10. The Merger of Bavarian Brewing Co., Inc., with INTERNATIONAL BREWERIES INC. (IBI): (1959-1966)
THE CONSOLIDATION OF BREWERIES
- In the 20th Century
After the number of breweries in the U.S. peaked to 4,171 in 1873, there was a tremendous amount of consolidation that began in the brewing industry. Of course, during nearly 15 years of Prohibition beginning in 1919, nearly all breweries went out of business, except for a small number that tried to make near beer, malt extracts or soda - and some that operated illegally. Many industrial improvements were also made over this period, making brewery equipment and facilities obsolete. There were also changes in the families that had owned and operated the breweries. Some had sold off their brewing assets, making it difficult to reenter the business. Often the descendants of former brewers were often uninterested or without the experience to be involved in brewing, and in some situations, there were no direct descendants to carry on the business. In the case of Cincinnati, the three largest breweries before Prohibition, including Moerlein, did not reopen after Prohibition. However, improvements in transportation, refrigeration, packaging/canning, marketing, etc., increased the capital to enter the brewing business. It caused the smaller brewers to be acquired by larger brewers, or simply being forced out of business, and the large brewers became larger.
The trend of consolidation was evident before Prohibition, but occurred more rapidly after Prohibition. In 1934, there were 756 brewers in the U.S.; considerably less than before Prohibition. In 1950 there were just 430 breweries. In 1960 there were only 225 breweries owned by 178 companies and in 1965 there were only 198 breweries owned by 136 firms. However, by 1972 the number of breweries dropped by more than one half, to only 78. Still, there were some entities that thought they could be part of the consolidation trend and be successful, especially in the 1950's and 1960's, if they were at least moderately large in size.
THE CREATION OF INTERNATIONAL BREWERIES INC. (IBI)
The concept of establishing IBI in 1955 was fairly basic. Acquire several good breweries in different cities and in a certain region of the country and improve their overall profitability through economies of scale, improved logistics and increased marketing. As the name implies, the company may have been a little over ambitious of calling themselves International. After all, their locations were only located in the U.S., and in just four states situated east of the Mississippi River. However, they did have operations in Detroit and Buffalo, not far from Canada, and apparently the company once had some thoughts of acquiring a brewery in that country.
IBI Corporate Emblem
The formation of IBI was through multiple acquisitions, as summarized below.
•Iroquois Beverage Co., Buffalo, NY in 1955
Iroquois Beer and Ale (formerly Tomahawk Ale)
•Frankenmuth Brewing Co., Frankenmuth, MI in 1955
(Plant acquired by Carling in 1956)
Frankenmuth Beer & Ale (& Bock Beer), (formerly Old English & Pioneer Ales)
•Krantz Brewing Co., Findlay, OH in 1956
Old Dutch Beer
•Southern Brewing Co., Tampa, FL in 1956
Silver Bar Beer and Ale
•Phoenix Brewery Co., Buffalo, NY in 1957
Phoenix Beer and Cream Ale
•Bavarian Brewing Co., Covington, KY in 1959
Other brands that were added without the acquisition of breweries were:
Tropical Ale – from the defunct Tampa Florida Brewery, Inc., in 1961.
IBI Malt Liquor - beginning in about 1961.
Malta Huey - a beverage licensed from Bacardi in the early 1960s.
BAVARIAN/S AS PART OF IBI
To celebrate their fold into IBI, the former top executives of Bavarian Brewing Co. met with Bruce Berckmans, the President of IBI. The photo was taken at IBI's headquarters in Detroit, MI, about a month after the merger. William R. (Bill) Schott, on the far left, had become Vice President and Board Member of IBI as well as General Manager of the Bavarian Plant. To his right, his father Will Schott was no longer involved with day-to-day operations, but had a significant equity ownership in IBI. On the far right, Louis L. Schott, is next to Berckmans, and with his father and brother. Louis became the Sales Manger for the Bavarian Plant. Despite having less authority than his brother, Louis had the same equity interest in their family brewery, and in IBI.
THE NEW BOTTLING PLANT
Bavarian desired a new bottle shop (plant) a few years before the merger with IBI. Their Directors even had approved funds to begin the designs for this structure 1958. It appears that when arrangements were made to merge with IBI in 1959, there may have been an agreement for IBI to build this bottle plant. One of the restraints Bavarian had in constructing the bottling plant was its considerable cost, in light of the lack of significant sales growth and increased costs. IBI's willingness to build a new Bottling Department at Bavairan's main plant may have been a contributing factor for the brewers to agree on a merger. This new structure was completed in August of 1960, about a year after the merger, at a cost of $500,000. It was heralded in the local papers, and executives posed in the new plant for promotional pictures, as shown below.
1960. From left to right, a large ad in the Cincinnati Enquirer publicized the opening of Bavarian/s new Bottling Plant. In the middle photo above with new equipment are (l. to r.): Miles Ericson, IBI Exec. V.P.; Larry Schrand, Bottling Superintendent, Wm. C. Schott: and Wm. R. Schott (IBI V.P. and G.M. of the Bavarian Plant. These same individuals are in the far right photo.
Like any merger, there were some transitions after Bavarian merged with IBI. Shown on the side (left to right) are: Louis . Schott, William C. Schott, Henry Wetzel and William R. Schott. They are congratulating Mr. Wetzel upon his pension retirement in 1960. He began working at Bavarian in 1917. About this same time, IBI no longer had need for Bavarian's Marketing Group, as most of that work was centralized at IBI's Detroit headquarters. As a result, the Advertising Manager, Larry Rinck, resigned shortly after the merger. And, in 1961, Louis L. Schott, who was Marketing Director and became Bavarian's Sales Manager under IBI, resigned to take an executive position with another Schott Family business, the Cincinnati Galvanizing Co.
SUCCESSFUL BOWLING TEAM
and Phoenix. This allowed IBI to advertised their company and brands in more major magazines, such as in Life Magazine, one of the premiere national magazines at that time. This is reflected by the front cover in the 1961 Annual Report below. In consolidating IBI's advertising, the main new term in their slogan became "...MEL-O-DRY to satisfy..." These featured men, with no effort to cater to women. This IBI
AN EVENT WITH TWO MAYORS
In the photo on the left, there is a gathering of executives of IBI with Mayors of both Cincinnati, OH and Covington, KY. They met to view the unveiling of a new lighted sign in the Ft. Washington area of Cincinnati in 1962. Left to right are Edward W. Pulver, IBI Sales Manager So. Central Region, William R. Schott, Director of IBI, V.P., and General Manager of the Bavarian Plant; Bruce Berckmans, President and Chairman of IBI; Walton H. Bachrach, Mayor of Cincinnati; and John J. Moloney, Mayor of Covington.
THE ADVERTISING OF BAVARIAN & IBI
In 1958, the advertising for Bavarian continued to support their "New Look" initiated a year earlier to essentially rebrand their beer as well as their company. They established a comprehensive advertising campaign around their new image. They also selected an attractive "Bavarian Girl" as an ambassadress to the company. Slogans were created to distinguish their beer from others, e.g. "Brewed the Old World Way...Natures Way." In early 1959, before their acquisition by IBI, Bavarian refined their slogan as shown by the ad on the side to "Enjoy Old World Style...American Style." (See Ads: 1957-1966). Another "Bavarian Girl of the Year" was not selected in late 1958 and Bavarian's print advertising appeared to decline in the beginning of 1959. Possibly Bavarian may have been concerned of making substantial marketing commitments if they were joining with a firm that had a different advertising philosophy.
How About That! Shortly after IBI acquired Bavarian merged with IBI, a new Blitz Merchandising Drive for Bavarian/s was announced in International News, IBI's newsletter, dated June, 1959. This publication replaced Bavarian's Tap Newsletter. Bavarian's main new advertising slogan became "How About that!" - shown in the far right banner above. Other phrases were also used as shown by the banners. A jingle feature the slogan "How About That" can be heard by selecting the arrow above. At first, it seemed that IBI was providing some unique and direct support for Bavarian/s. However, after a couple of years, IBI did not typically support individual branding and distinctive advertising for each of their brands. Rather, they attempted to standardize their advertising for most of their brands, as they did by making most of their labels alike, as shown below.
Besides those beer labels shown above, all but Bavarian/s and Old Dutch also had ales. The ale labels simply had green backgrounds instead of the red backgrounds associated with the beers. All together, IBI actually had about a dozen different beverages. One unique aspect about Bavarian/s compared to other IBI brands, is that the Bavarian/s label was never materially changed. Nevertheless, a relatively minor change to this label was made, as shown in the upper right above. Foil paper was no longer used, as it was before the merger, to reduce costs. Additionally, the label print color was changed from yellow to red. There was also a brief time when the IBI letters replaced the symbols for Time, Tradition and Skill in Bavarian's three colorful flags.
Not only did IBI have similar advertising for most of its brands, but it also brewed nearly all of its brands in four of its five plants. It is believed that the Bavarian Brewery Plant brewed all of IBI brands (except Iroquois Beer), and IBI produced Bavarian/s at its plants in Buffalo, NY, Tampa, FL and Findlay, OH. This may have supported the likelihood that all of International beers and ales tasted very much alike.
The print and point-of-sale advertising among its brands was often the same, using the same slogan and photos, but simply interchanging the name of one of their beers, and always emphasizing the IBI name and logo. This helped IBI lower their advertising costs and simplified their marketing. Since all but one of their brands were brewed in different states and selling territories, there usually wasn't an issue with advertising different beers with the same label designs and marketing material.
Mel-O-Dry: One of the main advertising themes for IBI starting around 1961 the slogan "brewed MEL-O-Dry to satisfy your taste!" Diagrams that illustrate this "Mel-O-Dry" slogan are below. Apparently these items were used for most of IBI's brands by simply changing the name of the beer. In particular, the diagram in the center below seemed to imply that there may have been a relatively consistent brewing process among all IBI brands, implying there may not have been any significant differences in taste. If that was what actually occurred, then there may have some changes in way some or all of the beers that IBI acquired were brewed. The fact that four of IBI's six beer labels were the same, also inferred that these beers were brewed in the same way and had a similar taste, if not the same. An ad that departed from the Mel-O-Dry ads, appearing in 1962, which was unique for Bavarian/s and connected the brewery back to its early years before Prohibition, appears on the far right below. It features a photo of the workers at Bavarian from 1901. In the upper right is the founder who incorporated the Bavarian Brewing Co., William Riedlin, and his son is seated in front second from the right. Please see more information about this photo in The Early 1900s.
An Award-Wining Taste: In 1962, Bavarian received first prize in an International brewing competition in Belgium under the Bavarian's plant brewmaster, Harold Klink, shown below. This award greatly pleased IBI and they used it in numerous advertisements, and not just for Bavarian/s. Interestingly, the ads touting the first prize included some of IBI's other beers, as shown below. This lends further credence that all IBI beers were brewed in a similar way to Bavarian/s. Ads featuring this award are below and appeared in 1963 and 1964.
...The Bold Beer: Some time in 1964, IBI changed the slogan Bavarian/s to "Things liven up with the Bold Beer." Some examples of the use of this saying on advertisements and an outdoor sign are shown below. This was the last major slogan used by IBI. While advertisements for Bavarian/s had used an ambassadress in 1958, and then featured mostly men, it was noteworthy that the marketing behind this new slogan featured couples. As depicted by the ads as displayed below, the couples were much more lively and attracted to one-another once they were drinking Bavarian/s. In the center is an outdoor sign that is still displayed more than 50-years after the Bavarian Brewery plant closed (in 1966) at the Happy Days Taverns in Covington, KY.
THE PERFORMANCE OF IBI
IBI had a relatively early success after it was formed in 1954, making it desirable as a suitor for Bavarian. However, the performance was of two stories; optimism in their first five years and concern and disappointment in their remaining six years, as discussed below.
The First Five-Years of IBI
Between 1954 and 1959, IBI acquired five brewers and were able to attain their goal of becoming the 25th largest brewery in the country. A financial summary of IBI and the locations and photos of their plants are shown on the right. This complete report in PDF format can be viewed here. The founder & President of IBI, Bruce Berckmans, was a pilot in WWII and visited the breweries in his private plane called the Flying Brewery. He considered himself a maverick and successful in creating a firm that others said wouldn't work, according to the noted report. In the year following this report (in 1960), IBI invested $500,000 in a new bottling plant at Bavarian to increase its production. It installed optimism in the future of the Bavarian Brewery Plant under IBI's management.
IBI in the 1960s
The IBI annual report for 1961 showed the Directors and Managment of the IBI, as displayed on the right. It identifies Bruce Berkmans as both the Chairman and President of IBI. William R. Schott the son of Lucia Riedlin Schott who was the daughter of Bavarian founder William Riedlin, was one of the nine IBI Directors. He was also a Vice President and the General Manager of the Bavarian Brewery Plant. The front cover of the report is shown to the lower right, publicizing IBI's advertisement in Time Magazine. However, inside the annual report are some indications that the brewer was facing some troubling financial headwinds. (This entire report in PDF format can be viewed here.) Gross sales seemed to have plateaued, there was a significant decline in net income and dividends were cut from $1.00 to 70 cents per share. However, share earnings were only 21 cents per share, with a harbinger that dividends would be further reduced.
Despite a good deal of optimism IBI generated about its future among their employees, the competition from the larger brewers, and the lack of material growth in the demand for IBI's beer, was taking a toll. By the early 1960s, the expectations that were exalted by the President of IBI, Bruce Berckmans, just a couple years earlier in the 1959 annual report, were failing. IBI lost $294,894 in 1963 and lost about $762,892 in 1964. The combined purchasing and advertising power of IBI, which were hoped to provide them with an advantage, did not prove to be successful. The logistics of brewing more than several of their brands in four of their five plants and distributing some of these in new market territories that overlapped with their same brands, may have been challenging. In particular, operating older plants likely contributed to higher costs and reduced margins for IBI compared to other national brewers who were building new and more efficient and automated breweries. Most of the members of the Schott family (William C. and Louis L. and Lou) had remained shareholders in IBI, but the reduction in dividends were causing at least one family member to reduce his holdings.
The earnings for IBI continued to erode more significantly in the early 1960s. By 1964, the IBI Directors decided to replace the founder and President of IBI, Bruce Berckmans, because of shareholder discontent and disappointing profitability. The new President became Albert Roach, by only a one vote margin. The former President of Bavarian’s, Wm. R. Schott, who was an Executive V.P., on the Board of IBI and the manager of the Bavarian Brewery plant, supported the new President.
The Beginning of the End, and the Bavarian Brewery Closing
In 1965, the struggles of IBI continued and some shareholders in the company had concerns with the practices of President Roach. A proxy fight ensued over the control of IBI headed by Terry J. Fox and Charles George. In a close 5-4 Board vote, the four opposition Board members, including Wm. R. (Bill) Schott and Roach, were removed. The departure of Bill from IBI ended the Riedlin and Schott family’s involvement in Bavarian Brewing Co. beginning in 1882 and lasting for over 83-years. Also in July of 1965, IBI threatened to close the Bavarian plant. Negotiations occurred between Covington Mayor Bernard Eichholz, the new Chairman and President of IBI, Fred George and union representatives. In particular, Eichholz wanted to retain the City's oldest and largest employer with some 250 employees and that contributed $1.17 million annually into the local economy. After concessions were made, it was agreed that some of Bavarian's delivery drivers would take jobs with various distributors, reducing costs for IBI who claimed they were losing $1,400 per day on the Bavarian Plant. A couple months later, Terry Fox became President and Chairman of IBI. In March of 1966, this new IBI chief executive and Board decided to license Bavarian/s and Old Dutch, made in Findlay, OH, to Associated Breweries, based in Detroit, the eighth largest brewery in America at that time. Arrangements were made to make Bavarian/s at Associated's plants in Evansville, IN and Detroit, MI, continuing its availability in the Cincinnati area. However, this signaled the end for the future of the Bavarian Brewery Plant and its workers. IBI had determined it could not be profitable in brewing and decided to exit the beer business altogether. In June of 1966, IBI liquidated two of their remaining breweries, one located in Findlay, OH and the Bavarian Brewery plant in Covington, KY. (See the Bavarian Brewery Closing.) IBI then acquired a controlling interest in Aberdeen Management and changed their name to that firm in 1967.
Closed, But Not Entirely Gone
Even though the sales of Bavarian/s had not grown in recent years, there were still many loyal Bavarian/s beer drinkers and there was a demand for the beer. Associated was easily able to accommodate this demand primarily by brewing and bottling Bavarian/s at their Evansville, IN, brewery. Bavarian/s was also brewed at other Associated breweries until they went out of business in about 1972. Thereafter, other entities still continued to brew Bavarian/s somewhat longer.
Comment: Around 2018, a microbrewery in Covington, KY, Braxton Brewing Co., mimicked Bavarian/s Select Beer using the three flag logo Bavarian Brewing Co. developed, but for a beer they introduced as Bavarian Style Select Lager. Note this is a different name than Bavarian/s Select Beer. The distribution was limited as it was only available in kegs. A year or two later, in late 2019, Braxton increased the availability of this beer by making it available in cans shortly after the opening of Kenton County Government Center, which repurposed Bavarian's former Brew House as office space. However, Braxton's Bavarian Style Select Lager Beer is made differently than Bavarian/s Select Beer, and the beers somewhat different tastes, even though Braxton claims the obtained the original formula used by Bavarian Brewing Co. In addition, the storied history behind the three-flag logo, which is explained under Bavarian/s New Look, was evidently unknown to Braxton.
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 is the top portion of a diagram,
which explains the process IBI used in brewing their beer.