Taps for a Beer.

This once dominant beer market leader was built to grow until their decisions destroyed that growth and position.

There’s a great little italian restaurant chain in the Phoenix area called Oregano's Pizza Bistro. The food is classic Chicago-style Italian and the décor is fascinating, with old beer ads on the walls and embedded in the tabletops.

On a recent visit, I photographed the below Schlitz ad in our tabletop. Advertising from that era is fun to read because the copy, imagery, and promises are so different from today’s.

It made me wonder what happened to Schlitz. 

As a former beer can collector, I remember the brand well. I even briefly thought it was a St. Louis beer before quickly recalling it was “The Beer that Made Milwaukee Famous."

But what I didn’t remember was its growth story.

In the 1950s, Schlitz battled Budweiser for the top spot in U.S. brewing and held that spot for several years before Bud took over in 1957 and stayed there for decades. But Schlitz continued to hold its own. 

Old Schlitz ad embedded in a restaurant table as part of the decor.

Both had built nationally recognized brands and reached the top of the industry. But their futures would turn out quite different. 

In the early 1970s, Schlitz expanded aggressively. It shortened its brewing process and switched to cheaper ingredients while Budweiser stayed the course with its successful strategy. 

On paper, Schlitz looked great: more capacity, better efficiency, stronger margins. The changes appeared to be working. But behind the financials, the foundation of the brand was cracking.

By the mid-1970s, Schlitz's quality and consistency had slipped, and an additive problem led to a major recall. 

In 1977, Schlitz dropped its beloved “Go for the Gusto” positioning for a campaign so menacing that people nicknamed it “Drink Schlitz or I’ll kill you.” The company also came under federal scrutiny for alleged illegal payments to retailers.

Customer trust was eroding quickly. In just six years, Schlitz fell from America’s No. 2 brewer to an also-ran. It closed its Milwaukee brewery after a strike in 1981, and Stroh acquired the company in 1982. 

A formidable national competitor and over 100 year old brand had lost both its standing and its independence but still survived. Barely.

Pabst acquired it in 1999 and attempted a revival in 2008 with a restored version of the classic formula. But Schlitz never regained its prominence and became largely a nostalgia brand. 

This past May, Pabst stopped Schlitz production. One report also pointed to volumes falling below the minimum required by its contract brewer. That brewer? Ironically, Anheuser-Busch.

The most revealing part of this story is how promising Schlitz's business looked even while decisions it was making were weakening the product and customer relationships.

That’s the inherent danger of the non-financial side of organizational growth structure. Growth risk often hides in and between sales, marketing, brand, and culture, and can go unnoticed long after it becomes reality and starts constraining growth.

Budweiser and Schlitz are the classic distinction between a company that stays built to grow and one that was built to grow but made decisions which eroded that organizational structure.

That’s why investors and leaders must constantly assess and measure their company's key growth drivers to determine whether each one is stable, stronger, or weaker and if these drivers and the leadership team are aligned on future growth strategy.

For Schlitz, brand equity was rapidly weakening. And though its leadership may have been aligned, it was aligned around a bad strategy. 

The key question for every investor and business leader is "Are the decisions producing today’s results strengthening tomorrow’s growth, or borrowing from it?"

Is your company built to grow today? The Breakout Quality of Growth Index and Report is the guide to help you answer that question. 

Tap into a complimentary report.