The Beer War is Back On!

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MILWAUKEE (TheStreet) — In VFW posts, Elks lodges and Shriner temples across America, there are signs for bygone beers that some brewers want to light again.

Before there was Anheuser-Busch InBeV (Stock Quote: BUD), Molson Coors (Stock Quote: TAP) or SABMiller (Stock Quote: SAB), there were regional brewers, whose beer flowed directly into the local conscience. While Pittsburgh stuck with Iron City, Chicago kept Old Style and Texas is still tied to Lone Star, decades of profit padding and cost-cutting let labels like Narragansett, Rheingold and Schlitz fade to pale imposters prior to recent revivals.

"It was death to beer flavor by 1,000 cuts," says Kyle Wortham, senior brand manager for Milwaukee-based Schlitz. "It wasn't something you could recognize yearly, but over decades there's a hell of a difference from what you were drinking back then to now."

Last year, the folks at Schlitz pulled cans of fetid swill out of coolers across the Midwest and replaced it with a bottled, maltier mix more in line with the recipe that "made Milwaukee famous" when it was a top-two brand in the 1950s, '60s and '70s. Schlitz brewmaster Bob Newman culled the confidential, unwritten recipe from the memories of former brewmasters and employees before the company distributed it to "men's social clubs" and cranked up a promotional effort that included retro merchandise like lawn chairs, bottle-opening belt buckles and nudie pens featuring Playboy's Miss December 1968 Cynthia Myers. Schlitz gunned for older men who remembered the beer's glory days, had been contacting the company about such a change for years and felt disenfranchised by the big brewers' youth movement and craft brewers' mature prices.

"People are just ready for a regular beer that has equity in a world that has all these boutique beers with citrus flavors, blueberry flavors and cans that turn blue when they get cold," Wortham says.

Despite that assertion, the top beer brands comprised 79% of the market last year, with Bud Light grabbing more than 19% alone, according to industry publication Beer Insights. Bud Light, Budweiser, Coors Light and Miller Light accounted for nearly half of beer shipments in the U.S. Pabst Blue Ribbon, whose rise from has-been to throwback-hipster favorite seems like a blueprint for Schlitz and its ilk, made up less than 1% of total market share.

Where some of these brands see hope, however, is in the 2% share Budweiser has lost since 2007 or in the more than 9% that imported-beer sales have dropped in the first half of 2009. For a label like Rhode Island's recently revived Narragansett, which produced only 30,000 barrels last year (or 3% of the 300,000 barrels of relatively unpopular Bud Ice that were produced in the same period), the big guys' misfortunes open up the small patch of turf they're looking for.

Since buying back the Narragansett label from Pabst in 2005, former Nantucket Nectars chief Mark Hellendrung made his brew a fixture in 830 bars in New England and retirement communities in Florida. Originally founded in 1890, the brewing company once had a 65% market share in New England, was touted by Red Sox announcer Curt Gowdy during game broadcasts and was quaffed by big-screen shark hunter Quint in "Jaws." Though cuts similar to those made at Schlitz turned Narragansett into a vile concoction colloquially dubbed "Nasty Narry" in the 1970s, and led to its demise in 1981, the original recipe has returned and a new generation of fans and promotional "Gansett Girls" are helping the company's plans to stop contracting its brewing to a facility in Rochester, N.Y., and build its own brewery in New England.

"Guys under 35 have no memory of the Nasty Narry days when it was swill beer and just love our story and appreciate it on its own merit," he says. "It's those guys in the middle who we have the challenge of convincing that this isn't the Nasty Narry that you may have been stealing from your dad in high school or buying for $9.99 a case when you were in your 20s."

For New York's Rheingold, the problem was that it was born nasty. Founded in Brooklyn in 1883, Rheingold's packaged goods and promotions were once ubiquitous in the Big Apple. It was the official beer of the Mets, the sponsor of the Miss Rheingold pageant, and its truck was in the background when Sonny Corleone put a beating on his brother-in-law in "The Godfather." When it was first revived in the late-'90s after folding in 1976 and had its vat contents emptied into Brooklyn sewers, however, Rheingold tasted as if the original batches had been retrieved from the depths.

It's not that the beer was bad, mind you, but that the owners insisted on using the rye-heavy original recipe that didn't quite translate to modern tastes. That a working-class beer like Rheingold was reintroduced at Williamsburg prices didn't help either. Rheingold's new owner, Drinks Americas (Stock Quote: DKAM), plans to reintroduce the reformulated brew in 22-ounce cans next spring. The company, which learned a little something about regional brewing when it successfully launched Kid Rock's American Badass beer in Detroit last summer, says it intends to take Rheingold back to the working-class roots it shares with its regional beer brethren.

"You can't go wrong with a 22-ounce can of Rheingold on the Long Island Railroad for the ride home," says Drinks Americas CEO Patrick Kenny. "If you're going to be Rheingold, be the city of New York and 25 guys at a construction site watching the girls walk by."

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