Morry Gash  /  AP
Miller brewery worker Steve Greene looks over cans as they go by on the line at Miller Brewing Company earlier this month.Miller Brewing Co., the Milwaukee brewer that gave the world light beer, celebrates its 150th birthday next month.
updated 7/31/2005 7:27:23 PM ET 2005-07-31T23:27:23

Miller Brewing Co., the Milwaukee brewer that gave the world light beer, celebrates its 150th birthday next month.

The party for the nation’s second-largest and oldest major brewer caps a history of turmoil that continues today.

The brewer survived Prohibition, a plane crash that killed the company president in 1954, and then grew under the skills of master marketers at Philip Morris Inc. after being bought in 1970.

Now, three years after being taken over by South African Breweries plc, the company again faces a turning point, with global consolidation increasing as it battles against market leader Anheuser-Busch Cos. of St. Louis, which commands half the American market.

Miller, with a roughly 18.5 percent share, faces stagnant industry volumes, fickle consumers — who increasingly choose wine, cocktails and spirits — and a price war with a rival that has deep pockets and seemingly endless resources.

Starting in late 2003, the company now called SABMiller plc, took aim at the market leader with ads that promoted Miller Lite, in a campaign that reversed a 15-year sales decline last year and caused Anheuser-Busch to give up market share for the first time in nearly three decades.

“We had to find a way to take A-B on. And we’ve succeeded in that,” said Norman Adami, a former SAB executive who became Miller president in February 2003. “For the first time in 20 years A-B is reacting to Miller Brewing Co.

“Now our challenge is to translate that success from Miller Lite and re-establish our other core brands in our portfolio.”

From the beginning, Miller has been the underdog.

When Frederick J. Miller bought a defunct brewery in 1855 on a plank road on the western outskirts of Milwaukee, the city was already full of German immigrants and there were many established local breweries.

What turned Miller into a regional and then national player was a combination of good genes, hard work, luck, and a commitment to quality, historians say.

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In 1903, the company unveiled High Life, called “The Champagne of Bottle Beer.” The image appealed to a rising American leisure class and sales soared, even at a premium price.

“That’s just textbook American marketing,” said John Gurda, author of “Miller Time,” a company history published by the brewer. “They were getting more for their beer than just about anybody else in the country. That was a real coup, a kind of masterstroke, and it put them on the map.”

Through Prohibition, Miller survived like other brewers, drastically cutting back and selling beer derivatives such as malt syrup and no-alcohol drinks.

After Prohibition’s repeal, Miller expanded quickly, even through the rationing of World War II. Tied houses — taverns supplied by single brewers — were outlawed and the fight between brewers for brand recognition heated up.

Frederick C. Miller, the founder’s grandson, became president in 1947, and his optimism infected the growing city. But he died suddenly with his son Fred Jr. in a plane crash in December 1954.

Without its charismatic leader, a family feud split the business into two ownership halves, both of which were ultimately sold to Philip Morris Inc. from 1969 to 1970.

The tobacco giant was eager to diversify and poured millions into advertising and expanding Miller’s capacity.

In new ad campaigns, High Life went from the champagne bucket to the lunch bucket and “Miller Time” was dubbed a time after work for the common man to enjoy a beer.

Sales surged, but the beer that really catapulted Miller to No. 2 was Miller Lite.

The brewer launched the low-calorie beer nationwide in 1975, smoothing over its potential image problem as a diet beer by saying it “tastes great” and was “less filling.” Burly former athletes like Bubba Smith and Dick Butkus and celebrities such as Rodney Dangerfield touted the brand.

Lite revolutionized beer advertising, said Benj Steinman, publisher of Beer Marketer’s Insights. “It’s really about using modern marketing techniques for the beer industry and raised the bar for all brewers in the mid-70s.”

Lite took Miller from seventh in the nation in 1970 to second in 1977 behind Anheuser-Busch. Other brewers responded, especially Anheuser-Busch with its heavily advertised Bud Light in 1981, which eventually overtook Lite in 1994. Despite the proliferation of new brands, light beer became the biggest domestic beer category in 1992.

Over the last two decades, Miller stagnated due to lackluster ad campaigns, while Anheuser-Busch grew, leveraging its hefty capacity and profits to set prices and overwhelm its competitors with ads.

While the relative positions of the big brewers have not changed much recently, industry growth has slowed. Total U.S. shipments fell 1.5 percent from a year ago to 47.5 million barrels in the first quarter, with Anheuser-Busch and Miller both dropping 2.7 percent, according to Beer Marketer’s Insights.

Adami said the challenge remains how to make beer drinking relevant to U.S. consumers who face an array of choices: Imports such as Corona, cocktails like Red Bull and vodka and malternatives like Smirnoff Ice and Mike’s Hard Lemonade are increasingly popular with the young drinkers brewers want. Miller has brought in imports Peroni and Pilsner Urquell from the SAB portfolio to help it compete.

Over the last 18 months, Miller has attempted to make its ad dollars work harder by pairing TV spots with some 4 million theme-related blind taste tests at bars around the country, pitting Miller Lite against Bud Light and Miller Genuine Draft against Budweiser.

The company also focused less on blanket TV ad coverage and more on sponsorship of events that hit their target audience, like the World Series of Poker this month.

“Consumer demographics are changing radically, consumption habits are changing dramatically, the old television model is no longer the same as it was before,” Adami said. “We’ll develop a marketing model that’s relevant to the new emerging situation and environment. That’s what we’re obsessing about in this business. For the next 10 years, that’s what we’re going to be working on.”

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