The MacNeil/Lehrer Report; Beer in America

(Film footage showing how to make homemade beer.)

JIM LEHRER: What you`re seeing is illegal -- or at least, that`s the opinion of the government agency that could prosecute you for making your own beer. But that agency can`t recall that anyone has been penalized for producing home brew in the forty-five years since the end of Prohibition. Some home brewers, therefore, contend their beer is legal .. as long as they don`t sell it. Others aren`t sure. But an estimated 100,000 Americans are putting barley through the fermentation process, and marketers of home beer kits are after Congress to clarify the laws so a person can comfortably sip a malted beverage of his own making. All this is going on in a country that produces more beer than any other nation, where the big five brewers -- Anheuser-Busch, Miller, Schlitz, Pabst and Coors -- account for seventy percent of all the beer sold, and where local breweries are going out of business faster than you can chugalug a six-pack. Tonight, with the summer beer-drinking season upon us, a look at beer in America.

ROBERT MacNEIL: Beer in America is a $16-billion industry with a fascinating story behind the scenes. Beer is as popular among alcoholic drinks as Laverne and Shirley on television. We drink nearly five billion gallons a year, and celebrate those who drink it the most.

MAN IN BAR: Hey, buddy! Have you tried this Billy Beer yet?

BILLY CARTER: You`d better believe it. It`s the best beer I`ve ever tasted, and I`ve tasted a lot.

MacNEIL: When it comes to brands, Americans are fickle. They want to identify with the images the biggest brewers create, but they also want diversity, and among a nation of individualists the belief abounds that a person can always find a better beer, or brew, one. And so, around the country home brewing clubs are flourishing.

FIRST CLUB MEMBER: ...it`s commercial?

SECOND CLUB MEMBER: No, I don`t think so.

MacNEIL: This is the Underground Brewing Society of Westport, Connecticut. Members meet once a month to taste and evaluate their own homemade batches, along with highly touted commercial beers.

FIRST CLUB MEMBER: Sweet, but pretty well balanced.

MacNEIL: Similar clubs in California have names like The San Andreas Malts, the Yeast Bay Brewers, and the Maltose Falcons.

THIRD CLUB MEMBER: Overall. Okay, we`ve got two points overall, it`s a real good beer.

FOURTH CLUB MEMBER: That was one of my stouts. This one has been aged about a year.

SECOND CLUB MEMBER: No kidding. That`s great.

FIFTH CLUB MEMBER: It`s a really nice beer.

THIRD CLUB MEMBER: Our beer costs less than commercial beer.

SECOND CLUB MEMBER: Less than domestic beer.

THIRD CLUB MEMBER: Less than domestic commercial, but it`s better than the imported commercial.

FIRST CLUB MEMBER: We`re making beer which is all malt, completely malt recipes, with much more hops, more flavor, and we`re getting the results.

MacNEIL: Some home brewers are uneasy about the legality of what they`re doing. A bill now before Congress would authorize home brewing if a person registered with the government, made only a hundred gallons a year, or 200 if he were the head of a household, but had no more than thirty gallons on hand at any one time. The author of a book for beginning home brewers, Lee Coe of Berkeley, California, says registration is unnecessary, and objects `to the gallon limits as unduly restrictive.

LEE COE, Home Brewer: The bill as it`s written puts a premium on beer, that`s insufficiently aged. The less you age it, the worse it is, the more you`re allowed to drink under the law. The better beer you make, the more you age it, the less you`re allowed to make under the law. If you drink a lot of beer under the law you can make more than if you are a moderate drinker. The law is a piece of foolishness.

MacNEIL: An association of home brewing supply merchants, headed by Shirley. Yingling of Princeton, New Jersey, favors compromise with the Treasury Department.

SHIRLEY YINGLING, Home Brewers` Association: Five years ago they wouldn`t even talk to you. They feel if they go to 200 and 400 gallons, there`s going to be too large a range, you could have too much on hand and this is going to allow the moonshiners to step in and be covered. -` I don`t feel they will be,- but this-`is what the Treasury feels, and sometimes you have to give a little bit to get a lot.

COE: It isn`t illegal to make home brew now...

YINGLING: According to you.

COE: According to lawyers who`ve looked at the law, it isn`t illegal now. This bill would merely put heavy restrictions on us. We should try to make those restrictions reasonable.

LEHRER: Home brewers may trouble the Bureau of Alcohol, Tobacco and Firearms, but they don`t worry the major commercial brewers. August Busch III, chairman and president of Anheuser-Busch:

AUGUST BUSCH III: I think some people are doing it because they think they can save a few dollars, I think other people are doing it because they`d like to try their hand at making beer and see what taste that they can produce. But I think in the end they`ll come back to the beers that are produced commercially in the industry.

LEHRER: The brewing industry traces its origins back to ancient Babylonia.

NARRATOR: Here in the cradle of civilization, archeologists have found one of the oldest existing records of early man: two clay tablets. And inscribed on their surface, a picture of two men at work, brewing beer. And a detailed brewing recipe. Because even then, 8,000 years ago, beer was already an important part of man`s daily life. As important, in fact, as his daily bread, for the two -- beer and bread -- are as. old as man himself., Beer was a way of life in ancient Egypt, and in China ... in Classical Greece, and in the empire of Rome.

The major Roman contribution to brewing appears to be the Latin verb bibere, meaning "to drink," which is the origin of our word beer."

Until the Middle Ages beer was pretty much of a bland drink, consisting of crushed barley cooked in water, with yeast to convert natural sugars into alcohol. Then one day in Bavaria, some monks made a great step forward. They added the leaves of the hops plant to their brewing kettles. Thus was born the unique flavor we associate with beer today.

As men have restlessly searched for new ways to improve beer, so beer has found new ways to make history. For instance, the famous Pilgrims were actually headed for Virginia, but the log of the Mayflower tells us that the ship developed a shortage of food, and especially beer. To solve this serious problem, the Pilgrims were landed at nearby Plymouth Rock.

LEHRER: The first commercial brewery in the New World was founded in New Amsterdam in 1623. George Washington was noted for his home brew at Mount Vernon, though it`s said he made enough for an army.

MacNEIL: Significant economies of scale can be achieved in brewing, and with the development of refrigerated shipping and pasteurization, local breweries have begun to yield to the aspiring national beers. Thir teen years of Prohibition put an axe to many local beers. Before the ban on drinking there were 1,700 breweries in America. After repeal, in 1933, only 750 survived, and that number soon dwindled to the forty-five breweries today. The East has lost beers like Feigenspan P.O.N., the pride of Newark; and Pickwick Ale from Massachusetts, known as the poor man`s whiskey. Acme, once the largest-selling beer on the West Coast, is no longer available.

Preserving memories of beer and brewing has been a lifetime hobby for Ernie Oest.

ERNIE OEST, Collector of Breweriana: Collectibles cover almost anything in the beer business except the smell. It`s hard to save that. But you have people save the openers. And when beer first came out in cans, they had a description on the beer can of how to open it: hold it firmly on the table; and they had a can opener that looked like a crowbar, and it put a hole in it like a subway tube. Then people save trays. Trays go back a long time, and they`re beautiful. Pet e save coasters, they save signs. There`s regular clubs on brewery advertisements, calendars, labels, the bottles themselves, and lately, cans. Of course those cans are a newcomer in the beer business. They only came out in about 1935. But that is at the present time almost one of the largest hobbies in the United States.

MacNEIL: Ernie Oest says the best beer to drink is the one you like and the one that goes down the smoothest.

OEST: I generally buy the cheapest beer, because I figure every brewery makes a quality product. And I can say I`ve been to.-almost every brewery in the United States. And one thing I can say, I`ve yet to be in a brewery where the fellows who worked there didn`t drink the product. Now, you can`t say that for some other industries.

MacNEIL: Ernie Oest has-sold his tavern in Port Jefferson, New York, where some 3,000 beer bottles and other breweriana are displayed. In retirement he concentrates on his label collection, which he`d like the Guinness Book of World Records-to authenticate as the largest anywhere. I it`s a puzzle to you why anyone would collect beer cans, just ask the nearest kid in your neighborhood. Since 1971 some 20,000 beer can collectors have been organized into national clubs, complete with newsletters. Regional trading shows have gathered a quarter of a million cans in one place, and full- color guide books are on sale at your local bookstore, as is this puzzle.

LEHRER: Too bad for collectors, but recent American taste preferences have not supported a wide variety of local beers or regional styles of brewing. That`s unlike the pattern in the country most associated with quality beer. West Germany not only retains regional differences but also has an amazing number of local breweries, some 1,600, a thousand of which are located in Bavaria. Per capita, the Germans drink more beer than any other nation, with Czechoslovakia, Belgium, Australia and New Zealand in thirsty pursuit. The U.S. doesn`t even make the top ten; it ranks thirteenth. Thus far, Germany, which has had laws protecting the purity of its beer since the sixteenth century, has resisted efforts to create a national beer.

In the U.S. the national beer competition shows Anheuser-Busch in the lead with twenty-three percent of the market, Miller second with fifteen percent, Schlitz third with fourteen percent; Pabst, fourth, has ten percent of the market; and Coors, with eight percent, rounds out the big five brewers.

MacNEIL: A regional beer, and so are the brewers who are fighting hard to stay in the bottom half of the top ten. The regionals have begun to invade each other`s territories, acquire local breweries and labels, appeal to specific markets, and maybe even gobble up each other in an effort to stay in business in a fiercely competitive industry.

Olympia Brewing Company of Seattle, in sixth place with 4.3 percent of the market, moved into the upper Midwest in March 1975 by purchasing and reviving the Hamm`s label.

(Hamm`s advertisement.)

MacNEIL: Then Olympia dipped into Texas in December `76 to buy Lone Star.

(Lone Star advertisement.)

MacNEIL: G. Heileman Brewing Company of LaCrosse, Wisconsin, is in seventh place with 3.9 percent of the market and fast challenging Olympia for sixth. Heileman invaded the Pacific Northwest in March `77 to acquire Ranier of Seattle.

(Ranier advertisement.)

MacNEIL: In 1970 Heileman ranked fifteenth among American brewers, but since then it`s aggressively added several labels to meet its competitors head-on. It was Heileman who fought Miller in court over Miller`s claim to exclusive use of the term "light" for its beer, and Heileman won. In eighth place, Stroh`s of Detroit, the nation`s last large privately owned brewery, has 3.8 percent of the market:"

(Stroh`s advertisement.)

MacNEIL: Without acquiring other breweries or labels, Stroh`s has moved into selective markets in the East. Stroh`s is reportedly making inroads among younger beer drinkers in the greater Washington, D.C. area. Another brewery to, watch is C. Schmidt and Sons of Philadelphia.

Now in eleventh place, with 2.2 percent of the market,` Schmidt has bought the labels of three breweries, including the popular Reingold. Schmidt`s recently proposed merging with the nation`s ninth place brewer, Schaefer.

(Schaefer advertisement.)

MacNEIL: But Schaefer doesn`t love the idea of merger, and thus far has rebuffed Schmidt`s advances. Schaefer has dropped from its fifth place ranking in 1970, but it still retains three percent of the national market. As the regional beers scramble for market share, the last local brewery in Philadelphia cleverly manages to stay alive.

JOE ORTLIEB, Brewmaster: In the beer business, when you bump another brand out of the bar it`s called knocking of a spigot...something I`ve done quite a few times. Of course, I`ve been knocked off, too. But I always go charging back in, ready to take on those big national brewers. And I win more than I lose. Because I`ve got a good glass of beer. Those big guys can knock off my spigots, but they can`t knock off my taste.

ANNOUNCER: Try Joes` beer. Ortlieb`s.

JOE ORTLIEB: We try to advertise our product in such a way that we try to tell the consumer that we`re a local product, made locally, and if you buy this product, it will benefit those people who work alongside you in the area, in the city. And the other way is we try to make our beer a little bit differently than national beers. Most national beers are very bland. Our beer has more material in it, more malt, more hops and it`s a heavier beer, and we think that our particular area likes this type of beer.

MacNEIL: Do you think the government should do anything to protect small brewers to prevent them from being just totally wiped out by the-increasing competition?

ORTLIEB: Well, I would not consider us an endangered species. I think that free enterprise should prevail. I would just like to see that the national brewers confine themselves to the limits of the law. As you know, there are some brewers that are being sanctioned now because of illegal trade practices, and we would hope, as the industry goes on, that this won`t happen any more and we can all compete in a fair marketplace.

MacNEIL: How many small brewers would you say would still be alive ten years from now?

ORTLIEB: Ten years from now -- there are now forty-four breweries, and as I said facetiously, someday I`ll be the tenth largest brewer and this will be by attrition. However, I would say that we`ll probably have a shakeout of ten, maybe fifteen more brewers. But there are enough local brewers around producing a good quality product that I think the consumer will continue to support them.

MacNEIL: Have you tried to make a light beer?

ORTLIEB: Yes; we worked with a food scientist, and the reports that came back, it was really undrinkable. I really wouldn`t try it. We recommend if you would like a light beer you would take our product and pour it over three ice cubes and you`d have the same taste as anybody else`s light beer.

MacNEIL: You`re saying light beer is just watered down heavy beer?

ORTLIEB: I say it and I mean it. It`s the truth, that`s all it is.

LEHRER: Beer is ninety percent water, and light beer is more so, but light beers do have one-third to one-half less the average 150 calories contained in twelve ounces of regular beer. If you`re drinking light beer because you think you can drink more, you`re probably drinking more than you think. But self-deceivers have apparently outnumbered skeptics as light beer sales have soared to ten percent of the market in just three years. The market leader is Miller Lite.

(Miller Lite advertisement.)

LEHRER: Its sales success has meant the resurgence of the Miller Brewing Company.

ANNOUNCER: Light beer from Miller. Everything y always wanted in a beer ... and less.

LEHRER: Miller sold only 5.2 million barrels of beer and ranked seventh nationally in 1970, the year it was bought by Philip Morris. By 1977, with a new infusion of Philip Morris money and its talent honed on TV cigarette advertising, Miller sold 24.2 million barrels of beer, second only to Anheuser-Busch, with 36.6 million barrels.

Much of Miller`s gain has been at the expense of Schlitz. Second to enter the light beer sweepstakes, Schlitz Light has failed to hold on to its entry position. Rumored ripe for a takeover bid, Schlitz has responded by tightening its management team and hiring away Coca-Cola`s top marketing executive. But Schlitz is still recovering from taste problems, underutilized capacity, and an advertising campaign that became known in the trade as "Drink Schlitz or I`ll kill you." The menacing "take away my gusto" commercials have-been pulled, but Schlitz is pugnaciously fighting recent federal grand jury indictments alleging tax fraud and illegal marketing practices.

In contrast, Anheuser-Busch and Miller have handled charges of illegal payoffs quietly, Anheuser-Busch recently paying the Treasury Department $750,000 in an out-of-court settlement. `

BAR CUSTOMER: I`ll have an Anheuser-Busch Natural Light.

BARTENDER: Just say "Natural." Ah. Well, you can call it anything you like. Ha, ha, ha.

LEHRER:. Eight months after it was introduced, Anheuser-Busch`s Natural Light captured second place in the light beer race.

BEER DRINKER: If you can say it in one word, why make a speech?

SINGER: Good taste...

LEHRER: Very recently, Anheuser-Busch has added a second light beer to its family. The popularity of light beer has cut into the sales of Coors, a lighter beer that was never advertised as such. Coors is also suffering from a long-standing union boycott against its beer.

In 1977 Anheuser-Busch surpassed Coors in sales in California, the largest beer-drinking state in the nation. In a total beer market that is expanding at a rate of about four percent a year, Anheuser-Busch has been number one for twenty-one years.

MacNEIL: But is the point that the competitive situation is so intense, as you put it, that there`s great encouragement to put the pressure on to get preferential display or treatment for your beer -- whether it`s legal or illegal -- that there is pressure to do something?

BUSCH: As in any other mass-merchandising effort, in the supermarket with ten or fifteen or twenty thousand items it is very important that you have the proper shelf space and the proper display position. But I`m going to clarify something. I don`t think there`s any question there`s pressure; there has been, there is now and there will always be pressure in the supermarket.

But what has happened with the Bureau of Alcohol and Tax and Firearms and their wish for the industry to clean up and with the publicity that has been in almost every newspaper across the country in the past two or three years, I think that the industry is in a much better position today. Still competitive, very competitive. But I think the industry is in a better position today as far as their practices than they have been since the repeal of prohibition.

MacNEIL: What about the tendency for the big five brewers to take over more and more of the market? We read that by 1980 eighty percent of the beer sold in the United States will be by the big five brewers. Does that mean, from the consumer`s point of view, that he`s going to lose brewers who brew a distinctive, particular taste and he`s going to end up with nothing but a kind of homogenized, national equal taste.

BUSCH: We don`t think so. Let me-give you a .case in point. In the past: four or five years, Anheuser-Busch has come, out with three different brands of beer in our line. Our major .competition has come out with four or five different brands of beer, each different in taste, each different in the advertising message to the consumer about the brand. I think competition will always be there; whether there are three or four or five brewers, or whether there are a hundred, the four or five are going to be producing a multitude of brands. They will be different tastes, and they will be pitched towards different consumer segments.

MacNEIL: Ed McMahon and the Clydesdales can`t do it all, so they`re joined by Lou Rawls.

(Budweiser advertisements featuring Ed McMahon and Lou Rawls.)

MacNEIL: And Budweiser enters the Indianapolis 500. And an ad campaign is aimed at the neglected home market, where ten million six-packs are consumed nightly. Television advertising cost each of the three major brewers between $32 and $33 million last year, and the price of competition is going up.

And the search for new products is on. Anheuser-Busch is considering making a fruit-type drink with about one percent alcohol, and Philip Morris is buying control of Seven-Up, which until recently had connections with Anheuser-Busch.

When Miller introduced Lowenbrau to compete with Michelob, AnheuserBusch complained to the Federal Trade Commission that Miller was misleading the public...

(Lowenbrau advertisement.)

MacNEIL: ... by making them think they were getting an imported beer, when in fact fowenbrau is now brewed by Miller in the United States. Lowenbrau is what brewers call an image beer, as is Michelob -- itself often mistaken for an import.

LEHRER: The real imported beers account for less than two percent of the American beer market, but in our largest cities, where some restaurants now have beer menus, imported beers are making an impact. Several of the most popular are imported nationally by Paul Lohmeyer, a former marketing executive for local,` regional and national brewers. His importing firm is headquartered in Roslyn Heights, New York. Per. Lohmeyer, is the real attraction of imported beer image?

PAUL LOHMEYER: I don`t think so. It might have been, thirty years ago; but today many stores -- Hawaii, California, New York -- you can find more imported beers on the shelves than you can domestic beers.

LEHRER: Why, what is the attraction?

LOHMEYER: Well, people are traveling, and they`ve discovered the taste and the quality of these beers, and they want to buy them when they get back home. They`re telling their friends, and other beer drinkers are trying to find them.

LEHRER: Can people really tell the difference in taste?

LOHMEYER: Oh, yes, they can. There`s a small minority of people that have a problem tasting; that`s a physical thing. But the majority of people really can taste beer.

LEHRER: You keep reading these stories all the time that some national magazine will do, they`ll set down all these beers and have people drink them and they can`t tell Schlitz from Budweiser from Lowenbrau from what ever.

LOHMEYER: Well, you`ll have to qualify the brands and qualify the tasters and test a little bit more scientifically. People can pick out beer. The brewers do it all the time in terms of taste-testing; we do, too.

LEHRER: What about the psychological or -- to be more blunt about it -- the snob appeal of ordering or buying foreign, imported beer? Do you think that`s a factor?

LOHMEYER: I think it has been a factor, but as I say, that`s gone a long time ago, because imported beers have been growing at more than a twenty percent rate annually for years and years, and if it were only snob appeal you wouldn`t have the number of successes that you have.

LEHRER: What effect is the growth and popularity of imported beer having on domestic beer, if any?

LOHMEYER: Oh, not very much. The imports are not a threat to the domestic market. They`re a small percentage, they`re special; they`re showing the domestic beers, I think, something about the taste preferences of the American public. People are looking for flavor and quality.

LEHRER: All right, thank you. Robin?

MacNEIL: Thanks, Mr. Lohmeyer. Good night, Jim. That`s all for tonight. We`ll be back tomorrow night. I`m Robert MacNeil. Good night.