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Brewers flowing away from the 'Beer Capital of the World'
Milwaukee beer
Dollars wishing good luck hang from the bar at Kochanski's Concertina Beer Hall in Milwaukee, where Andy Kochanski enjoys a Polish brew with the few remaining patrons early Wednesday.
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ST. LOUIS POST-DISPATCH

MILWAUKEE — On a perfect summer day along Lake Michigan, the chief executive of Miller Brewing Co. jabbed his finger at the ground.

"The home of Miller Beer is going to be here," Tom Long said into a TV camera.

"Milwaukee will always be the home of Miller beer," he told another reporter.

It felt like an oddly obvious point. Milwaukee and Miller are as connected as St. Louis and Budweiser. And Long had just announced that Miller was donating $500,000 to clean a city beach. There was even a super-sized cardboard check at the beach-side event. The mayor showed up to praise Miller as "a truly tremendous corporate citizen."



In the background, lifeguards in red shorts and white pith helmets ran on the beach. Women in bikinis played volleyball. Miller's name was plastered everywhere, from umbrellas and volleyball nets to the sleeve of the parks director's work shirt.

It looked like a Miller beer ad.

But Long's comments hinted at the once unthinkable: Miller's connection to Milwaukee is in doubt.

Six years ago, a foreign company, London-based South African Breweries, bought Miller. Now, as Miller looks to move its headquarters out of state, there is unease about the brewer's future in this city. The complicated relationship between Miller and Milwaukee offers clues about what could be in store for St. Louis, as Anheuser-Busch resists a takeover bid from Belgium-based brewer InBev.

In Milwaukee, civic leaders and beer analysts say the change has benefited the city in some ways. But there are fresh worries. On Tuesday, Miller will officially merge with Coors. The combined company is expected to announce in a few weeks the location of a new headquarters. One thing is certain: It will not be in Milwaukee.

Soon, no major beer company will be based in a city known as the Beer Capital of the World. Blatz. Schlitz, Pabst. All gone. Miller's brewery is staying. But corporate headquarters appears headed for Chicago or Dallas. That was the delicate distinction Miller's CEO was trying to make. Miller Beer will be here. But not the Miller Brewing Co.

It is enough to make a beer drinker feel like a sucker for caring.

"You think of Miller Beer, it is Milwaukee. But you can't stop change," said Chris Karwacki, a patron at the south side landmark White House Bar. "And if a new company is going to buy a local brewery, there is nothing you can do about it. It is difficult to live by certain brand loyalties anymore."

While the Miller deal is expected to result in a modest 50

to 100 jobs moving from Milwaukee, the loss of the company's headquarters would be a hit to civic pride.

"It is the image that is important," said Dean Amhaus, president of Spirit of Milwaukee, a nonprofit city booster organization.

The Milwaukee area, at 1.5 million people about half the size of the St. Louis area, no longer relies on beer for its jobs. In 1970, three of the top 10 employers were breweries. Today, two of those breweries are closed, and Miller with its 1,800 jobs does not even crack the Top 25. By comparison, A-B employs about 6,000 people in the St. Louis area and is No. 11 in size among private employers.

Owned for more than three decades by conglomerate Philip Morris, Miller Brewing was sold in 2002 for $3.6 billion in stock. A new company, SABMiller, was created and based in London. A new set of executives flew in. About 200 jobs were slashed. Some jobs were added back.

"I'd say it was a wash," said Harry Schuhmacher, publisher of Beer Business Daily, a trade publication based in San Antonio.

A former Miller executive, who spoke on the condition his name was not used, said the change in ownership "was the best thing that ever happened to Miller." The South African owners shook things up. They installed tougher performance standards. They updated the Milwaukee brewery, while also closing a brewery in Washington state. They hired from outside the beer industry — attracting people like Tom Long, who had been a Coca-Cola executive. But the new regime faced resistance too. "A lot of it was a fear of the unknown," the former executive said.

Despite the widespread changes, SABMiller has been careful to keep Miller as its public face in the United States. At the brewery on State Street — a smaller, less pristine, blond-brick version of the red-brick brewery on Pestalozzi Street in St. Louis — Miller's rich history, and not the corporate ownership, is emphasized.

On brewery tours, SABMiller is briefly noted in a video. Few visitors, especially younger ones, remark on it, tour guides say.

"My generation doesn't care as long as the beer is made here," tour guide Matt Seymour, 25, said.

The brewery gift shop is heavy on Miller Lite and Genuine Draft gear but also features hats and shirts with SABMiller brands Pilsner Urquell and Peroni. Browsing past a $50 Miller Lite golf putter, visitor Matt Feeney said he did not know Miller was owned by a foreign company. And it did not matter.

"As long as the beer tastes the same, I'll drink it," said Matt Feeney, 24, of Indianapolis, wearing a USA soccer shirt.

In some ways, it is still very much Miller Time in Milwaukee. The home of the Brewers baseball team is Miller Park. Support for arts and cultural programs has been retained, although priorities have changed, said Amhaus with Spirit of Milwaukee.

But even seemingly minor changes, such as Budweiser snagging from Miller sponsorship rights at the Milwaukee Mile racetrack last month, are probed for signs of a larger trend. And when a Miller executive from South Africa was killed in January during a random robbery, there was consternation over how the crime might affect where the brewer locates its headquarters.

Gone is the sense of security that a hometown company will always support the hometown.

In 2004, Anheuser-Busch ran advertisements teasing Miller for being "South African owned" as compared to Budweiser's being "American brewed since 1876." (Miller sued and got an injunction in federal court to have some of the ads pulled; the lawsuit was later dismissed.)

But there is no joy in Milwaukee over what is happening to Anheuser-Busch. Miller's CEO said last week that Miller doing something similar to tweak its St. Louis rival "would be inappropriate."

"I think all the beer barons would be rolling over in their graves if they saw what was going on," said Jim Kupferschmidt, a local beer expert who is trying to establish the Milwaukee Beer Museum and knows where Milwaukee's beer barons are buried.

On a recent afternoon, Kupferschmidt sat at the bar inside Steny's Tavern in the Walkers Point neighborhood. He has known the tavern's manager, Laura Jean Gwiazdowski, for 15 years. He's a Miller High Life guy. She prefers Bud Light — an oddity in this town.

"I wouldn't be too proud of that, Laura Jean," Kupferschmidt teased. He pointed out that the Miller brewery sits just five miles away.

"Bud — at least it's American," she responded with a laugh.

He shot back: "For now."

tfrankel@post-dispatch.com | 314-340-8110
 
MILLER HISTORY:


1830s: Brewing begins in Wisconsin.

1850s: Milwaukee contends with St. Louis for brewing supremacy.

1871: After Schlitz sends beer and water to volunteers and victims of 1871 Chicago fire, brewery develops tagline, "The beer that made Milwaukee famous."

1874: Blatz produces Milwaukee's first individually bottled beer.

1880s: Pabst Blue Ribbon (then called Best Select) is developed when workers tie blue ribbons on each bottle to make them stand out.

1902: Schlitz surpasses Pabst in sales and becomes the largest brewery in the world.

1903: Miller High Life debuts after a naming competition. It gains national recognition for its slogan "The Champagne of Bottled Beers."

1912: Schlitz introduces the brown bottle to protect beer from spoilage from light.

1959: Pabst acquires Blatz.

1966: W.R. Grace & Co. buys a controlling interest in Miller Brewing.

1970: Cigarette-maker Philip Morris completes purchase of Miller Brewing from W.R. Grace. High Life gets an image makeover, from the elite "Champagne of Bottled Beers" to the blue-collar appeal of "Miller Time."

1973: Lite Beer from Miller is launched. Backed by the long-running "Miller All-Stars" campaign, it will eventually become the company's largest brand and creates the light beer category.

1981: Miller Brewing's annual production reaches 40.3 million barrels, and the company bypasses Schlitz and Pabst to become the nation's second-largest brewer.

1986: Genuine Draft is launched and eventually becomes Miller's second-largest brand, eclipsing the slumping High Life brand.

1994: Miller Brewing's market share peaks at 22.7 percent, thanks in part to strong sales of Icehouse and Molson Ice.

1998: Miller lands a brewing contract with Pabst agreeing to brew most of its brands, including Blue Ribbon.

Sources: Wisconsin Historical Society, Milwaukee Beer Museum, Milwaukee Journal Sentinel

Comparing brands


Anheuser-Busch

Founded: 1852

Based: St. Louis

Total workers: 30,849

Workers in home city: 5,500

U.S. breweries: 12

U.S. market share: 48%

A-B Key Brands: Budweiser, Bud Light, Michelob, Busch and Natural.

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