America's Oldest Brewery Wants Low-Key Expansion - POTTSVILLE

POTTSVILLE, Pa. (AP) -- Anheuser-Busch visited Pottsville. Miller did too. They climbed D.G. Yuengling and Sons' mountainside brewery,...

POTTSVILLE, Pa. (AP) -- Anheuser-Busch visited Pottsville. Miller did too.
They climbed D.G. Yuengling and Sons' mountainside brewery, America's oldest. They tasted the old porters, the newfangled lagers and the popular black and tans. And then they offered to buy the whole place.

Fifth-generation owner Dick Yuengling politely declined.

Expansion lies ahead for the 167-year-old regional beer company. But, Yuengling vows, he'll do it in the family, just as his forebears did through a civil war, Prohibition and the advent of national beer-makers.

"Somebody kept this place alive for 167 years, and I respect that," he said. "We haven't been in the business this long to sell out to anybody."

Considering the antiquated facilities and steep roads, Yuengling thought a big buyer would have no choice but to take the recipes, dump the brewery and leave behind gritty Pottsville, 74 miles northwest of Philadelphia.

And that he couldn't stomach, especially during the company's most successful decade.

Sales have tripled since 1990 even as the company slashed its distribution area. It expects to sell almost 400,000 barrels this year, plus an additional 50,000 barrels of black and tan brewed at the nearby Stroh's.

The production translates into 145.8 million 12-ounce beers and $25 million in annual sales.

Yuengling can thank the craft brewers for introducing more drinkers to bitters and ales, dark stouts and porters. In 1991, 248 micro brews and brew pubs made just 850,000 barrels. Four years later, more than 1,000 craft brewers produced 3.8 million barrels.

To expand, Yuengling needs to surmount a large problem: The old brewery can't produce more beer.

That's why Yuengling approached Bud and Miller about brewing, bottling and distributing his six brands. That's why he contracted with Stroh's and may try to do more. And that's why he has considered building a new plant outside Pottsville.

"Our biggest problem here is that we're landlocked," said Yuengling, eyeing the hillside buildings tucked between a neighborhood and downtown Pottsville.

Even if he found outside land, he's not sure adding a new plant is the best way to cash in on a phenomenon that could quickly disappear.

"We need another brewery now," he said. "We can't wait two years. The boom is here now."

However he decides to expand, Yuengling has plenty of models to follow.

Pete's Wicked Co. sells in nearly every state by contracting with other breweries. Boston Beer Co. produces its Samuel Adams brands with equipment it doesn't own. San Francisco's Anchor Steam Brewing Co. and Sierra Nevada Brewing Co. of Chico, Calif., took the other route by expanding their own facilities to meet nationwide demand.

"There's a risk whenever you add a brewery," said Jerry Steinman, publisher of Beer Marketer's Insights. But contracting has its own downsides, including a loss of control and inconsistent batches of beer.

Even if the brewery expands, Yuengling faces another problem: earning a national stature and finding good wholesalers to push the beer.

Yuengling worries his beer would be just another regional brew entering beer cases crowded with new inventions from the big brewers and countless micro brews sporting trendy names such as Abita Turbo Dog and Rhino Chasers.

"There's not a lot of folklore about Yuengling in California," said Jeff Becker, spokesman for The Beer Institute. "But that's not to say there was a lot of folklore about Sam Adams in California before they came."

Yuengling also has one example not to follow: his own.

When he bought the company from his father in 1985, Yuengling faced stagnant sales in the traditional markets -- eastern Pennsylvania, New Jersey and Delaware. He began shipping beer north to battle the micro breweries of Boston and south into North Carolina's college towns.

Then the tiny brewer started running dry at home.

Local distributors couldn't get enough. With one brew house and storage for just 130,000 barrels annually, Yuengling couldn't even send employees home with a few bottles on hot summer days.

In 1990, the brewery reduced its distribution area.

"We had spigots in New York City," Yuengling said. "To pull out of that -- people thought we were nuts. We just didn't want to lose our home markets."

The pullback, Yuengling hopes, was temporary.

"I have all the confidence in the world that our beers would be accepted," he said. "But whatever we do, we want to do it right. We want to do it properly. We want to do it long term."



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