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 It became the Bruckmann Plant Nol 2 after Prohibition was repealed.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)
For a 15-year period after WWII, Bavarian had been on the offense, enjoying increased sales and expanding their production. In the following years - beginning about 1953 - the brewer went on the defense. This was a period of greater competition, reduced sale and increased operating expenses. In particular, Bavarian needed to aggressively reduce costs to remain profitable and stay in business. 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. First, they effectively duplicated their work forces and equipment without expanding their trade area, which led to higher labor costs without an increase of their potential customer base. Bavarian also placed substantial assets into Heidelberg (Plant No. 2), which lost significant value and were rather illiquid. By 1954, it was apparent that Bavarian no longer needed a second brewery. However, letting go of the second location would cause challenges with union workers they no longer needed.
The unions representing Bavarian's employees wanted the brewer to participate in a pension program, provide other fringe benefits and retain union workers in Plant No. 2. (Please see the photo on the side of the first Bavarian employee to retire with a pension.) Negotiations ensued, resulting in a settlement agreeable between the unions and the brewer. But it was also necessary to invest more capital into the brewery in order to reduce costs and for it to remain financially viable. More specifically, Bavarian needed to modernize and expand their main Plant No. 1, which required a capital expenditure estimated at slightly more than $1 million at the end of 1953. This also required more debt, revisions to organizational documents, and changes in management. Bavarian would also need to acquire adjacent property, new equipment and construct 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 the use of "Old Style" and another wanted to use the name "Bavarian" for a new and competitive brand. Since Bavarian's advertising may have been partly responsible for their decline in sales, more funds needed to be devoted to this area and their overall marketing needed to be improved. Beginning in mid-1956, Bavarian would need to create an entirely new image and brand, which was 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, while 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 remained unchanged: 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 Director, replacing Joseph Vehr, who had served in that capacity since 1945. These changes meant that the four Directors for Bavarian - all members of the Schott family - were Lou, Bill, Will and Louis. Vehr left the firm in late 1954 and disposed of the few shares of stock he held in the company back to the Schott family, which were primarily placeholders 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 to those that were younger, 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.) With the closing of Plant No. 2 and the new need for a consolidation and modernization program, significant changes were clearly on the horizon. The fate of the company would involve difficult decisions and shifts in goals in order to restore profitability. Such decisions were not left to both of Will's sons equally; as President, Bill had more influence. They were also not unanimously supported. Apparently due to a disagreement about the best course for pursuing modernization, Ray Hoffman, the V.P. and G.M, resigned in December, 1955.
In 1955, becoming unprofitable and in an attempt to conserve cash, Bavarian did not provide any bonuses to key employees, as they had each year for nearly two decades. Not surprisingly, some attrition occurred in response. Beginning in 1956, bonuses were awarded based on performance, replacing the older and somewhat arbitrary system for bonus compensation. The 16 key employees receiving such bonuses at that time were; Mel Aicholz, Perry Austin, Lyle Baker, James Caldwell, Herman Determan, Frank Hamilton, Harold Klink, Carl Moeller, Joseph Ponzer, Larry Rinck, Larry Schrand, Jack Shannon, C.H. Wimberly, Paul Wettig, John Wuest and Walter Zanis.
Will and his wife owned about 30 percent of the company, and their sons, Bill and Lou, each held about a 20 percent interest in trust for their families. Therefore, Will's family owned about 70 percent of the ownership in Bavarian, and Will and his sons had three of the four Director positions. Will's brother Lou was the other Director, and his family (consisting of wife Melba and daughter Melba Ann) owned the remaining 30 percent. For voting purposes, the closely-held family ownership of Bavarian was divided into 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 early 1949, was viewed as a timely solution intended to meet Bavarian's growing sales. It helped Bavarian achieve its peak annual production of 336,157 barrels in their 1950 fiscal year, ending on September 30. In the following two fiscal years production declined about 10%, but was relatively stable at about 306,000 barrels for each of the 1951 and 1952 fiscal years according to audited accounting reports. Even though financial reports were unavailable for 1953 and 1954, overall production in 1953 was believed to be at least about 175,000 barrels for Plant No. 1 alone and about 75,000 barrels for Plant No. 2 creating a total of about 250,000 barrels. However, in Tim Holian’s book entitled "Over the Barrel" volume two, it was noted that that Research Corporation of America (RCA) statistics indicated Bavarian had a much more severe drop in production between 1952 and 1953, from 323,000 barrels to 200,000 barrels. This same drop was also mentioned in Rob Musson’s "Brewing Beer in the Queen City Volume IX." Even though there was a decline in Bavarian's production between 1952 and 1953, it was not as severe as cited by the noted publications. As mentioned, corporate financial reports indicated that barrel production in 1952 was 306,000 barrels, not 323,000. And, since Plant No. 2 (Heidelberg) was in full operation for all of 1953, barrel production in that year was most assuredly not just 200,000 barrels, but more likely at least 250,000 barrels. It was only after Bavarian began to close Plant No. 2 in 1954 that production dropped more precipitously, but nevertheless still remained above 200,000 barrels. An explanation for the production inaccuracies cited by RCA is that possibly only the production of plant No. 1 was noted in 1953 and not Plant No. 2.
Bavarian's reduction in sales and production was believed to be due to multiple factors. Even though price was one factor, there was increased competition from much larger national brewers. Bavarian's advertising was also stale and needed to be revised. Further, there were increases in operating expenses caused by duplicate work forces at two nearby plants simultaneously. Due to these factors, Bavarian began to experience negative profits beginning in about 1954, while Plant No. 2 was still operating. Consequently, production not only declined because of demand, but t to reduce costs to have more competitive prices and restore profitability. Even though Bavarian needed to close Plant No. 2 in late 1954, it still had capacity to produce up to about 240,00 barrels in its main Plant No. 1 at that time. However, another issue occurred in April 1955 when Bavarian experimented with some modest changes affecting their beers taste, making it a little "too hoppy," according to some customers. It was corrected near the end of that year, but it impacted sales for both the 1955 and 1956 fiscal years. Financial records indicate that production fell to a period low of 211,831 barrels in fiscal year 1956. However, due to a new advertising campaign and warehouse in 1957 (as explored in "(9A. Bavarian's New Look"), sales and production began to improve.
The major reason for Bavarian's relatively high expenses in comparison to its main competitors, 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. By 1950, all of Bavarian's local competitors had been operating only one plant and making investments to reduce their production costs. Unfortunately, Bavarian's investment in Plant No. 2 did the opposite after a few years. Other critical issues were that the overall demand for beer in the early 1950s - in Bavarian’s Tri-State market area (Ohio, Kentucky and Indiana), and more generally throughout the U.S. - was highly competitive, and nearly a plateau with limited growth prospects. This meant that in order for a brewery to increase its sales, it was difficult to raise prices, and it was bascially necessary to cannibalize sales from other breweries. Lower production expenses would allow a brewery to more effectively compete on the basis of cost, and spend more on modernization and marketing. Without these advantages, Bavarian found itself at a competitive disadvantage. However, in an effort to revitalize their sales, they made some modifications to their advertising between 1953 and 1957, as explained below. Most importantly, Bavarian's management realized that it was necessary to make fundamental changes to their production model, as explored in the section on Consolidation and Modernization Program.
Bavarian had used "A Man's Beer" as their main advertising slogan from 1946. Along with slumping sales and changing times, Bavarian realized they needed to modify their advertising message to reach more customers. As shown by the coaster and ad below, beginning around 1953, their slogan was changed from “A Man’s Beer” to include "...and Hers Too!" (See below.) But "A Man's Beer" slogan was not completely dropped until 1955.
Bavarian sponsored a variety of television programs to better advertise their brand. As shown on the invitation below, these included A Favorite Story, Monday Night Fights and Abbott & Costello. However, their main emphasis was on the radio programs that covered news, sports and music. In the photo below, nearly all the radio and TV announcers involved with the programs Bavarian sponsored are gathered together in the Bavarian Tap Room. The brothers Wm. R. Schott and Louis L. Schott are seated 3rd and 5th from left, respectively.
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.
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 given to the man seated second from the left in the photo above, Paul Dixon. As mentioned in 8B. Bavarian’s TV/Radio Shows, 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 show 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 shown above, which appeared in March of 1955, because he was still living in New York at the time. However, it is believed that Bavarian's Beer was one of his show’s sponsors shortly after he returned to Cincinnati to launch his own show. The show ran for 20 years, until 1974. (See Cincy TV/Radio Talents.)
Bavarian had been working with the local ad agency of Ruthrauff & Ryan, coordinated by William R. (Bill) Schott with Bavarian. However, in late 1954, it was decided that a newly established local firm, Peck-Heekin, would be used instead. This resulted in a new theme: the full version was "The Promise of Flavor... at its Finest." However, it was sometimes separated as "Its A Promise..." and “Flavor... at its finest" in 1955. (Please see Bavarian's Ads: 1946-1956.A decision was also made for Bavarian to discontinue their television sponsorship of Midwestern Hayride in December, 1954, which had begun around 1949. Instead, Bavarian sponsored Monday Night Fights, which had previously been sponsored by Wiedemann's (that company took over Midwestern Hayride in turn, effectively swapping sponsorships with Bavarian’s). To support their new TV program, Bavarian released a series of posters featuring fighters which were taken from old lithographs created by Currier & Ives. One of these is shown on the side. For additional examples, please see Posters.