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by Roger Muller, MBA 1
Has Bud been dethroned as the "King of Beers?" Has Miller's time come and gone? That's what 17 trained beer tasters suggested in last June's Consumer Reports. Their choice for the best-tasting mass-marketed brew was that blue-collar bargain of the beer cooler, Old Milwaukee. It was followed by Stroh's, another cheap and minimally advertised brand from Detroit's Brewery Co. (The Associated Press, May 24, 1996)
Old Milwaukee and Stroh's are only two of the more than 100 products that the company produces and sells. Since 1850, when Bernhard Stroh established a small brewery on the Detroit River, The Stroh Brewery Company has been producing top quality brands like Old Milwaukee, Stroh's, Schlitz, and Schaefer, and employing top quality people dedicated to the craft of brewing beer. Today, Stroh is the nation's fourth largest brewery and ranks among the top 20 breweries in the world. Since its beginning, Stroh's has faithfully pursued its mission to provide consumers with the beverage alternatives they want as their lifestyles and preferences change. Through acquisitions and new product development its family of products has grown to more than 20 different brands.
On Friday, January 31, I had the opportunity to spend a "Day in the Life" at Stroh's headquarters in Detroit. For me the day started at 10:00 a.m., I had a meeting with David Dixon, International Sales and Marketing Manager at Stroh's and a UMBS alumnus. We discussed the new challenges that we are facing and the new opportunities available. Most recently Stroh's acquired the G. Heileman Brewing Company in 1996. Heileman was the fifth largest brewery in the country. Heileman has many well-known brands like Old Style lager, Blitz-Weinhard, and Colt 45. The consolidation of Stroh's and Heileman produced a firm with total barrelage shipments of 18.5 million in 1995 versus Coors brewing's 20 million, Miller Brewing's 45 million, and Anheuser-Busch's 87.5 million, reports trade journal Beer Marketer's Insights. Currently Stroh's has a huge potential, they have an extensive brand portfolio and a huge network of distributors. Prior to the merger, Heileman numbered about 1,000 distributors and Stroh's had about 800. For comparison, Anheuser-Busch has 800 wholesalers and Miller has about 600.
After hearing about the about the new trends in the beer market, Stroh's, Heileman, the competition, future plans, and distribution networks, we went to the presentation of Henry Weinhard's beer. The meeting was a great opportunity to see how a brand manager presents the whole strategy for launching a product in a new region. Henry Weinhard's is a very well-known brand on the West Coast, specially in California and Washington. During the meeting we had the opportunity to see some of the advertisements that are going to be presented, the different line extensions that are going to be available and the strategy for the present year. The experience was great. We saw the results of focus groups from different states and discussed different approaches that could be taken to successfully introduce this brand.
During the afternoon I had the opportunity to visit the laboratories and the international division. I talked with Jovan Jovanovski, Vice President of the International Division. Mr. Jovanovski explained that currently more than 10% of Stroh's production goes abroad. Schlitz is a success in England and Red Bull in Russia. Stroh's has a joint venture with Rajastahan Breweries in India, where Stroh's beer and Super Strong beer are available. The international division has been growing very aggressively. By the year 2000 it is expected that the international barrelage will exceed the two million barrels.
Overall what impressed me is Stroh's commitment to the highest standards of quality, integrity, and teamwork. The Stroh Brewery Co. is working to strengthen its position in the beer industry through new technology, advanced brewing methods, creative marketing and sales programs, without overlooking what they consider their most important asset, their employees.
After so many meetings, presentations and discussions the day was almost over, even though there was something missing. After talking for so long about beers, we had to try some of them, especially since two of their brands, Old Milwaukee and Stroh's got the first two places in the last June's Consumer Reports. We went to a pub in Detroit downtown, and drank a few Stroh's. Drinkers sometimes mistakenly believe the cost of a brew reflects its quality, in reality much of that added cost goes toward the marketing and advertising, rather than into the can.
So, try a Stroh's or an Old Milwaukee next time! At Stroh's "Success is Brewing," be part of it.
by Sam Valenzuela, MBA1
In auto news last week, Ford had to shut down three plants and idle 6,800 workers because of strikes at Johnson Control, Inc. The company supplies seats for several Ford vehicles, including the new sport utility Expedition and Econoline vans. Said Ross Roberts, Vice President and General Manager of Ford, "They're built. They just don't have any seats in them. They're hard to drive."
Analysts estimate that Ford receives gross profits of $9K to $10K on each Expedition. The plant shut-downs are costing them at least $5 million per day in net profits. Ford has since lined up Lear Corporation, operating with UAW workers, to supply seats for the Expedition.
GM may drop the name "Jimmy" from their sport utility vehicle depending on customer response to a new, more luxurious version called the Envoy. The proposed 1999 model was unveiled at the Chicago Auto Show last Friday, February 7. The Envoy will be priced above the Jimmy's $29,000 top-end price. A note for future marketers: to obtain a premium price on this new vehicle, GM officials thought they had to change the Jimmy's name. Chevrolet revealed the new 1998 Camaro SS and Z28 (possible future test cars for this column), at the Chicago Auto Show. The new Camaro has a more powerful engine, new suspension, a new hood and front end, bigger wheels and wider tires, standard four wheel disc anti-lock brakes, and door handles that match the body color.
As MBA1s recently learned in their OM classes, the Toyota Production System, as great as it is, has imperfections, especially when Toyota relies on only one supplier for its parts. A recent fire at Aisin Seiki Company, which provides almost all of the brakes and clutches for Toyota cars, completely shut down Toyota production for two days. Although production is now back up to 90%, Toyota is estimated to lose $323 million in operating profits because of the delays.
So far, in recent Indycar testing at the oval track in Homestead, Fla., Jimmy Vasser (USA) led the way averaging over 195 mph, followed by teammate Alex Zanardi (Italy), Mauricio Gugelmin (Brazil), Paul Tracy (Canada), and Richie Hearn (USA). In Formula 1 news, four-time World Champion Alain Prost is apparently looking to buy the French Ligier team and recruiting former McLaren and Ferrari designer John Barnard. The official Indycar and Formula 1 seasons start soon, so look here for updates of your favorite teams and drivers.
Finally, be sure to respond to the recent favorite car e-mail. If your car of choice gets tested and your name is drawn, you will win a ride with Sam in your dream car.
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