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Beer Business and Planning

You probably saw the Anheuser-Busch ad during the Super Bowl. You know the one, it went somewhat viral after the game because a lot of people saw it as some kind of comment on immigration.

Regardless of one’s political leanings, it was an effective ad – two immigrants meeting in St. Louis around the time of the Civil War and launching Budweiser. Coors, of course, has a parallel story, almost at exactly the same time Anheuser and Busch met, Adolph Coors was getting his brewery up and running just a little way to the west.

The rest, as they say, is history, by the 1980’s Anheuser-Busch and Coors were the first and fourth largest breweries in the United States.  In third place was Stroh’s. Stroh’s . . . you can be forgiven for never having heard of them, never mind ever sipping one.

Yet, in the early 1980’s Stroh’s was a household – well, at least a beer-drinker-in-the-mid-west household – name. Even if you never had a Stroh’s you had heard of them. Like Coors and Budweiser, Stroh’s was founded by an immigrant in the mid-1850s. Like the Coors, Anheusers, and Buschs, Stroh’s started as a family business. Like the Coors, Anheusers, and Buschs, the Stroh’s passed the business down for four generations.

Unlike the Coors, Anheusers, and Buschs, the Stroh’s didn’t survive and thrive into the 1990s. Neither did the Stroh’s family fortune, at one time one of the largest family fortunes in the United States.

It’s not often that real life allows a direct comparison of companies over a century like a business school problem, but that’s the Coors, Anheuser-Busch, Stroh’s scenario. Family businesses that made it – while surviving Prohibition, no less – from the Civil War through to the Reagan years.

Then, in the space of ten years or so, there were two.

As you can probably guess, there is no one reason for Stroh’s demise, there are many. But they all revolve around one theme, bad planning.

Not bad decisions, bad decisions can be rectified, overcome within a good plan. It seems that Stroh’s never really had a plan for the future until the future was on top of them. Which, of course, is too late.

Stroh’s made beer in Detroit. They marketed mostly to the Mid-West. They, obviously, had a great, loyal following. They had decided generations earlier that only the men of the family would run it, no women, no outsiders. They had decided generations earlier that every family member would get dividends for life … regardless. An easy thing to support through a generation or so, but by 1980 Stroh’s dividends were paying for the lavish lifestyles of some twenty-seven family members, only a few of whom were working in the business.

It’s easy to imagine the business being run like a large, benevolent fiefdom. Stroh’s had an entrenched market, but made the mistake of becoming entrenched as a company. After one hundred and twenty years of success doing it the ‘family way’ no one running the company apparently saw change coming, certainly never thought to plan ahead.

So, when change did come, it – as change has a way of doing – came fast and Stroh’s wasn’t ready. What happened to start it off is what happens to all successful companies across the spectrum of industries, a competitor began to push. In Stroh’s case it was their fellow-immigrant founded in the mid-1800’s company, Coors.

Coors was spreading eastward. By the late ’80s their sales were poised to surpass Stroh’s. Stroh’s management wasn’t ready. They seem to have panicked. In a short period of time they tried a series of increasingly ill-advised, knee-jerk-like reactions. None worked, just piled debt into the equation. By the time Stroh’s had to fire-sale their assets, including the Stroh’s brand, they had even tried to diversify into bio-tech.

It all gets us thinking – the only companies that need planning more than start-ups are established, successful ones.

 

 

Brown & Sterling

Brown & Sterling

Brown and Sterling, P.S. is dedicated to helping small to mid-sized business owners and entrepreneurs of the Pacific Northwest. We’ve been advising businesses from formation through owner exits for over fifteen years. With a team of seasoned attorneys with expertise in business, taxation, employment law, and real estate law, our firm is uniquely situated to walk business owners through all of the intricacies of a business acquisition or sale.