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, a tremendous amount of consolidation began in the brewing industry. Of course, during the nearly 15 years of Prohibition from 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 older brewery equipment and facilities obsolete. There were also changes in the families that had owned and operated the breweries. Some sold off their brewing assets, making it difficult for their family members to reenter the business. Often the descendants of former brewers were either uninterested or too unexperienced to get involved in brewing after Prohibition, 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. However, improvements in transportation, refrigeration, packaging/canning, marketing, etc., increased the capital to enter the brewing business. This caused the smaller brewers to be acquired by larger brewers - or to simply be forced out of business - and the large brewers became larger.
The trend of consolidation was evident before Prohibition, but occurred more rapidly after. In 1934, there were 756 brewers in the U.S.; considerably less than a few thousand 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 based on improving the economies of scale: acquire several high-quality breweries in different cities and in a certain region of the country, and improve their overall profitability through bulk purchasing, improved logistics, and increased marketing. As the name implies, the company may have been a little over-ambitious when they chose the name “International.” After all, their locations were only situated in the U.S. - and in just four states all situated east of the Mississippi River. However, they did have operations in Detroit and Buffalo, not far from Canada, and apparently the company had once considered 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.
In addition, brands IBI obtained a few brands with very limited production, as explained further below.
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. His father Will Schott, to his right, 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 with his father and brother. Louis became the Sales Manager 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 expressed interest in acquiring 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 as well. One of the restraints Bavarian had in constructing the bottling plant was its considerable cost, especially in light of the brewery’s lack of significant sales growth and increased costs. IBI's willingness to build a new Bottling Department at Bavarian’s main plant may have been a contributing factor to the decision of the brewers to merge. 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.
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 had begun working at Bavarian in 1917.
Like any merger, there were some transitions after Bavarian merged with IBI About this same time, IBI no longer had a 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. In 1961, Louis L. Schott, who was Marketing Director and became Bavarian's Sales Manager under IBI, resigned and took on an executive position with another Schott Family business, the Cincinnati Galvanizing Co.
SUCCESSFUL BOWLING TEAM
As mentioned under Sponsorships,Bavarian supported amateur sports and teams, which would include their workers, and occasionally employees of some of their customers or a distributor. Even before Prohibition, bowling was played at the Turners next to the brewery by William Riedlin and other employees. A Mettlach drinking vessel featuring bowling was in the Bavarian Tap Room. On the side is a picture of a successful Bavarian's employee bowling team in 1962 with a trophy displayed by Larry Schrand (Bottling Dept. Mngr.). Left and right of him are Bill Schott (V.P. & Gen. Mngr.) and Bruce Berckmans (President), respectively.