Hello everyone,
The late Russ Cleary comes to mind as I looked at the fuss over the rebranding of Diet Coke.
This week the beverage giant announced new packaging and flavors in an effort to jumpstart a brand that has grown tired over the years.
The goal is to attract the ever elusive millennials who are drinking a lot of La Croix these days.
So what does Russ Cleary have to do with this tale?
Cleary was one of the last beer barons and headed G. Heileman Brewing Co. in La Crosse, a Mississippi River town in western Wisconsin.
Cleary was one of the sharpest businesspeople I ever encountered in my reporting career. Only Sam Calagione of Milton, DE’s Dogfish Head comes to mind in rivaling Cleary’s ability to thrive in a hyper-competitive environment.
The hard-driving Cleary, a lawyer by profession, married the brewery owner’s daughter and went on to build Heileman into the nation’s fourth-largest brewer with annual revenues of more than $3 billion.
Cleary took great pride in making Anheuser-Busch and Miller also-rans in Chicago as dozens of truckloads of the company’s flagship Old Style brand made their way to the Windy City each day.
Under Cleary, Heileman paid bargain prices for breweries and brands that included Baltimore’s National Bohemian and Schmidt’s in Philadelphia, not to be confused with Schmidt’s of St. Paul, also a part of Heileman.
In some ways, Calagione and Cleary could have hardly been more different.
Calagione’s goal is to brew off-centered beer that stayed out of the mainstream. Cleary wanted to build the nation’s third-largest brewer, while Calagione has resisted building a second brewery somewhere else in the country.
Still, Cleary and Calagione both recognized the dangers of the beer business and worked to diversify their companies.
Heileman owned bakeries, a snack food maker and a company and a company that made parts for the aerospace industry.
Dogfish also diversified into restaurants and even runs an inn in Lewes. Dogfish has also taken pains to not be one trick pony, thanks to an assortment of mainstay and short-run brews, as well as a growing distilled beverage business.
The House of Heileman did share Dogfish’s ability to sniff out market trends.
At one point, Heileman’s talented marketing crew and Cleary took notice of the rise of Perrier sparkling water and introduced La Croix.
Cleary said at the time the name was derived from his hometown of La Crosse.
Others said it was based on a river of the same name up north.
Still, most of Heileman’s energies were focused on making the breweries profitable by using excess capacity to churn out budget brands like Blatz and some regional favorites. ‘
The company had no national brand, other than Baltimore’s Colt 45 malt liquor. Word has it that the brew was named after a Baltimore Colts player and not the gun.
Cleary came close to his goal, but the antitrust folks shot down his plan to acquire Milwaukee’s Schlitz and its breweries around the country.
The short-sighted move by the feds paved the way for Anheuser-Busch and Miller to control the industry. Decades later, AB was taken down by a foreign company.
Rivals took a page from Cleary’s playbook and began brewing their own low-priced brands to keep their plants running flat out.
As sales stalled, Heileman stock went into play with Australian Alan Bond buying the company for $1.3 billion and making many La Crosse-area residents into millionaires.
Bond failed miserably with his debt-laden plan, and Cleary later stepped in under new owners in an attempt to revive the company.
The owner of Pabst and Stroh’s bought Heileman and its assorted brews. Breweries in Baltimore and elsewhere were closed or sold.
The La Crosse site, rechristened as City Brewery, perks along with its own brands and contract brewing of craft and other beers. It also owns the former Rolling Rock brewery in Pennsylvania.
Cleary went on to manage family investments and passed away at the age of 63.
Along the way, La Croix got lost in the sell-off of Heileman and was acquired by a low-profile company that quietly built the brand, with all sorts of flavors that rarely impress, but sell well.
La Croix sales are now believed to be in the neighborhood of those of the original House of Heileman.
The growth continues to defy conventional wisdom, coming without boatloads of advertising dollars. La Croix also has its share of critics who can’t figure out why people are buying the stuff.
Coca-Cola and Pepsi, both of which moved into the bottled water world, are also puzzled and are probably kicking themselves for not picking up the brand as efforts continue to capture some of La Croix’s magic.
One has to think that Russ Cleary would have enjoyed the spectacle of seeing one of his brands keeping management of a couple of beverage giants up at night. – Doug Rainey.
(This is an expanded version of the original column)
