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Miller Brewing Company

Miller Brewing Company

3939 West Highland Boulevard
Milwaukee, Wisconsin 53201
U.S.A.
(414) 931-2000
Fax: (414) 931-3735

Wholly Owned Subsidiary of Philip Morris, Inc.
Incorporated:
1888
Employees: 9,600
Sales: $4.2 billion
SICs: 2082 Malt Beverages

Between the establishment of the Miller Brewing Company in 1855 and the death of its founder in 1888, the firms annual productive capacity increased from 300 barrels to 80,000 barrels of beer. This impressive growth has continued to the present day: Miller now operates six breweries, five can manufacturing plants, four distributorships, a glass bottle production facility, a label and fiberboard factory, and numerous gas wells. Beginning with a staff of 25, Miller now employs about 9,500 people. The company currently produces more than 40 million barrels of beer per year and is the second largest brewery in the United States.

The founder of the Miller Brewing Company, Frederick Miller, was born in Germany in 1824. As a young man he worked in the Royal Brewing Company at Sigmaringen, Hohenzollern. In 1850, at the age of 26, he emigrated to the United States. Miller wanted to start his own brewery and regarded Milwaukee as the most promising site, probably because of the large number of beer-drinking Germans living there.

In 1855 Miller bought the Plank Road Brewery from Charles Lorenz Best and his father. These two men had been slow to modernize their operation, but Millers innovative techniques made him successful, indeed famous, in the brewing industry. The Bests had started a cave-system which provided storage for beer in a cool undisturbed place for several months after brewing. Yet these caves were small and in poor condition. Miller improved upon the Bests system: his caves were built of brick, totaled 600 feet of tunnel, and had a capacity of 12,000 barrels. Miller used these until 1906 when, due to the companys expansion and the availability of more modern technology, refrigerator facilities were built.

After his death, Millers sons Ernest, Emil, and Frederick A., along with their brother-in-law Carl, assumed control of the operation which was incorporated as the Frederick Miller Brewing Company. By 1919 production had increased to 500,000 barrels, but it was halted shortly thereafter by the enactment of Prohibition. The company managed to survive by producing cereal beverages, soft drinks, and malt-related products.

Ernest Miller died in 1922 and was succeeded as president by his brother, Frederick A. Miller. Frederick A. remained president and chief executive until 1947 when his nephew, Frederick C., became head of the firm. Frederick C. instituted a program of expansion, and was instrumental in bringing major league baseball (the Braves) to Milwaukee, thus strengthening the relationship between the beer industry and the sporting world. The cultivation of this relationship led to increased sales for Miller. But tragedy struck when Frederick C. was killed in a plane crash in Milwaukee in 1954. At the time of his death, the Miller Brewing Company was ranked ninth among American brewers.

The expansion program initiated in 1947 was continued by Norman Klug, who became president following Millers death. Under Klugs management, Miller purchased the A. Gettelman Company in 1961, and four years later bought the General Brewing Corporation of Azusa, California. That same year, the firm purchased a Carling OKeefe brewery in Fort Worth, Texas. By this time Miller had formed a can manufacturing company in Milwaukee with the Carnation Corporation. The plant produced approximately 150 million beer cans a year.

Just before Klugs death, arrangements had been made for a diversified shipping firm, W. R. Grace, to acquire 53 percent of the brewing company. The Miller stock was owned at that time by Mrs. Lorraine Mulberger and her family, descendants of Frederick A. Miller. The Mulbergers were paid $36 million but Grace soon discovered that its purchase was significantly undervalued. Because of its cash reserves and growing importance within the industry, Miller was a prime acquisition target; in 1969 management at Grace decided to sell its interest in Miller to PepsiCo for $120 million. Yet suddenly, and without warning, Grace canceled the agreement and almost immediately sold its shares to Philip Morris for $130 million. PepsiCo filed suit in federal court to prevent this, but the suit failed.

Philip Morris purchased the remaining shares of Millers stock from the De Rance Foundation of Milwaukee in 1970. In 1971 Miller extended its production activities in Fort Worth, obtained a tract of land in Delaware as a possible site for a new brewery, and also acquired Formosa Springs, a Canadian brewery. By 1972 Miller Brewing ranked seventh in the beer industry.

Under the Philip Morris management, Millers marketing strategies and advertising campaigns became more important than ever before. Aiming to replace Anheuser-Busch as the nations largest brewer, the company expanded its range of brands and penetrated all segments of the market. As a result, production rose from seven million barrels in 1973 to 31 million barrels in 1978.

Led by John Murphy, a Philip Morris executive trained as a lawyer and with notable marketing ability, the company began a thorough study of American beer drinking trends. Miller had been known previously as The Champagne of Beers, and its advertising campaigns were directed to appeal to a specific group of white-collar consumers. Murphy revised this strategy and reoriented it toward the large blue-collar market with an emphasis on the work-reward relationship. Millers new slogan was: If youve got the time, weve got the beer. This slogan, and the marketing plan behind it, soon led to increased sales.

By 1985 reduced calorie beers accounted for 20.5 percent of all beer sales. Miller has the distinction of initiating this market with its Miller Lite, which still remains the number one product in this category. Rather than marketing Miller Lite as a diet beer, the company emphasized its lower calorie content and its unique flavor. Once again it was clever advertising that accounted for Millers success. Televisión advertisements showed brawny men enjoying Miller Lite; the slogan proclaimed: Everything you always wanted in a beer. And less. The Miller Lite allstars, included such personalities as Rodney Dangerfield and John Madden, have continued this approach in the beers award-winning commercials. In 1986 the tagline emphasized the beers uniqueness: Theres only one Lite beer. Miller Lite.

Millers rivals soon responded with low calorie beers of their own, and the company tried to prevent brewers such as Schlitz and Heileman from using the world Light. Fortunately for Millers rivalsand for the English languagethe U.S. Supreme Court ruled that Miller did not have exclusive rights to the word.

Shortly after the introduction of Miller Lite, the company began to market a domestically brewed version of Löwenbräua German beer with a 600-year old historyto which Miller owned the U.S. distribution rights. In an $11 million advertising campaign, Miller captured 10 percent of Anheuser-Buschs Michelob market. Anheuser-Busch promptly filed suit with the Federal Trade Commission accusing Miller of using deceptive packaging and advertising in order to convince consumers they were buying an imported beer. Later, when Anheuser-Busch introduced its Natural Light beer, Miller retaliated by pointing out that there was nothing natural about Anheuser-Buschs product.

Due to the phenomenal success of Miller Lite, Miller was in second place behind Anheuser-Busch by the early 1980s. But as Miller Lite sales were climbing, sales of Miller High Life began falling. Between 1981 and 1986, High Life sales dropped 60 percent. The decline was offset by Miller Lite and also by the introduction of Milwaukees Best and Meister Brau, two lower-priced beers that grew to represent 16.9 percent of the companys output by 1988. Equally important in maintaining Millers market share was the 1985 introduction of Miller Genuine Draft, one of the first premium unpasteurized beers to be made in the United States. Due to heavy advertising campaigns and a unique market position, production of Genuine Draft grew to 2.3 million barrels within the first two years.

Despite the success of Miller Lite and Genuine Draft, Miller was having a hard time capturing market share from Anheuser-Busch. In 1987, combined sales of Anheusers Budweiser and Bud Light grew 23 percent while sales of all Miller products grew only 1 percent. Parent company Philip Morris began to grow nervous. Early in 1988, Millers president and chief executive William Howell took an early retirement. He was replaced by Leonard J. Goldstein, a senior vice-president with considerable marketing expertise.

One of the first moves Goldstein made was to purchase the Jacob Leinenkeugle Brewing Company, a 120-year-old micro-brewery that would provide Miller with a foothold in the growing boutique beer market. Although the 1989 beer market was sluggish, Miller increased its market to 21 percent, against Anheusers 41 percent. The following year, Goldstein was named chairman, succeeded by Warren Dunn as president and chief executive. Under the two, Millers market share continued to increase. By 1991, it had grown to 23 percent, or 43.5 million barrels. Yet Millers goal of unseating Anheuser-Busch from the number one position remained far off. Although the company was firmly in second placewith a 13 percent lead over CoorsAnheuser-Busch prevailed as the undisputed market leader, with 45.7 percent of the market.

By 1993, many in the U.S. beer industry felt the domestic market was stagnant. With the exception of Genuine Draft, sales of all Miller beers fell in 1992 and income dropped 13.6 percent to $260 million. Coors and Anheuser both cut their workforce in early 1993; by December Miller had followed suit, eliminating 13 percent of its workforce through closing a manufacturing plant in Fulton, New York, and trimming 300 white collar jobs from its headquarter operations.

That year, in an attempt to compete with Anheuser-Busch in the international market, Miller paid $273 million for U.S. distribution rights and a 20 percent stake in Canadas Molson Breweries. Some analysts questioned the move, noting that although Molson was the leading brewer in Canada, its imports to the United States declined in the year preceding Millers purchase. However, Miller fared better than its competitors in 1993, due to the purchase of Molson, heavy discounting of its Miller High Life brand, and aggressive marketing outside the United States, where sales of Miller Genuine Draft climbed 29 percent. As growing consumer interest in small boutique brands continued to threaten Miller sales, the company further protected itself by purchasing the domestic distribution rights to Fosters Lager and other imported beers. Although the domestic beer market remained static, the company continued to see its sales increase through the first half of 1994, fueled by the introduction of Ice House ice-brewed beer, and Lite Ice.

Under parent Philip Morris, Millers focus in the 1990s was to dislodge Anheuser-Busch as Americas largest brewery. Yet by the middle of the decade the company still had a long way to go. Miller sold approximately 41 million barrels of beer a year and had a 21 percent market share, compared with Anheuser-Buschs 67.8 million barrels and 36.6 percent market share. Millers growth between 1985 and 1995 was slow but steady. Like Anheuser, Miller saw its market share increase as smaller breweries continued to lose ground. The competition between the two largest breweries in the United States continued.

Further Reading

Baron, Stanley Wade, Brewed in America: A History of Beer and Ale in the U.S., New York: Arno Press, 1972.

Heritage Born and Pledged Anew, Milwaukee: Miller Brewing Company, 1955.

Jabbonsky, Larry, Consider it Dunn, Beverage World, September 1992, pp. 2428.

ONeal, Michael, Can a Marketing Man Make it Miller Time Again?, Business Week, February 1, 1988, p. 26.

updated by Maura Troester

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"Miller Brewing Company." International Directory of Company Histories. . Encyclopedia.com. 19 Aug. 2017 <http://www.encyclopedia.com>.

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"Miller Brewing Company." International Directory of Company Histories. . Retrieved August 19, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/miller-brewing-company

Miller Brewing Company

Miller Brewing Company

3939 West Highland Boulevard
Milwaukee, Wisconsin 53201
U.S.A.

Wholly-owned subsidiary of Philip Morris, Inc.
Incorporated:
1888
Employees: 11,000
Sales: $2.92 billion

Between the establishment of the Miller Brewing Company in 1855 and the death of its founder in 1888, the firms annual productive capacity increased from 300 barrels to 80,000 barrels of beer. This impressive growth has continued to the present day: Miller now operates six breweries, five can manufacturing plants, four distributorships, a glass bottle production facility, a label and fiber-board factory, and numerous gas wells. Beginning with a staff of 25, Miller now employs some 11,000 people. The company currently produces more than 40 million barrels of beer per year and is the second largest brewery in the U.S.

The founder of the Miller Brewing Company, Frederick Miller, was born in Germany in 1824. As a young man he worked in the Royal Brewing Company at Sigmaringen, Hohenzollern. In 1850, however, at the age of 26, he emigrated to the United States. Miller wanted to start his own brewery and regarded Milwaukee as the most promising site, probably because of the large number of beer-drinking Germans living there.

In 1855 Miller bought the Plank Road Brewery from Charles Lorenz Best and his father. These two men had been slow to modernize their operation, but Millers innovative techniques made him successful, indeed famous, in the brewing industry.

The Bests had started a cave-system which provided storage for beer in a cool undisturbed place for several months after brewing. Yet these caves were small and in poor condition. Miller improved upon the Bests system: his caves were built of brick, totaled 600 feet of tunnel, and had a capacity of 12,000 barrels. Miller used these until 1906 when, due to the companys expansion and the availability of more modern technology, refrigerator facilities were built.

After his death, Millers sons Ernest, Emil, and Frederick A., along with their brother-in-law Carl, assumed control of the operation which was incorporated as the Frederick Miller Brewing Company. By 1919 production had increased to 500,000 barrels, but it was halted shortly thereafter by the enactment of Prohibition. The company managed to survive by producing cereal beverages, soft drinks, and malt-related products.

Ernest Miller died in 1922 and was succeeded as president by his brother Frederick A. Miller. Frederick A. remained president and chief executive until 1947 when his nephew, Frederick C., became head of the firm. Frederick C. instituted a program of expansion, and was instrumental in bringing major league baseball (the Braves) to Milwaukee, thus strengthening the relationship between the beer industry and the sporting world. The cultivation of this relationship led to increased sales for Miller. But tragedy struck when Frederick C. was killed in a plane crash in Milwaukee during 1954. At the time of his death, the Miller Brewing Company was ranked ninth among American brewers.

The expansion program initiated in 1947 was continued by Norman Klug who became president following Millers death. Under Klugs management, Miller purchased the A. Gettelman Company in 1961, and four years later bought the General Brewing Corporation of Azusa, California. That same year, the firm purchased a Carling OKeefe brewery in Fort Worth, Texas. By this time Miller had formed a can manufacturing company in Milwaukee with the Carnation Corporation. The plant produced approximately 150 million beer cans a year.

Just before Klugs death, arrangements had been made for a diversified shipping firm, W.R. Grace, to acquire 53% of the brewing company. The Miller stock was owned at that time by Mrs. Lorraine Mulberger and her family, descendents of Frederick A. Miller. The Mulbergers were paid $36 million but Grace soon discovered that its purchase was significantly undervalued.

Because of its cash reserves and growing importance within the industry, Miller was a prime acquisition target; in 1969 management at Grace decided to sell its interest in Miller to PepsiCo for $120 million. Yet suddenly, and without warning, Grace cancelled the agreement and almost immediately sold its shares to Philip Morris for $130 million. PepsiCo filed suit in federal court to prevent this, but the suit failed.

Philip Morris purchased the remaining shares of Millers stock from the De Rance Foundation of Milwaukee in the following year (1970). In 1971 Miller extended its production activities in Fort Worth, obtained a tract of land in Delaware as a possible site for a new brewery, and also acquired Formosa Springs, a Canadian brewery. By 1972 Miller Brewing ranked seventh in the beer industry.

Under the Philip Morris management, Millers marketing strategies and advertising campaigns became more important than ever before. Aiming to replace Anheuser-Busch as the nations largest brewer, the company expanded its range of brands and penetrated all segments of the market. As a result, production rose from seven million barrels in 1973 to 31 million barrels in 1978.

Led by John Murphy, a Philip Morris executive trained as a lawyer and with notable marketing ability, the company began a thorough study of American beer drinking trends. Miller had been known previously as The Champagne of Beers, and its advertising campaigns were directed to appeal to a specific group of white-collar consumers. Murphy revised this strategy and reoriented it toward the large blue-collar market with an emphasis on the work-reward relationship. Millers new slogan was: If youve got the time, weve got the beer. This slogan, and the marketing plan behind it, led to increased sales.

By 1985 reduced calorie beers accounted for 20.5% of all beer sales. Miller has the distinction of initiating this market with its Miller Lite, which still remains the number one product in this category. Rather than marketing Miller Lite as a diet beer, the company emphasized its lower calorie content and its unique flavor. Once again it was clever advertising that accounted for Millers success. Television advertisements showed brawny men enjoying Miller Lite; the slogan proclaimed: Everything you always wanted in a beer. And less. The Miller Lite allstars, included such personalities as Rodney Danger-field and John Madden, have continued this approach in the beers award-winning commercials. In 1986 the tagline emphasized the beers uniqueness: Theres only one Lite beer. Miller Lite.

Millers rivals soon responded with low calorie beers of their own, and the company tried to prevent brewers such as Schlitz and Heileman from using the world Light. Fortunately for Millers rivalsand for the English languagethe U.S. Supreme Court ruled that Miller did not have exclusive rights to the word.

Shortly after the introduction of Miller Lite, the company began to market a domestically brewed version of Löwenbräua German beer with a 600-year old historyto which Miller owned the U.S. distribution rights. In an $11 million advertising campaign, Miller captured 10% of Anheuser-Buschs Michelob market. Anheuser-Busch promptly filed suit with the Federal Trade Commission accusing Miller of using deceptive packaging and advertising in order to convince consumers they were buying an imported beer. Later, when Anheuser-Busch introduced its Natural Light beer, Miller retaliated by pointing out that there was nothing natural about Anheuser-Buschs product. The publicity garnered from these beer wars helped Miller to improve its standing within the brewing industry; by the early 1980s, Miller was in second place behind Anheuser-Busch.

After Miller brew beer, it is filtered, aged, and finally packaged. Most packaged beers are pasteurized, but two Miller products are unique because they require no pasteurization; in effect, they are real draft beers in a bottle. Plank Road Original Draft and Miller Genuine Draft are made with special cold filtering process (purchased from Sapporo Breweries in 1985) that removes the yeast residue and allows the beer to be packaged without pasteurization (which, because it involves heating the beer, affects its flavor). Although the shelf life for these two items is the same as other packaged beer (approximately 120 days), consumers have noticed the difference in taste. Sales have skyrocketed since their introduction.

Millers presidents since MurphyJohn Cullman, George Weisman, and the current president William Howellhave resolutely continued their companys efforts to dislodge Anheuser-Busch as Americas largest brewery. Yet the company still has a long way to go. At present, Miller sells 40 million barrels of beer a year and has a 20% market share, as compared with Anheuser-Buschs 67.8 million barrels and 36.6% market share. The competition between the two largest breweries in the U.S. continues.

Further Reading

Heritage Born and Pledged Anew, Milwaukee, Miller Brewing Company, 1955; Brewed in America: A History of Beer and Ale in the U.S. by Stanley Wade Baron, New York, Arno Press, 1972.

Cite this article
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"Miller Brewing Company." International Directory of Company Histories. . Encyclopedia.com. 19 Aug. 2017 <http://www.encyclopedia.com>.

"Miller Brewing Company." International Directory of Company Histories. . Encyclopedia.com. (August 19, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/miller-brewing-company-0

"Miller Brewing Company." International Directory of Company Histories. . Retrieved August 19, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/miller-brewing-company-0