was seeking to have the the trademark for "Bavarian's" cancelled on the basis that it was improperly issued. During the trial, August A. Busch, Jr., known as Gussie, testified that the sales of Busch Bavarian would be expanded not not only into the Cincinnati area, but all over the world, if successful. During the trial, Bavarian's President testified that his firm was aware that other brewers used the term Bavarian, but did not file objections because these other brewers in different market areas and, consequently, were not competitive with Bavarian's Beer.
In March of 1957, a decision was rendered, which was hailed as a victory for Bavarian locally, as Busch Bavarian would not be able to be sold in its Tri-State market area. However, it was actually neither a complete win or loss for either brewer. That was because the decision allowed A-B to use the Busch Bavarian name everywhere else, and AB did not need to pay any punitive fines or penalties for allegations of unfair trade practices. Further, both sides needed to pay their own legal costs. After the decision, both sides considered possible appeals. But after the Bavarian Directors met with Gussie at his masion in St. Louis sometime in 1958, it apparently reduced continued litigation between the two firms. It also provided Bavarian with an opportunity, and a dilemma. (See The Gussie Busch - Bavarian Meeting.)
vs. G. Heileman & Co.
A couple years before the A-B suit, in January of 1953, Bavarian also filed suit to defend the name of their beer against G. Heileman & Co. in LaCrosse, WI. Heileman was attempting to obtain exclusive use of the term "Old Style," which Bavarian had been using in their main brand Bavarian's Old Style Beer" since March 1946. It also appears Bavarian received a trade mark for their name in 1947, months before Heileman applied to register "Old Style." Even though Heileman had used the term "Old Style Lager" before Prohibition, it appears in the 1940s they were using the name Heileman's Beer, with Old Style Lager as a secondary term. (Please see the cone top can on the far left.) Congress had also passed the Lanham Act in 1946 regarding Trade Marks, after passing similar acts in 1881 and 1905. This suit became the first application under this new act. The brewers requested federal examiners to resolve this matter and there was a final hearing in May, 1954. A verdict was rendered in Bavarian's favor on July 23, 1954. D. Bailey, with the Patent Office, ruled that other brewers had also used the term "Old Style" and that it was too generic of a term for exclusive use by a brewer.
On November 18, 1955, Heileman launched an appeal to the commissioner of patents, overheard by assistant commissioner Mrs. Daphne Leeds. She reversed the decision in favor of Heileman, allowing them to register the name of "Old Style." She claimed that the most important factor was the "psychological evaluation of what is likely to happen in the public minds in the market place." For instance, if people most commonly refer to the beer as "Old Style," as supported by numerous witnesses in the appeal, then that supports what she referred to as a psychological principal as a main factor in determining a trade mark. Another issue was the significance of the secondary meaning of a name, such as Heileman's Beer versus Old Style (Lager), and the use of "Old Style" in Bavarian's Old Style Beer. Leeds claimed the paramount question was not whether the use has been (substantially) exclusive, but depended on whether the term identifies and distinguishes the applicant's goods from others. Several other firms had also used the term Old Style, but Heileman had threatened to file suit or made other arrangements with these other firms to cease using this term. It appears Bavarian was the largest and last brewer remaining to oppose Heileman on this issue. It should be noted that at this time Heileman was primarily distributing their beer in several states, but not nationally, and they were not selling their beer in the states within Bavarian's market area. However, the decision by Leeds would provide Heileman with the ability to use the name "Old Style" nationally, prohibiting Bavarian from using this term.
On December 15, 1955, Bavarian brought suit in U.S. District Court seeking to reverse the decision made by Leeds. Coincidentally, a few months earlier, Bavarian had filed suit to prohibit Anheuser-Busch from using "Bavarian" in their new Busch Bavarian Beer. So, Bavarian was involved in two litigations to protect the name of their beer simultaneously. This must have provided some distraction for Bavarian's management and prevented them to be more focused solely on their brewing business. The costs involved in litigation were also mounting, and may have provided restraints for Bavarian to modernize and increase their advertising, at a time Bavarian's sales were declining. In February, 1956, Bavarian representatives and attorneys met with their Heileman counterparts in Chicago, where Bavarian was discouraged from further court action. It was agreed that Bavarian could use the "Old Style" name in its trade territory over the next five years, while gradually decreasing the the type size for this term on its labels, and that it would not distribute its beer outside of a four state area.
Comparison of the Trade Name Litigations
There was some irony in the two Bavarian litigations discussed. Bavarian was prohibited from using "Old Style" in their Bavarian's Old Style Beer, but Anheuser-Busch was not prohibited from using "Bavarian" in their new Bavarian Busch Beer, except for within Bavarian's main trade area. It appears that the legal considerations used in these two trademark decisions may not have been applied equally. Otherwise, it would seem that Bavarian should have been able to at least use "Old Style" in their trade area, or that Anheuser-Busch would have been prevented from using "Bavarian" in the name of their new beer. Consequently, the argument could be made that legal rulings favored larger brewers over those that were smaller, which placed Bavarian at a disadvantage. Furthermore, the larger firms were better able to "lawyer up" and afford long lasting trials with very skilled lawyers, which was too expensive for their smaller rivals to endure. In essence, what these two litigations may have exemplified, is that legally, the deck was stacked against smaller brewers, like Bavarian, in favor of larger ones. It is estimated that over some four years these two cases were litigated, Bavarian may have spent about $150,000.
RENAMING BAVARIAN'S BEER & CREATING A NEW IMAGE
(Also see a separate section that provides more detailed information about Bavarian's New Look.)
Rather than spend more legal fees and another year or two to contest the Heileman trademark decision, Bavarian decided on the aforesaid settlement agreement. Even though they had up to five years to change their label, they decided instead to go through the process of changing the name their beer rather quickly. This was much more complicated than selecting a new name and simply changing their label. Everything associated with Bavarian's former beer name would need to be redesigned. It required an entirely new advertising campaign and packaging program and take nearly a year before they unveiled their "New Look." Previously the brewer had been using local advertising firms as noted, coordinated by Wm. R. (Bill) Schott. Since Bill was primarily focused on consolidating and modernizing the brewery, especially after the departure of Ray Hoffmann at the end of 1955, Bavarian's Board appointed Bill's brother Louis L. Schott to spearhead this effort. Louis was appointed Marketing Director in June of 1956, while also continuing with his responsibilities as Secretary and Treasurer.
The Bavarian's Old Style Beer label on the far left was used from the spring of 1946 until it was replaced by the Bavarian's Select Beer label shown to its right in May of 1957. The old style lettering was replaced with a cleaner type font, and the old trademark with the lions was removed. The flags on the newer label include an hour glass for Time, a crown for Tradition and a hand with grain for Skill.
The original Consolidation and Modernization Program did not take into account the cost for Bavarian to modify their brand name and create a new image for their beer and firm. The non-recurring costs for this including design and research costs, set-up charges, die charges and the cost of obsolete labels and supplies no longer needed and scrapped amounted to $70,084 in 1956-1957, and $16,190 in 1955-56, for a total of $86,274. This excluded an increase in recurring advertising of over $100,000. Recurring expenses were slightly increased due the new labels using more colors, but the more significant increase was due to union demands that raised labor costs by $130,000 annually. Overall, the combination of these sums, and the aforesaid litigation costs, provided financial restraints on Bavarian's financial ability to provide more funds to their plans to modernize, specifically for the construction of a new bottle shop.
The development of a new design for Bavarian's required a great deal of work and coordination over a period of more than two years. Besides changes to its labels, it was necessary to change their crowns (bottle caps), cans, crates, cartons, signs, advertising material, business cards, stationary, repaint their fleet of trucks and phase out their "Old Style" beer for their "Select" beer with their driver-salesmen and numerous distributors. In addition, an entirely new advertising campaign was needed involving print, radio and TV to promote their new image. The resulting appearance of a Bavarian's bottle and can with the new design are shown on the side. For more detailed information about this project, please visit Bavarian's "New Look."
T I M E L I N E
To place the events described above in perspective, following are some major events that occurred in the Bavarian Brewery Time Period 9: 1953 - 1958:
Dwight D. Eisenhower is elected President (1953-1961)
Korean War ends (1953); Cuban Revolution begins (1953)
Dow Jones In. Avg. reaches its high before the ‘29 crash (1954)
Ray Kroc purchases McDonalds; Disneyland Opens (1955)
Rosa Parks & the Montgomery bus boycott (1955)
Interstate Highway Act (1956); Civil Rights Act (1957)
Soviets launch Sputnik (1957); NASA formed (1958)
Cuba becomes Communistic & Fidel Castro rules (1958+)
For a summary of all the periods in the history of the Bavarian Brewery, please see the entire Timeline.
Newspapers.com and Cincinnati Enquirer
Holian, Timothy J., Over The Barrel Volume Two
Robert A. Musson, M.D., Bavarian Brewing and the rest of Northern Kentucky, Volume IX, pgs. 53 - 63.
Riedlin and Schott family items and information.
Trousdale, C.B., A History of the Bavarian Brewery, 1954
The background photo is the Bavarian Brewery plant in the early summer of 1957.