For the 42 Shiner beer employees Friday afternoon is a time to reap what they have sown. At one o'clock the plant shuts down and everyone from sales manager L. J. "Speedy" Beal to brewmaster Johnny Hybner mix with tourists and Shinerites to enjoy kegs of cold beer in the hospitality room of the nation's third smallest brewery.
And with the expected sale of the Pearl brewery in San Antonio, Shiner will become the last surviving independent brewery in the booming billion-dollar Texas beer industry. That, says Beal, is worth drinking to.
"We've been here a long time, and I feel like were going to survive the crunch," said Beal, whose Czech ancesters were among the first to work at the brewery when it began in 1909. "I was at a conference a year ago and it was mentioned that by 1980 there were going to be only 10 brewery compaines in the nation. I came back and told Mr. Ladshaw, our president, and he said 'Really, Shiner and who else?"
Ironically, it is Shiner, the smallest of Texas' seven breweries that worries the least about the heavyweight competition in the nation's third largest beer producing state. The annual Shiner production of 42,000 barrels is so low that Beal admits some of the larger breweries "don't know we exist."
But for the other regional breweries in Texas, specifically Lone Star and pearl "being a gem among giants" in the words of one Pearl official, has not been enough. Last year Lone Star stockholers voted to sell out to the nation's sixth largest beer producer, Olympia Beer of Seattle. And it is no secret among brewmasters here that Pabst of Milwaukee and Pearl are now at the negotiating table.
Pearl and Lone Star are the casualties of what is becoming an increasingly hot battlefield in the beer industry - Texas. Last year over 10 million barrles of beer were sold in Texas and generated a record $100 million in state taxes. The average Texan now drinks 26.3 gallons of beer annually, and sales this year will topple 11 million barrels.
With the exception of Pabst, all of the nation's top four beer manufacturers have breweries serving Texas, and number five, Coors, which plunged statewide into the Texas market in 1976, has gone all out to take the number one sales spot away from Schlitz.
Last year with Anheuser-Busch suffering from a three-month strike, Schlitz sold over 3 million barrels of beer in Texas while Coors followed closely with sales of 2.7 million barrels. Combined with number 3 Anheuser-Busch, the top three companies comprise well over 70 per cent of the beer market.
"We've been seeing this coming for the past 10 years," said Jess Yaryan, regional director in Texas for the National Association of Brewers in America (NABA) "The trend is for fewer and bigger breweries, especially in a state that's growing like Texas. The small, regional beers just can't compete."
The trend goes beyong Texas. The NABA in Washington reports that in 1960 the United States had 171 different beer companies with 229 breweries. Today 41 companies survive with 88 breweries.
In Texas beer drinkers have seen labels like Mitchell, Blue Bonnet, Grand Prize and Southern Select pass with the times, for years top selling beer in Texas was Falstaff, which held the number one selling spot from 1951 well into the 1960s, when local beers accounted for at least 90 per cent of the market.
But in 1965 Schlitz built a brewery in Long View and Anheuser-Busch followed suit in Houston. Miller bought out the failing Carling brewery in Ft. Worth and Premium beer became available at local prices. The picture began to change. By 1974 Schlitz and Budweiser were the top two sellers in Texas and Miller was closing in fast.
"I just think that beer companies realized back then that Texas was one of the places to be," said Mike Hopkins, president of the Wholesale Beer Distributors of Texas, a trade association that represents about 400 wholesalers. "It's a good beer state, and it's getting better."
Texas' rise in the beer industry is not coincidental with its sharp increase in population. Since 1970 Texastion increase, making it the third fastest growing state in the country. Also the 18-year-old drinking law was passed in 1973, and beer companies estimate that the teenagers account for almost 30 per cent of their sales. The warm climate is also enticing to beer companies, as well as some lenient state laws that permit drinking beer in public or while driving a car.
The low state excise tax, $5 per barrel, is certainly easier on the companies than neighboring Oklahoma, which charges $10 a barrel. Some states even go much higher, such as South Carolina with $23.80 a barrel.
Retailers enjoy the fact that Texas is a "cash state" and that bigger wholesalers can't buy on credit, thus no clear advantage is given for buying in quantity. The state legislature allows only four different containers to be marketed, and with Texas being one of the largest aluminum manufacturers in the country, materials are cheaper and easily attained.
With such an excellent breeding ground for the beer giants, the state legislature has taken steps to protect the smaller companies. In 1971 it passed the Shiner beer law, which gives any brewery producing less than 60,000 barrels a year a 25 per cent tax break on the state excise tax. And in 1976 President Fort signed a similar bill, which reduced the small breweries federal excise tax from $9 to $7. It was all very helpful, and said the small breweries, but it didn't help where they were hurting the most: the advertising budget.
"It wasn't until the mid-60s that the big national breweries really started investing in advertising, and we started to feel the crunch," said bOb Marsh, public relations director for Pearl Texas' oldest brewery. "If Schlitz spends $2 million a year on advertising then we've got to do the same just keep up with them. But our stockholders and corporate directors make the decisions and nobody feels confident enough with the success of a regional brewery to say 'Hey, let's spend $10 million on advertising.'"
Barry Sullivan, vice president of marketing for Lone Star, feels "almsot hopeless" in the face of the national brands' advertising abilities.
"Television is a beer, and if you're big in America today you can't get by without using it," said Sullivan. "It's tough for us to compete when Schlitz brings you Monday Night Football, Miller brings you the Olympics, and Budwerser brings you the rest. Our advertising budget compared to their's is a drop in the bucket."
According to "Advertising Age" last year Schlitz spent an estimated $34 million on promotion while Miller and Anheuser-Busch spent $29 million and $28 million respectively. Although Coors spent only $2 million in 1976 the Golden, Colo., based company has already announced a $13 million advertising project this year, $4 million of which, says a company spokesman, will find its way into Texas.
In contrast to those big budgets, last year Pearl spent $384,000 while Lone Star spent closer to $500,000.
Despite their sellout to Olympia, Lone Star remains a healthy beer in Texas, finishing fourth in sales last year. The company is most closely identified with the Texas country music youth culture using progressive country singers like Jerry Jeff Walker, Willy Nelson, and Waylon Jennings to support their image.
"In 1973 90 per cent of the youth in Texas thought we were so square that they wouldn't be caught dead with a Lone Star in front of them," said Sullivan, whose office is lined with Lone Star beer posters and bumper stickers. "Now we're more representative of the contemporary, hip western lifestyle. We've got the blue jean denim image but without the hard work."
In addition, Lone Star has made the "long neck" bottle (the company has a state patent on the name long neck), as much a part of Texas folklore as the jackalope. Now a strong 60 per cent of its business is in a returnable bottle, and in 1975 in Austin (home of the University of Texas) sales jumped a whopping 47 per cent.
But if Lone Star has benefited from its new, useful image, Pearl has suffered for not having any clear image at all.
"During the years we wer no. 1 in Texas I think our image was clearly the working man's beer," said Marsh. "Lately we have gone after the youth market and also tried to retain our older image. In the process we faded a bit."
However, the sale of Pearl Lite with only 70 calories has been very successful according to Marsh quadrupling the sales. Last year the owners, Southdown, Inc., announced that the brewery was for sale despite a year of profits and a number six finish in state sales.
Marsh, a dapper Englishman who frequently speaks of "the mother country," laments the disappearance of the regional breweries. Regional breweries are needed, Marsh said, because they have personality and participate in community events like trail rides, rattlesnake rodeos, concerts, and picnics. With the domination of the big breweries much of this small friendliness is lost, he added.
The light taste of beer has increased the sales of one brewery tremendously. The Miller Brewing Company is reportedly to make a big jump in the Texas ratings according to NABA, and will be battling it out with the other top three brands.
And now even Shiner is thinking of introducing a light beer - a substantial change from what the early 1900 German and Czech people were drinking in Texas.
"There are some things the big breweries do that we've got to copy," said Speedy Beal. "Even if we do sell just in a hundred mile radius."