Beer Drinker

The history of the brewing industry in the United States has taken some very unusual and peculiar turns. For a brief period early in the twentieth century this industry was virtually non-existent. A country that had produced and consumed more malt beverages than any other in the world became, almost overnight, a country where the production of malt beverages was illegal. America's fifth largest revenue producing industry was outlawed by enacting a prohibition amendment. This situation persisted for just over thirteen years, and when repeal was enacted the industry surged back to life with a jolt. Seemingly unchanged and as powerful and dominant as it had been in the past, the brewers rejoined the ranks of big business as production and demand soared to new heights. Despite the fact that production was soon to reach pre-prohibition levels, not all was well. The incorporation of new technologies, marketing and advertising strategies and changing American tastes revolutionized the brewing industry over the next fifty years. By the late seventies America was producing far more beer than any other country, yet there were fewer than fifty different brewing companies. Product differentiation was almost non-existent and of the fifteen or twenty different styles of beer only three or four could be found here. Although Prohibition still loomed large in the industry's history, it is not sufficient in itself to explain the state of the industry in 1980. To do this it will be necessary to look at the state of the industry up until Prohibition and then, after repeal, to analyze significant changes and try to determine how they led to 1980.

Europe is known as a great center of brewing tradition and there are many distinctive regional specializations that are recognized. The early settlement of North America and the peak periods of immigration in the nineteenth century brought professional brewers from all these areas of specialization to the United States. From the brewers of English ale to the brewers of Bohemian lager and everything in between, all of these different traditions were now represented in America. The Dutch settlements in the New York area were the largest ale producers in the New World for some time. Several malt houses and a brew house existed in Philadelphia prior to 1700; William Penn himself was known as a brewer and a brew house still survives on the grounds of Penn Manor. In response to the increased consumption of rum from the West Indies and domestically distilled whiskey the Philadelphia legislature passed in 1733, "An act for encouraging the making of good beer and for the consumption of grain." This act required brewers and tavern keepers who brewed their own beer to refrain from using molasses, coarse sugar or honey in place of malted barley. This early attempt at quality control was a response to the common use of substitutes for barley (the brewer's term is adjuncts). The cultivation of barley was very limited in the Eastern United States and nearly all of it was imported from England in the early days, whereas these other ingredients were usually plentiful. Beer brewed with adjuncts is considered to be of a lower quality than beer brewed with one hundred percent malted barley.

Despite the continued predominance of rum and whiskey there were nearly 150 breweries in the country by 1800. As immigration to the United States increased toward the middle of the century the number of breweries increased relative to the population. Many of the immigrants at this time were from areas of central Europe and they brought with them a brewing heritage and a new kind of beer. In 1850 the population of the United States was 23 million and the number of breweries stood at 431. Ten years later the population had swelled to 31 million and the number of breweries had grown to 1,269. There are several reasons for this rapid increase. Many of these immigrants came from an area of the world where more beer per capita was consumed than anywhere else; it was a strong element of their culture and their gastronomic habits. It was at this time, during the middle of the nineteenth century, that lager beer was introduced to the United States.

This new style of beer was developed by brewers in Bavaria and Bohemia. It utilized new strains of yeast which required a longer period of fermentation and aging (lagering) before the beer could be served. The benefits of this new style were many; the final product was a sparkling, lightly carbonated and lighter bodied beer than had previously been common. In addition to being more suitable for drinking during the hot American summers this beer also lent itself to greater marketability. Its longer period of aging rendered it less likely to spoil and thus made it popular with larger brewers who now saw increased opportunities for distribution. By 1860 lager beer comprised about 25% of all beer being produced. As the population of the country continued to increase the number of breweries did also and by the mid 1870's there were more than 3,000 in operation.

Between 1864 and 1914 the per capita consumption of beer in the U.S. increased seven times while the consumption of whiskey was halved. In addition to an increase in the number of breweries there was a similar trend in the associated trades such as malting, cooperage and machining. The growing industry combined with increases in technology to allow for the construction of bigger, more efficient breweries and after peaking in the mid 1870's the number of breweries began to decrease. Another advent of technology was being introduced into brewing at this time, the process of pasteurization. This method of sterilizing the living yeast cells in beer held great promise for the industry. As these yeast cells were often the cause of spoilage, pasteurization seemed to promise a nearly indefinite increase in the shelf life of beer without compromising taste. The potential for distribution increased greatly with this more stable product and bottled beer could be retailed in food markets and grocers with little regard to freshness or the need to refrigerate.

Thus far an important aspect in the history of American culture and brewing has been ignored, the temperance movement. Concern for temperance is probably as old as alcoholic beverages but the founding of the American Temperance Society in Boston in 1826 was the beginning of a movement that was to culminate in more than just concern. By 1836 there were about 7,000 temperance societies with over 1.5 million members nationwide. The inroads of this movement were slow but steady throughout the nineteenth century and prohibition sentiment continually increased the amount of dry territory. The temperance movement was later joined by another organization, the Anti-Saloon League. This organization was formed in Ohio, primarily for abolishing saloons and sponsoring a local option to promote dry areas; they publicized the bad reputations of institutions such as the saloon and this contributed greatly, perhaps unfairly to the degradation of the brewing trade. After its first national convention in 1895 the League began the push for state and national laws to abolish saloons and eventually became the dominant force behind the prohibition movement.

Despite the fact that more and more parts of the country were going "dry", the total production and consumption of beer continued to increase. The majority of the dry areas were rural while the large urban centers were becoming the bastions of the brewing industry. This development contributed to the decline of the small brewery as the metropolitan areas provided better access to the needs of industry as well as opportunities for distribution. Attempts by the brewers themselves to fight prohibition sentiment took several forms. They tried to dissociate themselves from the saloons and instead, tried to portray their product as a healthy and invigorating beverage. Great efforts were made to increase sales of bottled beer so that folks might consume beer at home without the need to go out. This was a more practical scheme now that refrigeration was becoming available; it was also an attempt to detract from the "home-wrecker" image that prohibitionists associated with spirits. Brewers also went to great lengths to separate themselves from producers of distilled spirits. Earlier attempts to impose a national prohibition excluded fermented beverages and they hoped they might remain similarly unaffected in the future.

Although the gains of the prohibitionists could not be denied, the brewing industry itself continued to flourish. Total production had continually increased since the end of the Civil War, rising from 6.2 million barrels in 1866 to 63.2 million in 1911. The 1,400 breweries operating in the country in 1900 included names which may be familiar today such as Pabst, Anheuser-Busch, Schlitz, George Ehret and Ballantine & Co. Technological advances in brewing equipment, transportation and refrigeration along with more advanced marketing and sales strategies had seen the first real national breweries emerge around the turn of the century. Limited expansion did not necessitate additional brewing facilities, only increased production and transportation capabilities. This type of expansion also required the establishment of marketing offices and storage facilities in the new locales. Using these techniques Anheuser-Busch and had established more than forty such agencies throughout the central United States by the mid 1890's. Pabst and Schlitz also expanded in this manner and grew to be the top two brewers in the country, both producing over 1 million barrels a year by 1900.

Expansion beyond the immediate area was much more difficult. This could be accomplished in one of two ways; the purchase of existing breweries or outright construction of a new facility. If the former were pursued the buyer might choose to continue production of the existing brand and use his greater marketing resources to increase profits. He might also choose to dispense with the existing brand in favor of his own. The most significant problem encountered with this second alternative, insuring product consistency, was the same one that would be encountered when choosing to construct a new facility. The ability to produce beer that continually tastes the same had always been a problem for brewers and few had been willing to risk production of their flagship brands, in plants hundreds or thousands of miles apart. Recent advances in technology, especially with regards to yeast culturing were finally helping to ease this problem.

In 1911 the industry was honored at the American Exposition of Brewing Machinery, Materials and Products which was held in Chicago. It was a great success and attracted international participation and recognition for the United States. Despite the fact that the industry seemed to be at its high point the success of the prohibitionists loomed largely. Primarily as a result of the Anti-Saloon League's efforts a proposed amendment to prohibit intoxicating spirits went before congress in 1914. Here it lingered until 1917 when it was finally passed, state ratification followed on January 16, 1919 and an act providing for its enforcement, the Volstead Act was passed in October of the same year. Effective January 16, 1920 the production and sale of cereal beverages of greater than one half of one percent alcohol by volume were prohibited. The United States brewing industry was cut down in its prime. Until this point it is obvious that brewing in the United States developed in a manner similar to other industries. Growth was strong and consistent while the population continued to rise. Increases in plant capacity had resulted in a decrease in the total number of breweries but this number was still great enough to insure the availability of fresh, local beer everywhere in the country. Product quality was excellent, as witnessed by the medal Pabst won at the Paris World's Fair in 1878. The growing popularity of lager beer was supplemented by the continued production of English style ale, porter, stout and others; consumers still had the opportunity to choose from a variety of styles as well as brewing companies. Prohibition was a long and painful period for brewers. Many gave up on the industry and attempted to liquidate their assets any way they could. Others, more determined to survive, sought to utilize their facilities in related businesses. Schlitz, one of the country's largest brewers, survived by selling bakery products, candy bars and soft drinks. Miller produced near beer, malt syrup and a health beverage known as malt tonic. Many other brewers also sold malt syrup which is the basis for "home-brewed" beer and needs only to be boiled with water and fermented. There are many reasons why the Eighteenth Amendment was finally repealed; the Justice Department considered the provisions of the Volstead Act "unenforceable"; bootlegging pushed crime rates in urban areas to new levels; the Depression; a political swing towards the pro-repeal Democrats; and even the sentiments of the people. Those who had voted in favor, some years before, were now having second thoughts, as one journalist recalled while walking down Vine Street in Cincinnati:

The Cullen-Harrison Bill was passed by Congress on March 21, 1933 and legalized 3.2 percent beer; this law became effective three weeks later. A major concession accepted by the brewers was that they were no longer permitted to own or financially assist retail outlets such as saloons, taverns or hotels. The companies that had survived Prohibition by producing near beer, a cereal beverage containing only the legal amount of alcohol, had an initial advantage as they were ready to began production immediately. Newcomers and former brewers required capital and often with little regard to proper financing and local public support they jumped into the booming business; these entrepreneurs saw mainly an opportunity for profit and employment. Most of the small pre-Prohibition breweries were unable to start up again. Their owners were either unable to find financing or they had gone into another trade during the 1920's. Despite the fact that pre-Prohibition production levels were reached before the beginning of the Second World War the industry was not as healthy as it seemed. In 1935 the total number of breweries stood at 766 and the top five had a combined market share of about 14 percent From this point onwards the industry is marked by several important trends all of which contributed to a reduction in product variety and consumer choice; a decrease in the number of breweries every year from 1947 until 1978; a continuous increase in the market share of the biggest companies; increased expenditures for marketing and advertising; and expansion through acquisition and the construction of new facilities.

The decline in the number of breweries followed a similar trend that had started early in the century. The large national brands could be shipped to distribution facilities across the country and sold as "Premium Beer" for costs that were marginally higher than local products. Brand recognition began to play an important part in the consumer's choice and the prestige of the national brands appealed to many people. Small brewers suffered as their markets were invaded by products shipped from hundreds of miles away. From the late 1940's special promotional pricing was also employed by the nationals to develop new markets; many consumers who switched to the "Premium Beer" while it was on sale continued to purchase it even after the price went back up. Local brewers could rarely afford to match the sale price and as a result they lost customers. This is one way in which many small breweries were forced out of business. Exit barriers for the small brewers were not great, there was usually a minimum of investment and few employees. While the elimination of breweries did not hinder total production it did contribute to a reduction in the number of brands offered.

As marketing practices were refined, advertising became an increasingly integral part of the expansionist movement. This advertising tended to focus on a single style, a flagship name which consumers could readily identify and associate with a particular brewery. This often resulted in a decrease in the different styles of beer individual breweries offered; by the end of World War Two, Miller had phased out approximately thirty-five brand names and continued to offer only one, "Miller High Life". This development was not seen as detrimental, the quality of the beer being produced was still very good and the industry continued to thrive as competition and demand boosted sales.

With the start of the war there was renewed interest in reviving Prohibition, but Congress decided instead to enjoy the revenue from the industry and increased taxes to $6 a barrel. This tax was later increased to $7 per barrel in 1942 and then $8 in 1944. In addition to these taxes being especially burdensome to the small brewer, wartime shortages and restrictions further hampered the industry as a whole. Restrictions were placed on cork, rubber and metals which were used to produce bottle caps, cans and brewing vessels. Limitations were placed on the industry's consumption of agricultural products for several years and this forced brewers to either reduce production or alter their products. Many brewers chose the second option, the number of pounds of malt products used per barrel dropped from an average of 35 in January of 1943 to a low of 23.5 in July of 1945. Two years later this figure was higher but still nowhere near pre-war levels. In order to maintain production levels brewers substituted adjuncts such as corn or rice for a portion of the malt. This resulted in the lighter, less distinctive tasting beer that was to gain popularity in the years to come.

In the years following the Second World War brewers expected sales to increase greatly. In order to accommodate demand most of the larger companies expanded. Instead of increasing the capacity of existing plants brewers now looked to acquire other companies or construct new plants. The first company to do this had been Falstaff when it leased the Krug Brewing Company in Omaha in 1935 and bought the National Brewery of New Orleans in 1937. They immediately utilized both these plants to produce their flagship brand, other brewers soon followed suit. In 1949 Schlitz purchased the Ehret brewery in Brooklyn, NY. (once the nation's fourth largest) and began brewing its "Premium Beer" here. With this one move they eliminated transportation costs and increased capacity by 500,000 barrels a year. Quality control measures were now good enough that brewers could brew the same beer at different plants without fear of a "bad batch" ruining the brand's reputation. The move paid off immediately and "The Beer that made Milwaukee Famous" began to eat into the huge market which Ruppert, Schaefer, and other local breweries had long dominated. Not to be outdone, number two Anheuser-Busch decided to construct a new plant in Newark, NJ. in 1951. At a cost of $29.5 million the new plant had a capacity of 1.2 million barrels a year; instead of being located in traffic jammed New York City it was located just off Highway 1 to facilitate distribution. This new plant was a huge gamble for Busch, the investment was nearly 75% of the company's total worth and came only one year after they completed an expansion of the main facility in St. Louis. Despite sales increases of 177% between 1946 and 1952 they were only operating at 79% of total capacity and depreciation charges were eating heavily into profits.

The boom that was expected after the war never materialized and the high sales figure of 1948 was not reached again until 1965. Despite a flat market the national brewers continued to grow. Both Schlitz and Anheuser-Busch built new breweries in California in the mid-Fifties; census figures show that the population there had increased more than 48% between 1950 and 1960 and the brewers knew where the markets were. With total sales not increasing and the large nationals continuing to grow there had to be a loser somewhere, and once again this turned out to be the small brewer. Industry analysts were well aware of this trend, they attributed it to the typical development of a capitalist market. In 1952 Business Week reported:

* measured in barrels - 1 barrel = 31 gallons Source: Brewers Almanac (1986) p.8

Since the growth of the large national and regional brewers in the early part of the century, the small local firms continued to enjoy several advantages over them. One of these was low transportation costs. A limited distribution area required only a few sturdy trucks capable of delivering to the customer's taverns and retail outlets. "Premium Beer " always cost more (except during promotions) because transportation costs were incurred. By expanding brewing facilities to strategic locations around the country the big brewers all but eliminated this competitive edge. Another advantage enjoyed by the local brewers was a certain degree of brand loyalty. The major brewers attempted to counter this in two ways, packaging and advertising. For many years packaged beer had begun to replace draft as the leading seller, (see table 1) but most small breweries relied heavily on their wholesale clientele and continued to produce mainly kegged beer. Many were still using bottling lines that were twenty or more years old and few had expanded into canning. The only advertising they used were their painted delivery trucks, serving trays and perhaps a billboard or two. Big brewers quickly realized the importance of advertising, they also detected the transition to packaged beer and took advantage of it. National advertising campaigns, colorful billboards and carefully designed packaging were geared to draw the attention of the supermarket shopper, to maximize exposure and reputation. By 1959 "Budweiser had made five subtle changes in its package design over the last three years and Schaefer had redesigned its entire line, labels, trucks and all to make both cans and bottles pretty enough for the dinner table." Pabst new president, Marshall Lachner, was recruited from the Colgate-Palmolive Company where he was in charge of soap sales. He brought new marketing techniques to Pabst and the company began to spend more money on flashy packaging and offered coupons cashable in salt shakers, barbecue equipment and fishing gear. It did not stop here for the nationals; in 1955 August Busch Jr. used his personal railway car to travel the country, visiting all 900 of his distributors when profits were lagging. Two years before this when the St. Louis Cardinals were threatening to move to another city he promptly bought the team and assured them a home in the city of Budweiser. This move was copied by other brewers in the years to come.

While the big brewers were busy trying to corner the market throughout the 1950's there was another subtle change taking place. American tastes were changing, the preference for less distinctive tasting, blander beer accompanied similar developments in eating habits as fast food restaurants and TV dinners became popular. This change was noted by brewers, as one magazine reported:

This same magazine, several years later, went so far as to say, "Brewers steadily change their product in recognition of the discovery that modern Americans don't really like the taste of beer." They concluded, according to taste tests, that consumers preferred lighter beers, beers that taste less like beer, and that national brewers were following this market finding closely while the local brewers still tended to cling to heavier beers. At the end of the decade the top ten brewers combined market share was 48%, up from 36.9% in 1950, despite the fact that there was no overall growth in the industry. The nationals were continuing to expand, Anheuser-Busch acquired the Regal Brewing Co. in Florida and also opened a new plant complete with gardens and a bird sanctuary in Tampa in 1958. Schlitz also opened a new plant in Tampa in late 1958, giving them a total of five.

The national brewers were not the only ones able to expand throughout the fifties, many regional brewers did as well. P. Ballantine & Sons continued to rank among the top

1.Anheuser-Busch	6.98	6. Hamms	3.39
2. Schlitz	5.89	7. Liebmann	2.87
3. Falstaff	4.5	8. Schaefer	2.78
4. Ballantine	4.0	9. Pabst	2.55*
5. Carling	3.53	10. Miller	2.3

*Excludes sales of "Blatz" (1.7), acquired during the year. Source: Business Week (June 20, 1959) p.45

ten while operating solely from its large facility in Newark, NJ. The company's products were marketed in seventeen states. Schaefer and Liebmann both operated several breweries in the New York area and their markets were restricted to the Northeast. From a base in St. Louis, Falstaff had acquired five other breweries over a twenty year period. Distribution was centered around Ft. Wayne, San Jose, New Orleans, Galveston and El Paso, with this regional approach they were able to hold the number three spot in 1958.

As the new decade began the trends of the fifties promised to continue. This was good news for the big brewers who finally saw the potential for increased production as the first generation of baby boomers came of age. Television was the latest form of advertising and in 1963 Anheuser-Busch switched $7 million of its annual expenditures from outdoor advertising to television. The company was soon able to predict the effect of a given advertising expenditure on sales. As a result it was able to more closely correlate production with demand, reduce inventories, and save money. Busch's vice-president of business and planning, Edward Vogel said, "This put us so far ahead of the rest of the industry that it was like plucking a chicken." The advantages enjoyed by the national brewers to this point increased even more over the next few years, these included:

It seemed that one way the small brewer could stay alive was to merge with or acquire other companies in the industry, but there were barriers to this. Few brewers had the resources to acquire another brewery, especially one that was ailing, and revive it. One alternative was to purchase a brand instead of an entire company. This could be especially profitable to a brewery operating below capacity, it could greatly increase profits for little added cost. One such company taking advantage of this idea was G. Heileman Brewing Company of La Crosse, Wisconsin. In 1958 it acquired the majority of the stock of Kingsbury Breweries of Manitowoc and over the next ten years seven more companies. In most cases Heileman purchased only brand names, then brewed the new beer at its facility in La Crosse. By using the distribution network acquired with the brand it could eventually introduce its own products into the new market. Heileman's greatest coup of the decade was the acquisition of the Blatz label from Pabst in 1969.

The oligopoly developing in the industry could not long escape the eye of the United States Justice Department. In 1966 the Supreme Court expressed its desire "to arrest consolidation of the brewing industry in its incipiency." Not only was this action too little too late but the manner in which it was effected was poorly directed. In 1965 the government blocked a regional merger in Pennsylvania between the Pittsburgh Brewing Co. and Duquesne Brewing Co. The government wanted to prevent Pittsburgh Brewing from enlarging its dominance in Western Pennsylvania but paid little regard to consequences the move may have had in surrounding states. The increased plant capacity would have enabled the company to penetrate Ohio, West Virginia and Maryland. Instead over the next five years Pittsburgh's profits dropped more than 30% while Duquesne was operating at only 40% of capacity and losing money. The government also challenged Falstaff's purchase of the Narragansett Brewing Co. of Providence, Rhode Island. Falstaff 's market share had decreased 4.5% during 1967-68 and it wanted to expand into the New England market. The Justice Department claimed Falstaff should build its own brewery, but the brewer was able to prove it did not have the financial resources to do so. G. Heileman's acquisition of Blatz in 1969 was also the result of action by the Justice Department. Pabst had acquired Blatz in 1958, (see table 2) boosting the company from ninth to fourth in sales. By 1969 Pabst was third, far ahead of Falstaff, when the government forced Pabst to divest itself of the Blatz brand, as the leading bidder Heileman was able to obtain it.

By the end of the 1960's the consolidation of the industry in the hands of the few was all too apparent. Anheuser-Busch now sat firmly atop the list, it had boosted net sales 175% between 1955 and 1968, compared to the industry as a whole, which grew 44%. The top ten brewers now controlled over 70% of the market and the number of breweries was down to 158. William O'Shea, head of the Brewers Association of America said, "By 1980 there won't be a dozen breweries left in the country." If the Justice Department wanted to deter or prevent acquisitions then the big brewers would build new plants. A-B completed a new 2 million barrel facility in Jacksonville, Florida in 1973 and opened a 1.7 million barrel plant in Merrimack, NH the following year. The newest Schlitz plant opened in Winston-Salem, NC in 1972. This huge 4.4 million barrel per year, automated giant could produce more beer per employee than any other plant in the world. Schlitz found it cheaper to ship beer from North Carolina to New York than it was to brew the beer in its old plant in Brooklyn. It is difficult to imagine the capacity of these plants, Busch's St. Louis brewery operated a filling line capable of pumping out 7.5 million cans and 6.9 million bottles in a 24 hour period. Economies of scale allowed the big brewers to enjoy profits of around $2 per barrel while even the regional brewers rarely profited more than 50 cents a barrel.

The trend towards consolidation continued throughout the seventies but there were some major changes, even among the giants. In 1969 tobacco king Philip Morris purchased Miller Brewing Co. in a move to diversify. Miller was the eighth largest brewer in the country at the time. Philip Morris began utilizing the marketing expertise which had created the "Marlboro Man" and invested large sums into expansion in an effort to increase Miller's sales. In an industry characterized by light beers, Miller pushed ahead with an even lighter, low calorie beer called Lite. By using ad campaigns featuring vintage athletes such as Mickey Mantle and Dick Butkus the product skyrocketed; Miller's sales increased 46% in 1976 alone. They knocked Pabst out of the number three position and closed in on Schlitz.

Schlitz was having problems of its own. Attempting to cut costs further and increase production Schlitz made several changes in the early seventies. A process known as "accelerated batch fermentation" enabled the brewer to speed up the fermentation process using an air injection which stimulated the yeast. The company also began using a greater ratio of corn adjuncts to malted barley, which decreased the quality of the beer. Customers noticed and sales dropped off in the middle of the decade. Schlitz returned to using its original formulas but the damage had been done. Sales of 17.4 million barrels in 1975 plunged to 6.2 million in 1981 and burdened by over capacity they were bought out by the much smaller, privately owned Stroh Brewery the next year. Stroh had acquired Schaefer the year before but was still a regional brewer, this move vaulted them into the number three position and gave them national distribution. Pabst was another major brewer to falter during the late seventies. Between 1976 and 1981 sales of Pabst Blue Ribbon fell from 16 million barrels to 9.6 million. In 1985, after a three year battle Pabst was finally dismantled. The main bidders for Pabst were number four brewer G. Heileman and number six S&P Company. Since complete acquisition by either company would have violated anti trust laws, individual brands were auctioned off. The Blue Ribbon, Olympia, and Hamms brands went to S&P. Heileman continues to do well buying up other brands. Throughout the seventies and into the eighties they purchased seven breweries. The last of these, in 1987, was Christian Schmidt and Sons of Philadelphia. This city, which once had more than ninety breweries, was left with none.

At this point it seemed as though the consolidation process could go no further, Anheuser-Busch and Miller alone controlled more than 62% of the market in 1989. Any gains that could now be achieved would come at the expense of the other big brewers. There were very few small breweries left in the country, Genesee, Yuengling, Latrobe and Straub were among the handful that had survived thus far. In 1978 an all time low of 89 breweries was reached. Since most of the larger companies operated many different plants this meant that there were only about 45 different brewing companies. This is difficult to rationalize when compared to other beer producing countries. West Germany produced about 40% as much beer as the United States and had well over a thousand breweries at this time. Both England and Belgium had several hundred breweries each. Some have argued that this was a natural progression of a capitalist system but if the American market developed this way why didn't the others? It seems more probable that the answer lies in American tastes. Consumers seem to have been generally indifferent towards the taste of beer, especially since the end of the Second World War. If there had been a strong element of brand loyalty this would have saved many small brewers. Devotion to local brands would have eliminated many opportunities for expansion by the regional and national breweries. Local tradition and brand loyalty are the most significant reasons for the survival of the small breweries that were left in 1978.

The other major weapons in the arsenals of the big brewers were marketing and advertising. As they increased their advantages through economies of scale they were able to sink more money back into these areas. Before television Pabst advertised on the Groucho Marx radio show in 1943, in 1944 they sponsored the "Pabst Half Hour" program which featured entertainers such as Danny Kaye and the Harry James Orchestra. When August Busch purchased the Cardinals in 1953 others took notice of the exposure created by this type of sponsorship. Ruppert soon began to support the Yankees and Schaefer sponsored boxing events at Madison Square Garden. American consumers were particularly susceptible to the progressive mass media generated by Wall Street; but these advertisers were no longer interested in selling beer - they were selling an image. As American beers grew less distinctive many people purchased on the basis of price or an image associated with advertising, taste became less of a factor.

This became noticeable throughout the 1960's and 1970's as an aura surrounding the quality of European beer arose in the United States. Increasing numbers of servicemen and travelers returned from abroad with stories of great German beer or English ale and it became readily apparent that there was a difference between our beer and their beer. The German brewmasters who immigrated to the United States brought their recipes and skills with them. The beer they brewed here was the same as the beer they had brewed in their homeland, initially. By the middle of the twentieth century however, there was little similarity between the two products, something had changed, and it wasn't the European tradition. Not all Americans were indifferent beer drinkers, of course. Some were able to rely on nearby small breweries to produce a particular favorite, some chose to brew their own, and others chose the third alternative, imported beer. Throughout the 1970's sales of imported beer rose continuously, but the figure was almost insignificant in comparison to domestic sales. More recently though this has started to change, imports reached 3.5 million barrels in 1978 and were more than twice this figure in 1984. Since 1985 the import market has continued to capture about 5% of all sales and there are now more than 400 different brands imported into the country.

In the mid 1980's many experts predicted that imports would reach 8% of domestic sales by the year 2000, but since 1985 they have remained about the same. This is due to the revival of domestic brewing that began in the late 1970's and early 1980's. The rising import market alerted entrepreneurs and beer lovers to the possibility of recreating distinctive and tasty European style brews here in the United States. This venture started off slowly with the construction of a few small "microbreweries" here and there, and continues today. Most of these small facilities produce less than 15,000 barrels annually, usually less. Likely locations in the early years included New England, the Pacific Northwest and the Great Lakes areas. Some of these breweries produce beer only for sale off the premises, retail or wholesale. Others, usually called "brewpubs" are housed inside restaurants and serve beer only to customers on the premises.

Over the last decade domestic beer consumption has evened off, changing no more than two percent in any year. During this same period the number of microbreweries and brewpubs has increased greatly, from only seven in 1983 to 123 by 1990. At the beginning of 1994 there were over 400 breweries in the United States, more than at any time since 1950 and the majority are these small establishments. According to the Siebel Institute for Brewing Studies in Chicago there are now sixteen brewing companies operating in Massachusetts, up from zero in 1980. The market niche for the microbrewery was the import drinker initially, but these places have since become trendy and enjoy a variety of patrons today. The success rate for the enterprise is far higher than typical restaurants or taverns which seems to indicate that the beer is making the difference, it is the only thing that sets them apart.

Micros have been successful for many different reasons, one of these is appealing to local pride and developing brand loyalty. These beers are produced and distributed locally, often the particular brand names reflect local history, trades or customs. They have a sense of purpose within the community; the Catamount Brewery of White River Junction, VT has informal contracts with local farmers. These farmers line up at the brewery doors on brewing days to collect the spent grains, which provide an excellent source of food to farm animals. Brewpubs also benefit from local connections, patrons can often view the brewing equipment from the restaurant and even talk with the brewmaster. Many brewpubs hold contests in which patrons can choose names for the newest brews, patrons can also be influential in determining which style of beer will be brewed next, after all, they are the ones who drink it. Another important part of the microbrewery movement is the role these establishments have played in urban renewal programs. Many cities, in hopes of attracting visitors and tourists, have attempted to lure entrepreneurs with good deals on real estate, facilities or financing. This effort has met with considerable success, brewpubs have played important roles in the building programs of Boston, Hartford, New York, Philadelphia, Baltimore and Washington DC.

The most important aspect of the microbrewery however is that they are responsible for returning local beer to America. In 1978 nearly half the states in the country had no breweries. The beer these establishments make is fresh and of a very high quality. Microbreweries do not deal in adjuncts, head stabilizers, vegetable proteins or pasteurization. Although it is not really a microbrewery the Anchor Brewing Co. of San Francisco is looked to as one of the forerunners in this area. It was a small, nearly defunct facility in 1965 when it was bought by washing machine heir Fritz Maytag. Maytag often drank the company's beer while in college at Stanford, and decided he would try to save the dying brewery. After ten years of work the brewery was finally operating at a profit. Today it pumps out nearly 50,000 barrels a year and includes a range of six different styles. One of these is a Christmas beer that is brewed with a different recipe every year. Despite the fact that he is technically too large to be considered a microbrewery, Maytag's success story is a great inspiration to a new generation of American brewers who, finally, after a long dry spell, are bringing local beer back where it belongs.

Decline and Revival of the US Brewing History