Yuengling brewery adapts through the generations

Richard "Dick" Yuengling, fifth-generation owner-operator of the Pottsville-based D.G. Yuengling & Son Inc., says he wasn't raised to expect he'd end up on Forbes' list of billionaires-on-paper. Or that he would control what the Brewers Association calls the fourth-largest beer-maker in America, after Anheuser-Busch, MillerCoors, and Pabst.

"I was told, when I was 19 or 20, that the brewery would fail and I should go somewhere else," said Yuengling, 73, smiling, at last week's conclave of the St. Joseph's University Initiative for Family Business and Entrepreneurship, which has become a premier forum.

So many Pennsylvania manufacturing families have sold and shut, leaving neighborhoods desolate. Instead, Yuengling modernized, plugging his old family brand just as Americans were seeking new beers beyond the familiar factory brands. Now he says he's intent on giving the next two generations of his family a larger legacy.

In Dick's telling, he got ahead by applying the old virtues of thrift, attention to detail, and personal sales relationships. And he brought in four daughters to build on the company's legacy.

Dick marketed Yuengling as both new and historic: regional brews from "America's oldest brewery," founded in 1829. Just as beer tastes were becoming more adventurous, he bet the company on new facilities, boosting sales 2,000 percent, to 2.7 million barrels a year.

He told the St. Joe's crowd how he split from his dad at age 30, when the older man wouldn't update the brewery as fast as he urged. He bought a beer distributorship, identified the best of the competing reps who pushed Pabst and Rolling Rock to college kids, then bought the Pottsville works and brand from his late father's estate at age 41, "when nobody else in the family wanted it."

Using Pennsylvania's state-protected, decentralized network of local beer distributors to his advantage, Yuengling fought bigger brewers for shelf and bar-tap space. He wrestled government agencies over wastewater disposal, paying millions in fines and upgrades. He even persuaded workers to dissolve their Teamsters union.

Despite the early warnings, Dick said, he had faith from an early age: "We had a good brewmaster, good products, and I was never afraid to work and put the hours in."

In 1988, he persuaded a Pittsburgh distributor to take on Yuengling lager and Black & Tan half-porter.

It was Yuengling's moment. In the mid-1990s, "he came to all of us and said, 'We're really oversold. We can't meet the demand for our products. Are any of you interested in coming back to work in the family business?' " recalls daughter Jennifer.

She packed off to a beer-making course in Chicago, came home to Pottsville to immerse herself, from fermentation to invoicing, and has run operations since.

Wendy took a longer road, more like Dick's own. After outside jobs in marketing and advertising, she joined the company in 2004 as outside sales rep. She now oversees HR, IT, and finance, and stays close to sales and marketing. "We're a very small company. Anyone who is part of a family business, you wear all hats, and touch everything."

By 1998 the firm was "totally sold out in the little brewery in Pottsville," Dick said. Family adviser Bill Jones cobbled together lenders to finance a second Schuylkill County brewery, adding a few hundred thousand barrels a year.

Then the family that controlled Stroh's started putting its dozen U.S. breweries up for sale. Dick made an offer for the 1.5 million-barrel Tampa, Fla., plant, not Stroh's largest, but manageable, and strategically placed. He drew on the modest financing committed to the new Pennsylvania plant to update Tampa.

"The bank found out through the newspaper that we had purchased [another] brewery. That phone call was not pleasant," Jones recalled, laughing.

At the St. Joe's forum, Meghan Juday, fourth-generation owner of the electrical-supply toolmaker Ideal Industries, and Joe Procacci, the Philadelphia Tomato King, whose family controls thousands of acres of U.S. and Mexican farm production, asked how and when to bring the young folks into the business.

"The conversations should be starting around the teenage years," Jennifer said. Dick said his way was to "kind of wing it," but his daughters say they are talking to professionals about helping the kids discern whether and when to join.

Jones said it's important to make shares available early to younger family members, and recapitalize the business "while the value is still doing well."

Her sex was an asset early on, Wendy said: "When you are trying to sell beer to retailers, you can get a lot accomplished as a female." Now, in operations, "you go in and do your job every day without regard to being a female or a male."

Dick says the federal government should do more to keep Big Beer from strangling smaller-brand distribution - and worries federal environmental rules boost operating costs. He complains how hard it is to find reliable young workers, and about inheritance taxes that persuade some families to liquidate.

Be bold, Wendy advised. "As far as fear of risks or failure, you have to know you're going to be pushing yourself outside your comfort zone just about every week. You can't be afraid of failing. Because you won't know unless you try it."

But stick to businesses you know; heirs who fancy themselves real estate developers tend to lose big, Jones said.

Won't the Yuenglings finally sell, when the investment bankers lay enough hundred-million-dollar bills on their desks?

"It wouldn't be fair to the previous generations" to sell "frivolously," said Jennifer. "Our name is on the label. That's what we come to work every day for."

"Everything isn't about money," said her father. "Our game is all about longevity."

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