Battling the Beer Barons

Last updated on May 13th, 2019 at 02:21 pm

Once known as the Beer Capital of the World, Milwaukee was synonymous with beer. The city wasn’t alone in being awash with beer; hundreds of breweries dotted the state. It seemed that if there was a town with available grain, water and European immigrants, there would be at least one brewery.
But over time, as large breweries started to buy smaller brewers, and other factors like Prohibition and world wars put many small brewers out of business, the hometown breweries became a thing of the past. Even Milwaukee succumbed to the change, with Miller Brewing Co. remaining the last of the major brewers to operate here.
While the giants – Blatz, Schlitz and Pabst – were lost (although they’re all brewed here now, by Miller), a comeback of sorts started in the late 1980s, led by former Pabst supervisor Randy Sprecher. And home brewing became a popular hobby and spawned entrepreneurs such as Jim and Russ Klisch of Lakefront Brewery, and others.
"The reason that Sprecher and Lakefront are successful is that those people work 100 hours a week," says Mathew Kopca, sales manager at Beer Capitol Distributing, which represents the two breweries. "Randy for years was working 90 hours a week. You’d call the brewery at midnight (and he’d be there). Randy bought all used equipment and built the brewery himself.
"Jim Klisch? Russ Klisch? They bought used equipment – they built the brewery themselves," Kopca continues. "If you call there now, they’re there, and they’ll answer the phone or they’re bottling. They didn’t all of a sudden show up driving Mercedes Benzes or buying beach houses. Those guys are still at that brewery a lot. And that’s why they’re successful."
All the micros say that they are friendly competitors. The real competition comes from the new beer barons – Anheuser-Busch, Miller, Coors – and imports. A Miller spokesman said microbrewers are good for the industry, but for the most part the local brewing giant focuses on the other national brewers as its competition.
"You have to go back to when microbrewers took off," said Mike Hennick, Miller’s director of marketing communications. "This renaissance of brewing was great for raising consumer consciousness. And any product that raised the point that beer is a quality beverage was and is good for the industry as a whole. The more people you have considering beer as a beverage, the better."
Miller even borrowed the micro-brewing consciousness in a humorous advertising campaign touting its ‘macro-brewery" status.
But the micro owners aren’t laughing and view their existence as a David-and-Goliath struggle as they take on the industry leaders.
Some imply that the brewing giants play hard ball with distributors, forcing distributors to push the bigger brands over micros. But industry analyst Eric Shepard, the executive editor of Beer Marketer’s Insights, says that can be a matter of perspective. Small brewers, he says, may think their beer will sell itself, but it doesn’t.
"Meanwhile, the big brewer comes into the distributor and says, ‘Here’s the promotional plan, this is the advertising, this is the merchandising, here’s your POS (point-of-sale displays)’ – all the things that are used to sell beer," Shepard says. "And the small brewer comes in and says, ‘Here are some coasters.’
"Then they’re shocked when it doesn’t necessarily sell because they’re not trying to sell it," Shepard continues. "And then they blame the big brewers for squeezing them out."
Here are the stories – the struggles and the triumphs – of five local microbrewers that are fighting the battle for beer drinkers in Wisconsin.

Sprechenzie Bier?
To say that Randy Sprecher is the king of Wisconsin microbrewers wouldn’t be going far enough. Double the size of the other four microbreweries interviewed for this story and there would be room to spare in Sprecher’s Glendale facility just off Interstate 43.
The facility is capable of producing 150,000 barrels annually.
Sprecher eventually sees the Glendale facility turning into a soda-only plant, with beer production moving somewhere else.
"Maybe down the road, Sprecher will be going back to Milwaukee," he says.
If he had his druthers, he’d locate his brewery operations in a portion of the old Pabst brewery, which was shuttered in 1997. That facility – once the largest brewery in the world, will be sold in the near future, and likely be redeveloped into commercial and residential components.
If Sprecher moved to the Pabst location, it would bring him full circle, back to his training grounds.
He had the idea for a microbrewery long before he started his company in 1985. It all started in the 1960s when Sprecher was stationed in Bavaria while serving in the US military. He acquired a taste for German beers during his year and a half overseas – a taste that American beers couldn’t satisfy when he returned home. So he started to brew his own beer at home.
His passion for beer led him to Milwaukee where he worked as a Pabst supervisor for four years, learning how to run every operation within the brewery.
Sprecher took that experience and $40,000 to start his brewing business on the east side of Milwaukee’s Menominee River Valley, producing 1,100 barrels of beer in his first year – a huge quantity when compared to other local micros.
He knew people would like it – he has an uncanny knack for knowing what consumers want in both beer and soda. It was just a matter of convincing distributors and bar owners.
"People thought I was totally crazy for going up against Miller – that’s all they were thinking about," Sprecher recalls. "But I was principally competing against the import brands. So it was a matter of getting people to spend their money on our products" and not on the imports.
The company moved to its three-acre Glendale site in 1994 to consolidate operations (the old Menomonee Valley location was splintered in three different buildings) and to provide future expansion. It’s an impressive facility featuring a gift shop, a German beer garden – where those taking tours stop to sample Sprecher’s wares – and a fully automated bottling line complete with a robotic stacker that loads filled cases onto pallets.
Sprecher’s fearlessness in the face of a huge competitor was evident when he took on Miller in its own backyard in 1985, and it continues today.
"I don’t have problems with anybody else in this state or out of state," Sprecher says of fellow microbrewers. "Our biggest problem is dealing with Miller’s attitude on the street. They don’t like the little guys getting a small percent. … They don’t want to have any other fish in their pond."
His sodas are distributed in at least 15 states, where he says they crush the competition if given enough time. That includes taking on another giant in the beverage industry in its hometown: Sprecher says his sodas are "starting to go really good" in Atlanta – the home of Coca-Cola.
Walking through a warehousing section of his facility with pallets of soda towering over him, Sprecher reflected on his success: "Like the other guys (microbrewers) out there, I just wanted to be able to make a living at this, be my own boss. I never thought we’d be this large, and I certainly didn’t think the soda would catch on like it has."

Chalet on the Lakefront
As memorabilia was auctioned off from Milwaukee County Stadium, the one that caused the most controversy for not being relocated into Miller Park – Bernie’s Chalet – sparked an idea in Russ Klisch’s mind.
"What would you have to pay to get that kind of recognition?" the co-owner of Lakefront Brewery said of owning the most famous slide in Milwaukee. "How many ads would you have to take out? You’d have to spend several hundred thousand dollars. Plus, it has value if we ever decide to sell it."
And so the chalet, including slide, keg and frothy mug of beer were transferred to Lakefront’s brewery on Commerce Street in Milwaukee for $18,000 last October. It’s a brewery-tour highlight that is also used to raise money for local charities.
The fact that Klisch and his brother, Jim, have room for something that large is a testament to how far they’ve come.
Currently the fourth-largest microbrewery in Wisconsin, Lakefront Brewery was started humbly, with beer brewed in Jim’s kitchen. After winning awards for their home beers, and with encouragement of others, the two established Lakefront Brewery in 1987 in Milwaukee’s Riverwest neighborhood.
In the beginning, Russ, an engineer with Johnson Controls, and Jim, a Milwaukee police officer, worked part-time until Russ went full-time in 1996; Jim followed in 1997. The first year in business they brewed 56 barrels, often delivering them on a handcart to one of the four local taverns they served. The demand for their beer quickly outpaced their ability to produce it on a part-time basis.
"When we first started, we were an overgrown home brewery," Russ said. "If you can imagine 55-gallon, stainless steel drums – we put a huge burner underneath it and that was our brewery. Then we discovered used dairy equipment, and we went to 200-gallon tanks and things just kept on growing. We called it our Frankenstein operation; it grew and grew because we just kept buying these pieces of used equipment that had died in a previous life.
"Now I like to think we’re more professional," Russ continues. "The equipment we have is more brewing equipment instead of dairy." The brewing equipment has helped attract and keep employees because the work is less labor intensive, he says.
Lakefront, like most micros, produces certain beers year around and a number of seasonal beers, including flavors such as Fuel Café Coffee Flavored Stout (a year around beer) and the exotic sounding Pumpkin Beer.
"One thing when you have something that unusual," Jim Klisch says, "nobody has any expectation of what it tastes like anyway, so what ever you come up with defines it."
Perhaps the most important step for the brothers was moving from their first, 3,600-square-foot location on Chambers Street to the 24,000-square-foot facility on Commerce Street along the Milwaukee River just north of downtown – a huge turning point for the brewery. But, they point out, they have averaged 20% growth every year since the brewery’s inception.
In fact, the brothers dispute what some beer analysts say – that sales in the micro segment of the beer industry have flattened.
The micro segment, which accounts for about 3% of beer industry sales, has been dominated in the past by two breweries, Boston Beer Co. (makers of Samuel Adams) and Pete’s Brewing Co. (makers of Pete’s Wicked Ale). While Sam Adams remains the micro-market leader, Pete’s has gone way down, according to Russ.
"That volume has switched basically from Pete’s to local brands, so that’s why people like us, Sprecher, New Glarus and Capital have all increased their volume over the past few years," Russ says of the top four Wisconsin micros.
Lakefront’s numbers bear that out. The brewery’s 2000 overall sales were up 15.3% from 1999, including a 33.3% increase in cases sold – an increase the Klisches attribute, in part, to new packaging.
Shepard, of Beer Marketer’s Insights, says that the days of double-digit growth are over, but there is room for growth. "I think most people would be shocked if it were to shrink smaller than 3%," he says of the micro segment of the beer industry. "… Certainly the opportunity for growth is there, but it’s exceedingly competitive now with not only the big brewers, but the importers are spending a ton of money. … People who find the niche, and particularly the ones who stay local – some of the ones who have stayed local have done quite well."
Do microbrewers feel threatened at all by the increase of brewpubs in the area?
"The general feeling among most tap brewers isn’t the problem that we’re competing against one another, but you’re basically competing against the large brewers, trying to convince the average beer drinker to drink your beer," Russ says. "So when we see more brewpubs opening, we actually feel that’s another soldier out there, so to speak, trying to convince the general public that craft beer is good."

Oconomowoc Brewing Company
One of the newer soldiers in the battle for beer drinkers is Tom Miller, the brewmaster and co-owner of the Oconomowoc Brewing Co. Miller is a chain-smoking, coffee-drinking bundle of energy, who looks as if he can’t sit still. There’s reason for that – he is, for the most part, a one-man show. Sure, his wife, Leigh, helps with the company’s management when she’s not busy with her own full-time job, but it is Miller who is the company’s producer, promoter, distributor and tour guide.
The brewery, started in 1998, is working its way to the next big step – bottling. It’s a turning point for an operation that has hovered around the same 150-barrel production over its first three years. As Miller explains it, fighting for tap handles as a start-up can be a monumental task.
"A lot of people don’t take you seriously until you’ve been around a couple of years," Miller says. "Bar owners and restaurant owners are very particular about what’s on tap – they have their reputations to think of. So they have a tendency to go with brands that are known. People tend to order what’s advertised and what they know. That’s been our biggest obstacle."
But once he has his accounts, he prides himself on going above and beyond to service them.
"I’ve gone out at 9 p.m. on a Saturday night to deliver beer," he says. "A lot of the bar owners have my home phone number. If they’re drinking my beer and the bar has a run on it, the last thing you want happening is to have a cup upside down on your handle."
With virtually no money in his budget for advertising, Miller has stuck with a grassroots approach to marketing. The brewery (Miller) tries to attend as many beer tastings in the state as possible, and is a big believer in supporting community events.
"(Tastings) develop more of a ‘Gee, I really like those guys, so I’m going to drink their beer’ situation," says Leigh. "Being very involved with the community and helping promote the community – that goes a long way."
Bottling is the next logical step, Tom says, because people may try his beer out at a restaurant, bar or tasting, like it and then look for it to take home. To do that, he’s thinking of partnering with the Pioneer Brewing Co. in Black River Falls, a brewery that bottles for the Port Washington Brewing Co., as well.
Another challenge facing microbrewers is the change in drinking attitudes.
"People aren’t going out and drinking as much as they used to, which is good – they shouldn’t," Miller says. "I think people are afraid of traveling (and drinking)." But, he adds, "People are always going to drink – they’ve been drinking since the beginning of time. That’s not going to go away."

Harbor City
Unlike the other microbrewers in southeastern Wisconsin, Jim Schueller didn’t start out as a home brewer, but brewing’s in his blood. His cousin, Jeff Lebesch, owns the New Belgium Brewery, the second largest brewery (after Coors) in Colorado.
Schueller learned the business from his cousin, and when New Belgium moved to a larger facility, he jumped at the chance to buy New Belgium’s used equipment and start a microbrewery in Port Washington.
And unlike some others, Schueller had the space to set up a bottling line – a huge advantage for a start-up brewery. But he’s taken a very low-key approach to marketing.
"We try to keep it really quiet," he laughs. Like Miller at Oconomowoc, Schueller relies mostly on beer tastings to spread the word about his beer. "It’s pretty much just shelf position and word of mouth."
Schueller, a laid back, 30-year-old, seems to take an Alfred E. Neuman-like, "What, me worry?" attitude toward the business. It’s his first "real job" since attending college, but he questions whether or not it’s a "real job."
"It has its responsibilities, of course, but I don’t have to be here at a certain time," Schueller says, noting that a 9 a.m. interview was out of the question. "But I’m not opposed to staying late and coming in early sometimes. So it’s kind of a real job. … It’s a lot better job than most, and a lot of people would be willing to do it. You can set your own time, you drink beer …"
Schueller hopes to double the brewery’s production over the next few years and do more self- and community promotion.
"Port Washington," he says, "I don’t see it being promoted very well. We have a harbor. It’s very scenic."

Port Washington Brewing Co.
Just down the main drag from Harbor City Brewing, in Smith Bros. Fish Shanty restaurant, is the Port Washington Brewing Co.
The brewery and restaurant were at one-time linked together as a brewpub when the De Rosa Corp., which owns the Chancery restaurants, bought Smith Brothers and added the brewery in 1996. About a year after the brewpub’s opening, the restaurant – but not the brewery – was sold to another owner, giving the microbrewery high visibility in one of Port Washington’s most recognizable landmarks.
It features a highly automated system but remains a one-man operation. Brewmaster Jeff Kolar is a highly energetic man who learned his craft while home-brewing. Kolar was about to graduate from the Milwaukee School of Engineering with an electrical engineering degree when he faced a choice: go into a high-paying engineering job or become a low-paid, professional brewer.
"I don’t regret not going into engineering because that’s something I could always fall back on," Kolar says. "Obviously, job satisfaction is a very important thing (to me)."
The brewery, currently owned by Lisa De Rosa, still has ties with the De Rosa Corp., and its beers and root beer are featured in all of the Chancery restaurants across southeastern Wisconsin. Kolar says he is negotiating to buy the brewery from De Rosa and expects to own it by March. But the ties to the De Rosa Corp. have no doubt been key in the brewery’s success. That, and the fact that Kolar is producing some tasty beer.
Kolar does his part promoting the brewery, as well. He rides along with his distributors to help educate his customers on his beers and the brewing process, and, like the other microbrewers, he’s at every possible tasting around the state.
The strategy has worked, as Port Washington has sales from Door County to Stevens Point to Minocqua and throughout the southeastern Wisconsin area. Pioneer Brewing has bottled Port Washington’s flagship beers since 1999, but Kolar is working on the design of a new six-pack container to create more visibility in retail outlets.
He likens his working style with that of an engineer, breaking down the details of most projects on paper until he gets them right. And the engineering experience comes in handy when something breaks down – rather than calling a service firm, Kolar fixes things himself, saving the brewery time and money.
After the brewery changes ownership, its next big step is bottling its root beer. If the soda takes off as Kolar expects, he pictures a move to a larger facility.
Kolar likes his chances as a Midwestern microbrewer, despite some microbrewing naysayers.
"I have talked to people that have come from the coasts (where microbrewing first gained popularity), and they’ve warned me that the micro industry was a fad and in a few years, these will all be gone," Kolar said. "I told them I didn’t think it was going to be that way only because Wisconsin’s heritage, being a lot of German settlers and immigrants, like quality beer. And, yes, you have Miller in Milwaukee, but there are a lot of people whose tastes have changed, and I don’t think they’re going to change back to Miller and other national brands."

Indecent proposal
As has happened in the past, larger breweries have purchased smaller brewers, sometimes continuing the small breweries’ brands (e.g., Miller with Leinenkugel’s), sometimes not (e.g., Miller with Celis Brewery in Texas). What would happen if a larger brewer came along and offered to buy out their operations?
"I don’t know if I could do that," Miller, of Oconomowoc, said. "Brewers are crazy people. We’ve got egos that are huge."
"When I worked at Johnson Controls, I thought, ‘What can I possibly do for my dream job?’" Russ Klisch, of Lakefront, recalls. "And I thought running a brewery is the thing I’d want to do. So if I sold out, I might be sitting at home twiddling my thumbs; I don’t know what I would do."
But he adds: "That doesn’t mean that if somebody came along and offered me a silly amount of money I wouldn’t take it. But it would have to be along those lines."
Kolar, of Port Washington, says that selling out goes against why he became a microbrewer.
"That’s one of those conflicts that most brewers have," Kolar says of selling out. "It’s the same conflict that people in the micro industry have about brewing light beers. You know that they would sell if you would do them, but the reason you’re a micro is to give people a different product. So, I would have to say no, I wouldn’t (sell out)."
As for Randy Sprecher, it was clear: Don’t even ask.

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