Pittsburgh Post-Gazette,
07/20/1999
By Len Barcousky, Pittsburgh Post-Gazette
Jul. 18--POTTSVILLE, Pa.--After years of having too many customers and too
little beer to sell them, Dick Yuengling is about to find himself with excess
brewing capacity.
"We're taking a dangerous step," Yuengling said of what has turned into a
double-barreled expansion plan. The owner of America's oldest brewery had begun
construction of a new facility just outside town, when he had a chance this
spring to buy a Stroh's operation closing down in Tampa.
Yuengling, the fifth generation of his family to make beer in the same location,
didn't hesitate to buy the Florida plant. "I rely on
instinct."
He may not be the first in his family to do so, and if the company's track
record is any indication, he won't be the last. D.G. Yuengling & Son has been
brewing beer in the Schuylkill County seat since 1829. It has survived the Civil
War and Prohibition. And now it is trying to ride a rising wave of popularity to
growth.
Yuengling was interviewed in his crowded office, which probably doesn't look too
much different than when his father and grandfather occupied it. The walls are
covered with family photos and century-old advertisements, and his wide wooden
desk is piled high with papers and folders, some of which may date to the 19th
century.
"Of course, I could turn out to be an idiot. But I have confidence in the
management team, the brewery workers, the sales force and the finest wholesalers
in each area that we can get."
He will know soon whether or not he's made the right moves. The first cans of
Florida-made Yuengling beer will arrive in southwestern Pennsylvania later this
week.
For the past several years, D.G. Yuengling & Son has been in an enviable
position: Current demand for its six products has outstripped supply.
Despite having increased production almost 400 percent to more than 600,000
barrels last year, the regional brewer has been forced to cut back its
distribution area to Pennsylvania and parts of adjoining states. Yuengling even
had to establish quotas forsome wholesalers.
"We'd run out every year in July and August," said "Chick" Wagner, inventory
manager for Pittsburgh's Frank B. Fuhrer Wholesale Co. Fuhrer is Yuengling's
master distributor and provides its beers, ale and porter to about 325 retailers
and 4,000 bars in anine-county area around Pittsburgh.
Product shortages should end this summer as Yuengling starts shipping north
cases of beer made at the new Tampa brewery, which has a capacity of 1.6 million
barrels.
Starting with Dick's great-great-grandfather, David G. Yuengling, family members
have been making beer in the heart of Pennsylvania's hard-coal country since
1829. Following a fire, the brewery moved to its present location at Fifth and
Mahantongo streets in 1831. The five-story building hugs the side of one of
Pottsville's many hills and was built close to a spring that provided fresh
water. Caves were dug nearby to keep the beer cool during summer months in the
decades before commercial refrigeration.
Over the past decades many regional brewers, like Pittsburgh Brewing, have
struggled to compete against the national giants: Budweiser, Miller and Coors.
Many more, like Duquesne Brewing on the South Side, have long-since disappeared.
So why has Yuengling prospered?
"Nobody knows exactly how Dick Yuengling does it," said Eric Shephard, executive
editor of Beer Market Insights, a trade publication. Industry observers and
analysts, however, say the explanation for Yuengling's success probably includes
equal parts product, personality and luck.
"They make very good beers," said Wagner, the inventory manager.
"It comes down to product," agreed Pete Reid, editor of Modern Brewery Age,
another trade magazine. "[The beers] have character, authenticity, quality and
consistency" "The family has fantastic pride in its product and appreciation of
the traditions of the brewing industry," said Robert Weinberg, an industry
consultant based in St. Louis. "To be successful you have to have respect for
the product -- you have to be a brewer and not a beer manufacturer."
Refrigerator trucks have replaced the horse-drawn wagons in front of the brewery
where the Yuengling family has been making beer in Pottsville since 1831.
Dick Yuengling, 56, is clearly a brewer. He has been around beer and beer-making
for more than 40 years.
On a rainy summer morning he was wearing a knit shirt and jeans. "I don't dress
this way as some kind of costume, but because when I come to the brewery, I
work."
While he smoked his way through a 45-minute interview, he also answered a half
dozen questions posed by employees who popped their heads into his office to ask
about truck routes, delivery schedules and production plans.
Yuengling, who bought the business from his ailing father in 1985, radiates
confidence, energy and enthusiasm.
Name a town in Pennsylvania, and he can tell you who used to brew beer there.
"Shenandoah, that was Columbia; Mahanoy City was Kaier's -- they made a good
product but the family got away from the business; Pittsburgh, of course, had
Duquesne; Allentown had Horlacher's and Neuweiler's -- they're all gone."
Then there is luck.
"Certain brands develop a mystique," Shephard, the Insights editor, said. "Coors
had it when it was available in only a few states. Corona developed it without
doing any advertising."
"[Yuengling Lager] is almost a cult beer with younger drinkers," said Dave
Fuhrer, the president of Frank B. Fuhrer. He estimated that Yuengling sales
around Pittsburgh have doubled each of the last several years.
Yuengling doesn't describe his products as "specialty" or "craft" beers.
Those are the usually fuller-flavored products made in small batches by
micro-brewers and often sold in adjoining restaurants. "We're not competing with
brew-pubs -- their business is as much food service as brewing," he said.
Nevertheless Shephard, Reid and Weinberg said that the growing audience for such
beers helped Yuengling. "We make a craft-type product," Yuengling said. "People
are drinking less beer, but they are drinking better."
While its amber-colored lager is the company's best selling product, Yuengling
makes what it calls a premium beer, a premium light beer, Lord Chesterfield ale
and a porter. It also produces Black & Tan, a dark, yeasty blend of 65 percent
porter and 35 percent beer.
"We offer alternatives to the bland national brands, [but] we are not a beer for
everybody," Dick Yuengling said.
Can elephants fly?
While Yuengling has shown remarkable growth, Weinberg advised not losing sight
of the reality of the marketplace. Anheuser-Busch, Miller and Coors together
have 85 percent of the market for domestic beer.
Yuengling, producing about 637,000 barrels last year, has less than 0.5 percent,
he said.
"Can Yuengling grow to 1 million barrels a year? That's very possible," Weinberg
said. "Can they grow to 2 million? I'll discuss that when I'm on my next date
with Sharon Stone -- both events are equally likely."
While he had worked at the brewery as a teen-ager and young man, Dick Yuengling
said his father and uncle both discouraged him from staying with the business.
Regional brewing was dying, they warned. Before buying the business from his
father, he worked for 11 years as a beer distributor, handling Pabst, Carling
Black Label and Latrobe-brewed Rolling Rock. "That let me see the other side of
the business and how we're perceived by the distributors -- our partners in
business," he said.
After 14 years of running the brewery, he said he has developed an even stronger
sense of tradition. "I have a lot of respect for the generations before me. We
were here 30 years before the Civil War started; we survived 20 years of
Prohibition."
Analysts have universally praised Yuengling for moving cautiously, never losing
touch with its home market and its loyal local customers. So why suddenly
undertake this double expansion by building one new brewery and buying a second
in Florida?
"Tampa gives us breathing room until we can get online with the new brewery,"
Yuengling said.
Most of the beer from the Tampa brewery will be shipped to the Northeast,
although the company will have the ability to enter the Southeastern market as
well. Long-term plans call for moving back into the Boston and New York City
markets from which Yuengling withdrew when supplies ran short.
The new brewery, under construction about two miles outside Pottsville in the
St. Clair Industrial Park, should be ready to open sometime next summer.
Expected to cost about $50 million, it will be outfitted with the best used
equipment Yuengling can find. With Stroh and other breweries closing down,
"There is lots of good second-hand stuff available," he said.
When the new brewery opens, some production will continue in town at the old
brewery, Yuengling promised.
This isn't the first time the company has sought growth through expansion. On
the walls outside the museum are prints of 19th-century Yuengling operations in
Richmond, Va.; New York City; Saratoga, N.Y.; and even Trail, British Columbia,
which is locatedjust north of the Washington-Idaho border.
"I don't know how my great-grandfather got that far west," Yuengling said Anyone
trying to explain the success of the Yuengling brewery points to the importance
of continuity and tradition in a family business that has been transferred for
almost two centuries from father to son. Dick Yuengling has four children, all
of whom have worked during vacations at the brewery and two of whom work there
fulltime now.
Whenever they take over, the original company name, D.G. Yuengling & Son, and a
tradition, may have to be amended: Dick Yuengling has four daughters.
(c) 1999, Pittsburgh Post-Gazette.
Distributed by Knight Ridder/Tribune
Business News.