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.
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...Nature’s Way." In early 1959 - prior to their acquisition by IBI - Bavarian refined their slogan, as shown by the ad on the side encouraging customers 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. It is possible that Bavarian was reluctant to make substantial marketing commitments when they probably anticipated a merger 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 was changed to "How About that!" - shown in the far right banner above. Other phrases were also used, as shown by the banners. A radio jingle featuring the slogan "How About That!" can be heard by clicking on the arrow above. At first, it seemed that IBI provided some unique and direct support for Bavarian/s. However, after a couple of years, IBI typically no longer supported individual branding and distinctive advertising for each of their brands. Rather, they attempted to standardize their advertising for most of their brands; they did so in part by making their labels alike, as shown below.
Mel-O-Dry: One of the main advertising themes for IBI, introduced around 1961, was the slogan "brewed MEL-O-Dry to satisfy your taste!" Diagrams that illustrate this "Mel-O-Dry" slogan are presented below. These items were evidently 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, suggesting there may not have been any significant differences in taste between the beverages. If that was what actually occurred, then there may have some changes in the way that some or all of the beers that IBI acquired were brewed. The fact that four of IBI's six beer labels had the same design also implies that these beers were brewed in the same way and shared 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 1902. Shown in the upper right is the founder who incorporated the Bavarian Brewing Co., William Riedlin; his son is seated in front second from the right. For more information about this photo please see period 4. The Early 1900s.
In addition to the beer labels shown above, other brands in small quantities bottled at the Bavarian plant in Covington included Malta Hatuey and a limited numbers of brands from the former Cleveland-Sandusky Brewery. These included Gold Bond and Crystal Rock beers, as well as Old Timers Ale. A couple other infrequently produced brands in Covington, originally from Florida breweries, were Stolz Beer and Orbit Beer. In addition, Silver Bar and Frankenmuth also had ales with labels that had green backgrounds instead of the red backgrounds associated with their beers. Altogether, IBI produced about a dozen different beverages. Besides having similar advertising for its brands, IBI also brewed several different brands at their Phoenix Plant in Buffalo, NY, the Old Dutch plant in Findlay, OH, and the Southern (Silver Bar) plant in Tampa, FL - until the beginning of 1964 when the Tampa location was closed. However, the Bavarian plant was the only one that produced all the different IBI brands, except for Iroquois Beer and Tomahawk Ale, which were exclusively brewed at the IBI Iroquois plant in Buffalo, NY.
A unique aspect about Bavarian/s labels compared to other IBI brands is that they were never materially changed. Only 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 period in which the IBI letters replaced the symbols for Time, Tradition and Skill in Bavarian's three colorful flags.
The print and point-of-sale advertising among IBI’s brands was often the same, using the same slogan and photos while interchanging the name of one of their beers, and always emphasizing the IBI name and logo. This design helped IBI to 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 that had the same label designs and marketing material.
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, not only those for Bavarian/s. Interestingly, the ads touting the first prize included some of IBI's other beers, as shown below. This lends further credence to the possibility that all IBI beers were brewed in a similar way to Bavarian/s. Ads featuring this award are shown below and appeared in 1963 and 1964.
...The Bold Beer: At some point in 1964, IBI changed the slogan Bavarian/s to "Things liven up with the Bold Beer." Some examples of this saying printed 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 thereafter, it was noteworthy that the marketing behind this new slogan featured couples. As displayed in the ads below, the couples were depicted as much more lively and attracted to one another once they were drinking Bavarian/s. In the center there is an outdoor sign that is still displayed today - more than 50years after the Bavarian Brewery plant closed in 1966 at the Happy Days Taverns in Covington, KY.
THE PERFORMANCE OF IBI
IBI had relatively early success after it was formed in 1954, making it desirable as a suitor for Bavarian. However, the performance ultimately was one of two stories: optimism in their first five years, and concern and disappointment in their remaining six years.
The First Five-Years of IBI
Between 1954 and 1959, IBI acquired five brewers and was 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 and 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 because he was 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 in order to increase its production. The move 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 Management 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 there are 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 in 1958, and net income began significant declines in early 1959. By 1961, its dividends were from $1.00 to 70 cents per share. However, its earnings declines were not only a harbinger that dividends would be further reduced, but that the company was having more serious financial issues.
Despite a good deal of optimism that IBI generated about its future among their employees and customers, the competition from the larger brewers - as well as the lack of material growth in the demand for IBI's different brands - was taking a financial toll. By the early 1960s, the expectations that were exalted just a couple years earlier by the President of IBI, Bruce Berckmans, in the 1959 annual report, were failing. IBI lost $294,894 in 1963 and about $762,892 in 1964, as their production and sales declined. The combined purchasing and advertising power of IBI, which they hoped would provide them with an advantage, did not prove to be as successful as anticipated. The logistics of brewing multiple brands in four of their five plants, and distributing some of these in new, overlapping market territories, 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, automated breweries. Most of the members of the Schott family (William C., Louis L., Lou) had remained shareholders in IBI, but the reduction in dividends caused at least one family member to divest his holdings.