Since new breweries are setting up shop daily, I thought it might be appropriate to look at what happens when MBAs have their way with the Brewmasters. It’s called the Schlitz Mistake. I was young, but I remember the time well.
The local Schlitz wholesaler’s warehouse was across the street from ours. During the 1970s, I remember their parking lot being full of customers for dock sales everyday. And, our lot was empty.
We’d have just a few customers, with carloads of Schlitz of course, crossing the street to pick up a couple cases of Malt Duck or Champale or Pearl or Pabst. Most just wanted a couple tubes of cups. Carthage cups was our best seller.
It seemed like it happened overnight, but I know it took longer than that. Within a couple years, Schlitz’s local 50% market share evaporated and the void left over filled quickly with Miller High Life.
By the early 1980s, I can remember our lot full of dock sale customers and looking across the street at a vacant building, wondering what had happened to those guys.
The Schlitz Mistake
Up until the mid 1970s, the Joseph Schlitz Brewing Company was a solid number two, controlling 16% of the US beer market. The company was growing fast and trailed Anheuser-Busch by only a handful of percentage points.
However, by the late 1960s Schlitz had a problem. They couldn’t make enough beer to keep up with demand. Not too bad of a problem to have, but the direction the company chose to take had lasting consequences. It would eventually ruin the brand and force the sale of the brewery.
Slowly at first, starting in the early 1970s Schlitz management began cutting costs by using cheaper ingredients. Corn syrup and cheap extracts were used to supplement the roasted barley and traditional ingredients. And even worse, an artificial additive called silica gel was added to prevent haze from forming when the beer was chilled.
Later, Schlitz chose to shorten the length of the brewing process. Management figured it could be done by implementing an experimental, continuous fermentation process called ABF or Accelerated Batch Fermentation. Pretty soon, Schlitz had found a way to reduce the brewing time to half the time of its competitors.
At first the company’s strategies were successful. Sales were growing and the brewery was running at full capacity. Schlitz could turn out beer in half the time at nearly half the cost as the competition. Profits were much higher than competitors and the company initiated a rapid expansion program building new breweries.
Schlitz management believed consumers wouldn’t notice these small changes in beer quality. However, the company’s recipe changes began to take a toll from each successive modification. Consumers may not notice a change from point A to point B or even A to C, but the change from A to F has the potential to be drastic.
The final blow to Schlitz happened with a quality control fiasco in 1976. The company expected the FDA to pass a labeling law that required brewers to list all ingredients in their beers. Schlitz beer contained silica gel, which probably wouldn’t have looked too appetizing on the label.
So, the company quickly made use of a new stabilizer that could be filtered out in the place of silica gel. The new stabilizer interacted with the beer and caused tiny flakes to accumulate and settle to the bottom of the bottles.
For the first half of 1976 Schlitz beer was full of mucous-looking sediment. From there Schlitz sales fell fast and the company lost 94% of its value from 1974 to 1982. This is known in the beer industry as the Schlitz Mistake.
The lesson is that a brewer’s reputation is critical to long-term survival. It does not pay long-term to cut corners or tamper with quality in the beer business.
Expiring Beer, Wine, Spirits Industry Domain Names for Saturday November 3, 2018
For the second part of my daily post, I feature my curated list of today’s expiring domain names. I research each of the domain name aftermarkets and go through the drop lists to find the best available domain names for beer, wine and spirits companies.
These domain names are perfect branding opportunities for breweries, wineries, distillers, distributors, retailers, vendors, etc., even cannabis companies. You never know, your company’s exact match domain name may be on the list. You can acquire premium domains, often at a huge discount, in the aftermarket.
Click on the links below to see the current prices: I am not including hyperlinks the first week while I’m still getting my processes down. The domains below are expiring today, if you have any questions about a domain name feel free to contact Andy here. I can help you acquire it.
Beer Distro Domain of the Day: YourFired.com – Worst case scenario, you sell it to Trump for big bucks. Dang, it’s YoureFired.com isn’t it?
KeyToQuality.com – Outline your key to the quality of your product.
JetSharing.com – I can see this as something the big brewers and distributors could use.
WildfireCraft.com – Because craft beer sells like wildfire. I like it as a craft beer distributor name.
NorthernCrush.com – Not a bad grape/wine name here.
OurBeverages.com – On this site, you discuss your beverages. Tell the story of your brand.
FusionOfCraft.com – I like FusionCraft.com better, but FusionOfCraft.com is still cool. Anything fusion is cool.
UnicornBrands.com – A craft beer startup valued at over a $1 billion? Stranger things have happened.
TheBeverageRoom.com – Catchy name for a dive bar. Though Billy’s, or Mack’s, or Buddy’s is better.
NewsEagle.com – Get all the latest breaking news about MegaBrew here.
LightSummit.com – Let’s get the premium light category together for talks on how to stop the slide.
GreenMantle.com – Canna name all the way. 1997 registration.
LiquidLabels.com – I like the plural version for a beer distributor. It fits better for a company with lots of brands.
SedonaWineTours.com – If your business advertises for Sedona Wine Tours, then this is the best domain, for the best price you’ll ever get. And, that’s because Sedona.com or SedonaWine.com are going to cost bank.
CDWine.com – Old Cellardoor Winery domain name. Registered to Constellation up until last year when they let it expire. Has a fair amount of backlinks.
HeartlandBrands.com – Registered since 1998. Heartland is a cereal, oats and pie crust supplier. Would be decent name for a wholesaler.
AnchorWeb.com – The old Anchor Brewing Company DCN. Just kidding. 1996 registration date is nice, though.
And, that’s that. Or, it’s it and that’s that. Hope you enjoyed reading about the Schlitz Mistake. It happens all too often. Have a great weekend.
See you tomorrow,