By Emmett O’Connell
Between the mid 1970s and the early 1980s, the Schmidt family tried to keep up with a changing national beer market. But, in the end, national and international changes in the industry forced the family to sell the company that in many ways was the heart of our community.
Paul Knight, who was the brewmaster in Tumwater during the company’s most turbulent and interesting years, recently gave a presentation on his years with the Olympia Brewing Company.
Knight was attending college in the early 1960s when he started working part-time for Olympia Brewring. He eventually worked his way into a full time job in production. The company sent him and his family off to Chicago to brewmaster school.
Two years later, in 1972, Knight graduated, returned to Olympia and was promoted to assistant brewmaster. In 1974, Knight was promoted to brewmaster of the entire operation. The taste and quality of all Olympia products were his domain.
“I was amazed by the correlation by what we were doing in the 1970s and what the original brewmasters were doing in the 1800s,” Knight said. “We were making very much the same beer as they made in 1896.”
Knight debunks at least one telling of why the local ownership of Olympia Brewing came to an end. Some blame a mixup between marketing and the brewmaster.
The brewery’s advertising agency, Kelley Advertising and Marketing, describes an effort in the early 1980s by Olympia to come up with a new brand identity. This campaign was the famous “Artesians” series of ads, featuring imaginary creatures involved in the beer making process.
But, the campaign failed, said the writer at Kelley Advertising and Marketing, because the brewmaster went in a different direction.
“Unbeknownst to the product managers, the brewmasters had, at the same time, reformulated the beer to a richer, more ‘European’ taste,” reads the article. “They did a great job. This newly-formulated beer was a clear winner in double-blind taste tests against all the major American beers. The result was disaster.”
Absolutely not true, said Knight. “We never changed the formula,” Knight said. Of course, small changes would be made every year depending on the crop available to them. But, these changes were to ensure consisency of the product. This was also the era when Olympia began rolling out various other products, but the primary Olympia lager that everyone is familiar with never changed.
“Each growing season is different, you have to make changes here and there,” Knight said. “But, the beer stayed the same.”
The true factor leading to the Schmidt family’s sale, in the early 80s, where market forces dating back to the ban on tobacco advertising on television in 1971. Phillip Morris, one of the largest tobacco purveyors, decided to diversify a few years before the ban and bought Miller in 1969.
The Miller sale sounded off like a shot to the once traditional and staid brewing industry. “Budweiser met the challenge,” Knight said. “The two companies started buying up every market in the U.S., rolling over smaller breweries.”
While it might seem like the tobacco giants were buying beer companies, what they were really buying was geography. The quickest way to break into new beer markets was to buy existing beer companies, gaining loyal beer buyers and their preferences, along with beer distribution arrangements.
A few years later, the Schmidt family reacted by buying Hamms (1974) and then later Lone Star (1977). “Olympia was a little late getting into the game,” Knight said.
“They had to get bigger or get a lot smaller,” Knight said. “Each time Olympia bought a new brand, it would give them a boost.” Olympia’s attempt to appeal to the drinkers in the newly acquired territories included the Artesians campaign.
But, in trying to keep up in a race of quickly nationalizing brands, the Schmidts eventually ran out of family talent and stock. In 1983 Paul Kalmanovitz (who owned Pabst and had also bought other Washington brands like Lucky Lager) bought Olympia Brewing Company.
“It was quite a disappointment when the company was sold,” said Knight. “But, it was understood by the people who knew what was going on.”
While the Schmidt family had always been in a controlling position in the company, they didn’t actually have a controlling stock share of Olympia Brewing in the early 1980s. The earliest public sale of Olympia stock was in the 1890s, and there was at least one other one in the 1930s to finance the modern brewery facility.
“(The Schmidt family) ran out of talent and people for the breweries,” said Knight. “But, in the interest of all the stockholders, the family knew that it was a good thing to sell.” Knight noted that a good portion of those stockholders were brewery employees.
It is ironic that Miller, the brand that kicked off the forces that eventually overwhelmed the Schmidt family, also ended brewering in Tumwater. In 1999, control of the Tumwater facility passed from Pabst to Miller (still owned by the larger Phillip Morris). Just a few years later, in the contiuing game of global brand trading, Miller was sold South African Breweries. The Tumwater plant was the smallest in the new Miller organization, which already had a sizable production facility in California.
Knight had been retired for six years by the time the brewery closed for good in 2003. It has sat empty since then. “I hope they put something in there soon that will get people down there,” Knight said. “It still is a very important part of our community.”
References and Additional Reading:
Forbes: Philip Morris Says No To Beer
Kelley Advertising and Marketing: A Good Campaign Accelerates the Death of a Brand