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Pabst Brewing Milwaukee, WI Pabst - The brewery that lived on survival Pabst Brewing Company, one of the oldest of the great brewing companies in America, is celebrated its 150th Anniversary in 1994. Since its humble beginning in 1844, the Pabst Brewing Company has maintained a leading position in the brewing industry as a survivor. Jacob Best and his four sons would be amazed if they could see the progress of their brewery today. In 1842, Jacob and Charles Best established a vinegar factory in Milwaukee.

(Remember when Wisconsin was still a United States territory?) Charles Best returned to Mettenheim, Germany and brought the rest of the Best family to Milwaukee in early 1844. Rather than starting new when moving to Milwaukee, Jacob Best essentially relocated his German brewery. He was immediately ahead of much of his competition. Upon returning to Milwaukee, Jacob made the first real estate purchase on Chestnut Street Hill, the present site of Pabst Brewing Company today. A small brewery was established in the fall of 1844, and Jacob's original brew kettle had a capacity of only 18 barrels. On February 22, 1845, the first lager beer from Best and Company was available for sale in Milwaukee.

In the first year, Best's brewery produced 300 barrels. Best not only brewed lager but also ale, porter and rye whiskey. During Best's first year of business, six months later Charles Best withdraw from Best and Company and went back to the vinegar business. Five years later, Lorenz Best left the Company and convinced Charles Best to get back into the brewing business, and later established the Plank Road Brewery (eventually became the Miller Brewing Company). On July 1, 1852, the first display advertisement for Best and Company was placed in the Wisconsin Banner. When Jacob Best, Sr. retired, Jacob Best Jr. and Phillip Best Best carried on the business of Best and Company under a partnership.

Best and Company was then producing 2,500 barrels annually and was ranked fourth largest among Milwaukee breweries. In the mid 1850's, Phillip Best set his sights on Chicago, 90 miles to the south; and there he set up the Company's first branch sales office and warehouse. Jacob Best, Sr. chose his son Phillip to take charge of the brewery when he retired in 1853. He was the one proudest of the reputation for quality the young brewery had already won and was the first to see chances for improving the techniques of brewing. His brothers were content with the brewery's production of a few thousand barrels a year, but Phillip's plans for the future of the business were on a much larger scale. Jacob Best Jr. and Phillip Best terminated their partnership, over major disagreement about the brewery's expansion and future.

Jacob Best Jr. sold out his interest and Phillip Best continued the business as sole proprietor. Soon after the dissolution, business began to decline steadily. By 1863, the brewery was producing little more than half its capacity. Phillip Best's health was failing, and asked his family to continue the business. No one seemed interested and the brewery's future looked grim. Survival was Phillip's main priority for his failing company.

During Phillip's Lake Michigan boat trips to Chicago, he became acquainted with Frederick Pabst, a young steamship captain on the Great Lakes. Phillip found in the young captain with the same belief in the future of American industry that he had. Phillip was not the only one to take notice of Frederick Pabst, Phillip Best's daughter Maria, married the Captain on March 25, 1859. Captain Frederick Pabst decided to sell out his shipping interests and take a partnership in the brewery in 1863 after a violent storm beached his ship, The Huron, on the sands of Whitefish Bay. When Captain Pabst bought a half interest in the Phillip Best Brewing Company in 1864, the plant's production was at 5,000 barrels annually.

Emil Schandein, another son-in-law of Phillip's, became another partner with Phillip Best and Pabst. The partnership between Phillip Best and Captain Pabst was dissolved in 1864, and a new partnership agreement between Captain Pabst and Emil Schandein was drawn up for Best and Company. On July 17, 1869, Phillip Best died. Captain Pabst had three major ambitions: to constantly improve the quality of his beer; to continue to increase the capacity of the brewery; and to sell his product to an even broader market. To realize these goals, the Captain went out after the best brewmaster's of his day, even traveling abroad to sell the virtues of living in America to the men he wanted to work at the Milwaukee brewery.

He increased the capacity of his brewery by convincing the stockholders that profits should be put into bigger and better equipment. To broaden his market, Captain took to the road and to the high seas, establishing sales connections throughout the United States and Europe. November 11, 1870, The Melms brewery was purchased by Best and Company. At the time, Melms brewery was the largest brewery in Milwaukee.

Even though Melms brewery sales were slipping, the brewery was still operational. After the purchase by Frederick Pabst, the Melms brewery became the South Side Brewery and the original Phillip Best brewery on the hill was known as the Empire Brewery. In 1886, operations at South Side Brewery were discontinued. In 1872 the output was 100,000 barrels and Captain Pabst was President of the Company. Best and Company became the second largest brewery in the United States. A year later, 1873, the Phillip Best Brewing Company was incorporated in Wisconsin.

Two years later, the Phillip Best Brewing Company started bottling their beer, but turned the department over to Stamm and Meyer in Milwaukee. In 1879, a Boyle ice machine was purchased for the Empire Brewery and was installed by 1880. Before the installation of the ice machine, Phillip Brewing Company suffered its first loss after a fire destroyed the m althouse, grain elevators and office building on December 21, 1879. Between 1879 and 1893, Phillip Best Brewing Company operated two breweries and opened 40 beer offices around the country. On February 5, 1881, Phillip Best Brewing Company purchased the bottling business back from Stamm and Meyer and continued the bottling department under their own name.

The famous "Blue Ribbon" label did not get started until 1882. Prior to 1882, Phillip Best Brewing Company had received awards for their beer. In 1876, Pabst won both the highest awards for bottled beer and a gold medal. In 1878 at a Paris World's Fair, Pabst again won more medals. In 1882, bottling became significantly important to the brewing business.

When bottles were first used, these were generally plain and were not appealing to the public. Pabst decided to add pieces of blue ribbons tied around the necks of Best "Select" beer bottles. It didn't take long before the public continued to ask for "The beer with the blue ribbon". By 1892, this special packaging idea became so popular that the company was purchasing 300,000 yards of silk ribbons, which workers tied by hand around each bottle. In 1895, words "Blue Ribbon" were eventually added to the label of Select Beer, and in January 1898, the Blue Ribbon label was first used. In 1893, at the Columbian Exposition in Chicago, Pabst won five medals and an honorable mention.

When a jury was then established to present the highest award for beer, an argument was developed by all the breweries who entered in the contest. The eastern breweries complained they were not represented correctly and the western brewers complained that the jury members were not beer experts. The judges confused things more by making a preliminary finding in favor of Anheuser-Busch as the winner. After a review of the chemical analysis, the judges then gave the top award to Pabst. Even a legal action threat from Anheuser-Busch didn't change the judge's minds. On November 25, 1888, the Company suffered an irreparable loss by the death of Emil Schandein.

Four months later the name of Phillip Best Brewing Company was changed to the Pabst Brewing Company. Pabst Brewing Company has made many important contribution to Milwaukee. Much of Pabst's advertising helped create the city's favorable public image. The 1890's campaign "Milwaukee beer is famous - Pabst has made it so", along with similar advertising such as Schlitz's "The beer that made Milwaukee famous", brought the city much recognition. Between August 25-31, 1889 Captain Pabst and the Company helped in the entertainment of the 23rd National Encampment of the G.A.R. in Milwaukee. Captain Pabst spent time on Milwaukee projects such as the Whitefish Bay Pleasure Resort development.

Pabst also built a 13-story Pabst Building in downtown Milwaukee, rebuilt various theaters, and also helped organized the Wisconsin National Bank in 1893. Pabst purchased the old Nunnemacher Grand Opera House, located opposite Milwaukee's City Hall in early 1890 and changed it to the Pabst Theatre. On September 17, 1890, the theater opened and Captain Fred Pabst donated it to the City of Milwaukee. As Pabst was helping improve Milwaukee, he was also maintaining constant improvements in his brewing process to produce an even better product. Right after the Pipe Line Act was approved by congress on June 18, 1890, Pabst installed a pipe line carry beer from the fermentation cellars to the bottle house Pabst continued to expand his brewery by purchasing the Falk, Jung and Borchert Brewing Company in 1891. President Pabst called to his assistance in the management of the enterprise, Frank Falk and Ernst Borchert.

In the same year the capital stock increased to 10 million dollars. July 22, 1893, another fire broke out in the bottling works of the Pabst Brewing Company causing damage of $40,000. It was confined chiefly to the storage and supply departments, and did not interfere with bottling. Sparks set fire to the former homestead of Jacob Best, the founder of the brewery. The year 1895, was busy for Pabst Brewing Company. First, the Stadt Theatre, owned by Pabst, was destroyed by fire.

Captain Frederick Pabst rebuilt theater at a cost of $150,000. Later that year, Pabst first made plans of expansion by planning a large brewery in Atlanta, Georgia. Immediately after Captain Frederick Pabst's death on January 1, 1904, his two sons, Gustav and Fred, Jr., began to make extensive improvements in the Milwaukee brewery. Captain Pabst's second son, Fred, worked in the brewery until 1905 to operate Pabst Farms in Oconomowoc, Wisconsin. With Gustav Pabst as President, installation of a new malting house and a fermentation building was started. Newer equipment for bottling came into place.

Pabst also experimented with the steel keg, but could not figure out to prevent the metal from spoiling the beer taste. Finally, Pabst scrapped the project and went back to wooden kegs. In December of 1904, Pabst Brewing Company filed suit against the Storz Brewing Company in Omaha, Nebraska for an alleged infringement of Pabst's copyright trademark and device, the Blue Ribbon. Storz Brewing Company had been using the "Blue-Ribbon" brand name on its bottled beer for about a year. After a year of court battles, Storz discontinued the "Blue Ribbon" name from its brand. At the beginning of the 1900's, orders of over 30 million feet of silk blue ribbon were placed by the Pabst Brewing Company to decorate its blue ribbon beer bottles and other packages.

One factory supplying 10 million feet of the ribbon, kept their mill stringing the ribbons around the clock for seven days a week. It took almost a year to fill the order. Keeping up with modern technology and after labor complaints about tying blue ribbons on the bottlenecks by hand, new bottling equipment with special blue ribbon fasteners were added to speed up production. Pabst also decided to use Crown Cork and Seal Company bottle caps by October, 1906.

A setback for Pabst Brewing Company occurred on October 25, 1909. A major boiler house explosion devastated three stories at Pabst Brewing Company early that morning. The damage was estimated about $250,000 and injured several workmen. Pabst Brewing Company filed suit against the Hartford Steam Boiler Inspection and Insurance to recover $150,000 for the damage caused by the boiler. The case lingered for months in court on whether the loss was caused by a single explosion or by three explosions in quick succession. Pabst's insurance policy listed its liability to $50,000 for each explosion.

Hartford Steam Boiler Inspection and Insurance claimed that the explosion was from one boiler and Pabst claimed there were three explosions; therefore, Pabst tried to recover the limit for each one. Eventually, Hartford Steam Boiler Inspection and Insurance only paid $50,000 for the damage. Pabst wasted no time in completing the repairs and production continued. Pabst enjoyed great prosperity in the early 20th century.

The name "Pabst" was so recognized for quality, the brewery registered the handwriting of Pabst Brewing Company, done by Captain Frederick Pabst as a registered trademark. A company newsletter for employees and agents called Blue Ribbon News was first published on May 1, 1913. Prohibition was becoming a threat to the American breweries. Pabst reacted by setting up different ventures of business.

On March 1, 1916, Pabst introduced its first non-alcohol Pablo to the public. and on December 4, 1920 The Pabst Corporation was organized which operated the non-alcohol operations and the Pabst Reality Corporation. The Pabst Brewing Company was finally dissolved on December 24, 1920, due to Prohibition. On December 31, 1923, Pabst Corporation acquired the business of the Sheboygan Beverage Company to continue the soft drink and Pablo operations. With no hope of Repeal, Gustav Pabst resigned as President on December 23, 1921. Fred Pabst returned to the brewery as President to try saving the family company.

In December 1923, Fred sold his cheese division of Pabst Farms with assets chiefly in the form of bulk cheese inventory, to the Pabst Corporation. The cheese was produced at the Pabst Farms, but the brewery used their cellars to age cheese. The salesmen, trained in selling beer, found it difficult to readjust to sell the new product. With the help of advertising and strong campaigns, the cheese business thrived during Prohibition. Starting with 33 employees in 1925, the brewery employed 176 by 1927. Cheese was sold in three forms, Pabst wonder process cheese, Pabst-ett and pasteurized package cheese.

Pabst-ett was the most successful. By 1930, over 8 million pounds of Pabst-ett had been sold. Kraft Foods sued Pabst claiming Pabst had infringed on a Kraft patent for process cheese. Kraft won the case in 1927. The two companies entered into a licensing agreement in which Pabst-ett, a product similar to Velveeta, continued to be produced in Wisconsin, but was sold through Kraft. The cheese operation was disbanded with the end of Prohibition in 1933.

Kraft bought out the Pabst cheese operations, and Pabst started to get back in to the beer business. With optimistic foresight, the Pabst Corporation bought the Puritan Malt Extract Company in Chicago on January 2, 1930. Two years later, Premier Malt Products Company voted to merge with the Pabst Corporation, and the name of Premier Malt Products Company was changed to Premier-Pabst Corporation. Fred Pabst, now in his sixties, wanted his brewery to excel after Repeal.

Harris Perlstein, then President of Premier Malt Products Company became the President of the new combined Company. After Repeal, Premier-Pabst Corporation was quick to get back into the beer business. Demand for the Pabst Blue Ribbon beer was so high, the company wasted no time in modernizing the Milwaukee brewery. On March 20, 1935, metal kegs were first adopted by Premier-Pabst. Compared to the first metal kegs at the turn-of-the century, the new metal kegs were much better for beer storage and transport. Pabst needed more volume capacity.

In 1934, Pabst opened a new brewery in Peoria Heights, Illinois. In 1946, Pabst purchased the Hoffman Beverage Company in Newark, New Jersey. By expanding toward the west, in April 1948, Pabst purchased the Los Angeles Brewing Company in Los Angeles, California. Now with Pabst beers brewed throughout the country, surviving as a National brand was eminent. In July 1935, Pabst became the first major brewery to test market their beer in keg lined cans. Not knowing if the idea would work, Pabst did not print their top-selling brand, "Blue Ribbon" on the can.

If the idea didn't work, Pabst believe their flagship brand would receive a bad reputation; and sales would drop. Instead, the idea worked; and Blue Ribbon was added shortly thereafter. During the next six years before World War II, with Perlstein and Pabst's leadership, Pabst kept up with competition. On December 20, 1938, Premier-Pabst Corporation changed its name back to the Pabst Brewing Company. Advertising was important to Pabst's strong market. June 1940, the slogan "Thirty-three fine brews blended into one great beer" was first used in national advertising.

In 1943, Pabst started advertising on national radio network. It wasn't until 1950 when Pabst started to sponsor boxing on CBS-TV in 1950. Production and sales soared in the early 1950's. Now with Pabst Brewing Company growing in the early 1950's, Fred Pabst retired as Chairman of the Board in May 1954.

After Fred Pabst's retirement, sales started to slip for Pabst Brewing Company. Several unsuccessful campaigns such as "Pabst Blue Ribbon Time" campaign of 1956 and "Pabst Makes it perfect" campaign of 1957 only stabilized Pabst's sales. The introduction of 16-oz cans in November 1954 didn't help sales much. Pabst Brewing Company was having some financial and marketing problems in 1958. Pabst needed new blood to survive the years to come. Harris Perlstein, then Chairman of Pabst, was under pressure from the Pabst family, which has staged a proxy fight to try to oust him and regain control of the Company.

Perlstein's main concern was survival. Pabst family's effort failed when Perlstein reacted by hiring Blatz Brewing Company President James Windham, who was responsible for reviving Blatz's market share in the 1950's. Windham's reputation in the industry was respected by many breweries. Windham, at first, did not want to join Pabst as the new President unless he could bring Blatz with him.

Perlstein agreed, welcoming Windham's dowry of Blatz Brewing Company and its aging Milwaukee plant. The first campaign under Windham's regime was on April 1958; Pabst passed the 100 million barrel spot since its beginning in 1844. A red stripe was added to blue ribbon logo to celebrate the memorable event. The red stripe is still with the logo today. Windham wanted to bring Blatz with him because he needed to increase Pabst volume to stay on top of competition. But Windham didn't get a chance.

The Justice Department brought suit almost immediately, wanting Pabst to divest itself of Blatz, Pabst fought the antitrust case for 11 years, even to the Supreme Court, but lost. Blatz was sold to G. Heileman, which was later to play its own nuclear role in Pabst's future. Windham, meantime, was never sure he'd keep Blatz, sought another way of generating substantial volume. He did it by lowering the price of the company's flagship Pabst Blue Ribbon brand in some parts of the country.

The short term effect was successful. Pabst had instant volume. Pabst Blue Ribbon beer was known as "The Premium Beer at a Popular Price". This helped Pabst ride the 1960's boom in beer market, a market Windham predicted. By 1961, Pabst was smashing company sales records.

Revenues hit $175 million, an increase of 16 percent from the year before. Net income was averaging $5 million. From 3.9 million barrels annually in 1958, Windham's leadership brought Pabst's volume to 10.5 million barrels by 1970 and then to its all-time high volume of 18 million barrels in 1977. From the outside, Windham appeared as a brewery industry hero, but his influence was spotty. Windham allowed a haunting fear of debt to cloud his vision from his experiences from the Great Depression. He depended only on cash to finance modernization and new facilities.

This decision of cash management would come back to haunt Pabst Brewing Company in the form of skyrocketing production costs. In turn, Pabst built only one new modern and efficient brewery during the prosperous 1960-70's. (The town of Perry, Georgia changed its name to Pabst, Georgia until G. Heileman purchased the plant in 1983, and the town went back to being called Perry.) There were other strategic errors caused by Windham. By keeping the Company substantially debt-free, he made the Pabst balance sheet attractive to the takeover artists who would come swarming around after his retirement. Management at the top was thin. He ran the company with an iron fist.

When Windham made a decision, you could not challenge or disagree with him. Windham had a forceful personality. One brewery worker recalls, "You could hear him all over the building when he was upset". In 1973, a heart attack forced Windham into semi-retirement. He ran the Company as Chairman and Chief Executive Officer from his Mississippi home. Frank DeGuire became the new President of Pabst.

Still, Windham continued to control the Company until his death in 1977. In 1977 Pabst Brewing Company had over $70 million cash in the Bank of Delaware. Immediately after Windham's death, takeover artists from all over the country were after Pabst's assets. DeGuire did not have an easy task for the next three years.

He spearheaded Pabst's defense against all takeover artists. At first, an unfriendly takeover by APL Corporation of Long Island, New York (a manufacturer of cocktail swizzle sticks). APL was heavily in debt, and if successful, was to use Pabst's assets to finance the acquisition. DeGuire's defense was so successful, the APL's two-year acquisition fight was blocked by the Commissioner of Securities.

Now that APL was out of the way, Pabst's days in the ring were far from over. The company management had little time to catch its breath before a new, and ultimately far more destructive, takeover battles were joined. As DeGuire continued to fight off takeover artists, Pabst needed a marketing expert, someone to solve Pabst's image problem created by Windham's "Premium beer at a popular price" strategy. Pabst Brewing Company hired Anthony Amendola, the President of D'Arcy Mac Manus Masi us Advertising Agency, as the new President of Pabst. Amendola was credited with sending Anheuser-Busch sales soaring in the 1970's. DeGuire stayed on as CEO and Chairman.

Amendola believed there was nothing wrong with the Pabst Blue Ribbon product itself. It just wasn't appealing to the young beer drinkers. The older beer drinkers, who were loyal to the brand were dying off. In turn, Amendola created the "Give that man a Blue Ribbon" campaign - arguably more memorable than the ad campaigns immediately preceding Amendola's arrival at Pabst. Pabst acquired the Blitz-Wein hard brewery in 1979. The acquisition got Pabst the number one selling malt liquor brand, Old English 800 and sales increased 33 percent, largely due to the malt liquor market.

During 1979 and 1981, the DeGuire- Amendola relationship was a tense one. DeGuire and Amendola attempted to put together a leveraged buyout of Pabst. Both couldn't come to an agreement, and DeGuire backed out at the last minute. Amendola put together a presentation to the Pabst board as to why DeGuire should be fired. The Board trusted DeGuire. They did not have the highest regard for his leadership, but they trusted him.

Amendola was eventually fired in 1981. He was quickly hired by Schlitz, where he stayed for six months until Stroh bought out Schlitz later that year. About the same time, DeGuire resigned his position at Pabst because he saw another takeover battle, the Heileman buyout. DeGuire recruited several "action oriented" people to the Pabst Board.

William Kimberly - Kimberly-Clark Corp, Frederick Stratton - Briggs & Stratton, and Milwaukee financier Sheldon Luba r, to fight off Heileman. The Pabst Board needed a new leader. The Board took a chance and hired Bill Smith, former President of the Pittsburgh Brewing Company. At the same time, takeover battles continued.

Minneapolis businessman, Irwin Jacobs, entered the ring by buying 8 percent of Pabst stock and eventually 15 percent. Speculation of Jacobs attempting to take over the whole company caused problems to the Board. Jacobs had been labeled "The Liquidator" after he bought Grain Belt Brewing Company and sold the assets to Heileman. The reputation stays with him to this day. Jacobs formed the Shareholders Committee to Revitalize Pabst and called for a proxy contest to oust the Pabst Board and replace it with his own committee. Eventually, both Heileman and Jacobs were fought off by the Board created by DeGuire, but at what cost?

To stop Jacobs, Pabst paid over $11 million in legal fees. Under Bill Smith's leadership, many changes were made to keep the Company going. To tighten Pabst corporate belt, 17 Pabst Vice Presidents were fired. $80 million was spent on advertising, and $20 million in price discounts to wholesalers.

Pabst also acquired the Olympia Brewing Company in 1982. Smith and another Pabst executive tried to structure an executive buyout, but could not arrange the financing. Pabst had closed the Peoria Heights, Illinois; Los Angeles, California; Portland, Oregon; Pabst, Georgia; and Newark, New Jersey plants. Pabst traded breweries with Stroh in 1983. Pabst traded their St. Paul, Minnesota (Theodore Hamm), for Stroh's Tampa, Florida plant in 1983.

Stroh eventually bought the brewery back in 1987. After seven years of battling takeovers, the board gave the decision to sell the brewery in 1984. When California millionaire Paul Kalmanovitz offered to purchase Pabst Brewing Company in 1985 for $63 million, the news was not welcome in Milwaukee. Kalmanovitz has had a reputation of purchasing breweries and running them into the ground, only to profit on past reputation. Paul Kalmanovitz had been involved with the buyouts since 1982. Since his offer was the only one Pabst accepted, the deal was closed.

The next four years were not pleasant for Pabst. Once holding the number 3 position in the United States, Pabst was no longer a contender for the "National Brand". Many employees still believe Kalmanovitz saved the brewery to this day. Even though inside the brewery had high hope, the beer drinkers turned away from from Pabst Blue Ribbon label. Kalmanovitz cut out all advertising and terminated most of the management. His business strategy was to run a lean ship.

With almost no advertising budget, he was able to cut prices. He also removed quality control. There was no consistency from one batch to another. He also bought the rights to many pieces of antique art work that had been in the Pabst family and had been part of the Milwaukee heritage for many years. He moved the art from Milwaukee to his home state of California, where he also ran the Company practically from his pocket checkbook. Pabst future looked serious.

Brewing industry analysts believed Pabst Brewing Company would not be around after the year 1992. In 1988, Kalmanovitz passed away; and Lutz Issleib took over as Chairman and President of Pabst. Issleib promised to devote his career by seeing Pabst make a strong comeback. Ironically, brewing industry analysts did not believe it could be done and suggested Pabst close shop. Issleib would not listen and followed his dream. Immediately, Issleib managed to bring back sales and install a new sense of pride at Pabst.

For the first time since 1985, Pabst was pouring money into advertising and its breweries. His dream is becoming a prophecy. Since Issleib took over, Pabst has been averaging a 9 percent increase each year. This year may be producing close to 8 million barrels compared to 5.9 million barrels in 1988. Today, Pabst has regained a great market share in the West Coast and the Midwest. Currently, Pabst is enjoying its sixth year under Issleib's leadership.

Despite brewing industry analysts' predictions five years ago, Pabst is on the rebound and is slowly regaining the market share it lost during the 1970's and 80's. Pabst has plans to expand their distribution beyond the Midwest and West Coast regions for 1994. Pabst's campaign "PBR Me ASAP" is now in its third year, regaining it's image of a "quality brewer" to the younger beer drinker market. Pabst's national distribution could happen within this generation.

As a fitting climax of 150 years of constant battling and successful efforts to keep up with the times, Pabst Brewing Company is a survivor. Pabst management teams and employees at both Milwaukee and Olympia plants are still carrying out the goals once set by the Bests and Captain Frederick Pabst a long time ago.