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Forever Yuengling: America's oldest brewery is building one of America's newest breweries, right in its hometown of Pottsville, PA.

The D.G. Yuengling & Son Brewing Co. is planning to build a new million-barrel brewery in Pottsville, PA. Given the current industry environment, conventional wisdom might say this is not the best time to build a big new brewery. But conventional wisdom would not have foreseen D.G. Yuengling booming along at capacity 170 years after its founding. So let's just dispense with conventional wisdom - brewery president Dick Yuengling certainly has. "Most people think we must be nuts to be doing this, given the excess capacity in the industry," Dick says. "But we were founded in Pottsville, Pennsylvania, and people think Pottsville when they think Yuengling. So we'll be staying here, but we need more capacity. Our wholesalers know our brands stick and sell, and demand is increasing. We want to be able to give our wholesalers the beer they need. That's why we are building a new brewery. We're not trying to be number one, or two or three. We just want to be a strong, quality regional brewer."

The new Yuengling brewery will be in Pottsville, not too far from the company's original 1831 brewery, a warren of brick buildings perched on a hillside overlooking the town. When Dick Yuengling's great-great grandfather built the place (after his first brewery, built in 1829, had burned down) the hillside offered a perfect place to dig tunnels to serve as aging rooms in the days before refrigeration.

Dick Yuengling is not terribly sentimental about all this history. As we go through the packaging department, we walk past the brewery's enormous investment in modern bottling, labeling and pasteurizing machinery. The great machines are humming along, packaging thousands of bottles of Yuengling beer, and then we stop by a large 19th century time-clock. "We take tours through here every day and they never say anything about all this machinery," he says. "All they ever say is 'Wow, look at that great old clock'."

This is but one of the small frustrations in trying to run a modern brewery within the confines of a registered historic place. Fifty thousand people a year take the Yuengling tour, and it's easy to see why. The brewery is dense with history, and even with all its modern machinery, it's like a working embodiment of American brewing history.

Most of the central structure of the brewery was built in the 1870s and 1880s. Old machinery stands beside new, and on the upper floors there is still a speaking tube used to warn the workers on the loading dock that kegs would be rolling their way. "It was an absolute riot," Dick says. "a guy would yell through the speaking tube, and the kegs would roll down the conveyors right into the trucks."

Until 1964, there was still a 19th century steam-driven ice machine on the premises. "That thing was enormous," Dick recalls. "People used to come just to watch it work. It was quite an attraction. There was even a guy that filmed a movie of it."

Walk past the kegging line, and you find yourself in the first gallery of the tunnels that once housed the aging cellars. The first galleries are lighted, and used for storing damaged kegs, but beyond that the tunnels recede into darkness. Wooden aging vessels used to line these galleries, and deep in the tunnels there is a large wooden cistern once used to collect mountain spring water for use in brewing. Nowadays, the brewery uses city water, but the spring water still streams down the hewn stone walls.

In those days, Yuengling beers were top-fermented and aged in large wooden vessels, a practice that endured well into this century. "We used to top ferment our ales and porters in wooden tanks," Dick says, "but in the 1960s we changed our system. We switched the yeast to bottom fermenting, and it worked out fine. There was no taste or character change."

One of the grand old wooden fermenters still stands in place, a mute testimonial to an era gone by. It is now used to hold the brewery's spent yeast prior to its sale to farmers.

Newer equipment shares the floor with the obsolescent, partly because the cramped quarters don't allow removal of older equipment. "I've got a 1952 bottle washer here that I'd like to get rid of," Dick says, "but how the hell am I going to get it out of here? But we've got a 1952 walking beam pasteurizer that works just fine. And we've got a 40-spout can filler that does about 520 cans a minute, installed in 1991. We added a Krones labeler two or three years ago, and that's been very nice. But we had to knock a hole in the wall to get it in here, and get permission from the church next door to bring a crane in. Everything is so jammed in - this place was built to do 150,000-200,000 barrels, and we're doing over 300,000. We have to replace equipment, but we can't shut down to do it."

A Family Business

After 170 years, the business is still family-held. Dick started working in the brewery in 1958 at the age of 15. In those days, many of Pennsylvania's regional breweries were still brewing, although their numbers were dwindling, "Pennsylvania and Wisconsin always had the largest concentration of small breweries," Dick says, "every town had its own. But my parents didn't thin there was a future in it, and they wanted me to go to school and stay out of the business. We were doing 75,000 barrels in those days, and just barely hanging on."

Other breweries in the area didn't hang on - companies like Columbia, Mt. Carbon, Reading, Sunshine and Neuweiler. "Through the '60s breweries were shutting down pretty regularly," Dick recalls. "We'd go around and scavenge their equipment. We picked up a some good packers and conveyors in the 1960s. It was a shame to see those breweries go, but of course we were struggling too. We just kept hanging in, first for one more year, and then another, and another. More than a few times we just made our payroll."

According to Dick, the unique distribution system in Pennsylvania was a big factor in the company's survival. "Direct case sales though retail-distributors kept us going," he says. "It gave us a chance at keeping the national brands on a even playing field. They couldn't just come in and drop prices like they did in other states. The 16-oz. returnable was also a big package in this state, and the big guys didn't want to bother with it. That package kept a lot of small breweries alive."

After Dick's grandfather died in 1963, Dick's father and his uncle took over the brewery. Dick left to run a beer distributorship in the early 1970s, but came back in 1985, when his father became ill. "I had done production and shipping," Dick recalls, "so I knew the business. I sold the distributorship and came back. I felt that as America's oldest brewery, we stood a chance. I knew we made good beer, and I thought we could make it."

So Dick found himself back in the fight, eking out survival for his small family brewery in a business ever more dominated by the large national players. But a funny thing happened - it turned out that Dick's hunch was right. Yuengling did brew good beer, and the company could make it. In the late 1980s, Dick noticed an upturn in Yuengling's business, perhaps stimulated by the nascent specialty beer segment.

With the production end anchored by veteran brewmaster N. Ray Norbert, Dick decided to bring the sales and marketing up to speed, starting by hiring David Casinelli in 1990. Casinelli had worked for All Brand Importers for more than 8 years, playing ball with the big boys. He and Dick began to bring a modern business sensibility to the sleepy brewery in Pottsville. "We always had good products," Dick says, "but I brought David in because he's an aggressive sales manager. He pushed us to upgrade the packaging, create quality point-of-sale, and generally make us more marketable. I was resistant to him about the packaging changes for a couple of years, but he was right - it had a very positive effect on sales. He really upscaled it for us, and he also put us in touch with quality wholesalers."

The company began to fine-tune its portfolio as well. In addition to its basic Yuengling Lager, Pottsville Porter and Chesterfield Ale, the company added a Black & Tan, amber lager and light beer. "When we added the new lager, we didn't just throw it into the marketplace," Dick says. "We just kept working at it, and now it's a real success story. We also came out with a light beer - a good one - and that's coming along nicely too. David has done a wonderful job of marketing our products, and creating interest with quality wholesalers. Our beer isn't sold at discount - people buy the beer because they like it."

Casinelli also helped Dick rationalize distribution, which had become somewhat scattershot. Yuengling brands were sold in New Jersey, Virginia, Delaware, Massachusetts, Maine, Rhode Island, Connecticut and New Hampshire.

"We were throwing it out to see where it would stick," Dick says, "and in some places, the brands were really starting to take off. But David started pulling us back, focusing on our core markets. Now we're down to three states, but there is still demand in some of those other markets, and when we get the capacity, we'll go back."

Retrenchment is a familiar strategy for regional brewers in today's market, but for Yuengling it was a strategy borne of success, not failure. Demand for the brewery's beer has steadily risen over the past ten years, with Yuengling reporting sales of 473,021 barrels in 1996, and 376,384 barrels in 1997. "This thing started to take off in 1988-1990," Dick says. "We started to grow, and so we started to add on. We put in new fermenting cellars, we bought tanks, and we continued to expand. And it didn't level off. We added 50,000 barrels of capacity, but by the time we were done, we needed 70,000. We've been operating at capacity for years, and we still can't make enough to supply consumers."

For that reason, Dick Yuengling has committed to build his new million-barrel-plus brewery. The footers for the new brewery have already been poured at a site in Pottsville. Dick looked at purchasing an existing plant elsewhere, but instead opted to keep the company in its hometown. Given the current capacity constraints at the old brewery, Yuengling has been producing 10% of its volume under contract at Stroh. "We were resistant about going to Allentown, but when our amber lager started to have dramatic sales increases, we had no choice. Stroh did a very good job with it, and got a great flavor match."

Most of Yuengling's beer is sold within a 100-mile radius, and the company has built up incredible consumer loyalty in its home region. "If a retail-distributor doesn't have our beer, people will sometimes just walk out," Dick says, "and that drives distributors insane. Being at capacity, we sometimes run out of product, and that's been going on for a long time. So you have a retailer that is putting Yuengling on draft, and now they are being penalized for supporting us. The growth we've had is attributable to our wholesaler network, and they have to believe we'll get this done. We will build this new brewery."

This year, even with production going overtime, and with contract production at Stroh, demand is still outpacing supply. "The add-ons we've been able to do haven't been adequate," Dick says. "our wholesalers want to see something dramatic, and they are enthused about the new brewery."

For Dick, the plan to build a new brewery is purely a practical one. Yuengling needs more capacity, and he wants it to be in Pottsville. The existing brewery is a historic structure, and is now surrounded by a mixed commercial and residential neighborhood. That rules out further expansion onsite. Besides that, the cramped 19th century interior of the brewery and the twisting, precipitous access drives make getting high volumes of beer out of the brewery a challenge.

Once the new brewery is built, it will take the pressure off the old plant, although Dick plans to keep the senior brewery running, as both tourist attraction and production facility. "When we get the new brewery, we'll run this place at 150,000-160,000 barrels," he says. "we'll get our draught production out of here, and put a nice keg]me into the new brewery."

The frugality learned in keeping the old D.G. Yuengling brewery running will be employed in building the new Yuengling. For example, Dick doesn't plan on large outlays for new equipment. "I hired a director of operations to build the new place for us," Dick says. "and I've got confidence that he will put together a first class brewery at a substantial saving. We'll be installing a lot of used equipment. There's a lot of it around, and it works just fine."

According to Dick, beer should be coming out of the new brewery by summer 2000, and will allow Yuengling to renew its regional expansion, this time with the capacity to fill the orders.

"The business is changing," Dick says. "About 90% of our business is in Pennsylvania, but as we expand outside the state the chains will become important for us. There is demand in other states that didn't exist even a few years ago. In Delaware, for example, we're doing a phenomenal business. As we move outside Pennsylvania, we'll be looking for wholesalers who know how to sell products like ours, and are willing to help support them. We won't be looking for volume-driven guys, but we'll need wholesalers that want to help build a brand."

Once the new brewery is built, Dick hopes it will be a family affair. "Several years ago, I told my four daughters that I was 52 years old and the company was growing, and we had to do something dramatic. I told them 'if I spend the money to expand, one or all of you will have to be involved with this company'."

And so they are. Dick's eldest daughter, 27-year-old Jennifer, is now working in the packaging area. And 24-year-old Debbie is studying for an accounting degree, so that she can work in the office (Two other daughters are still in college). So, with a new brewery a building and the brands booming along, a new generation of the family is stepping up; ready to help keep the 170-year-old brewing company forever Yuengling.
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Title Annotation:D.G. Yuengling & Son Brewing Co
Author:Reid, Peter V.K.
Publication:Modern Brewery Age
Article Type:Cover Story
Date:Jan 18, 1999
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