Latrobe Brewing Company

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Latrobe Brewing Company

119 Jefferson Street
Latrobe, Pennsylvania 15650
U.S.A.
Telephone: (724) 537-5545
Toll Free: (800) 245-7892
Fax: (724) 537-4035
Website: http://www.rollingrock.com

Wholly Owned Subsidiary of Labatt U.S.A.
Incorporated: 1933
Employees: 250
Sales: $132.8 million (2001)
NAIC: 312120 Breweries

Latrobe Brewing Company brews Rolling Rock beer, one of the leading brands in the United States. Founded as a regional brewer with a strong following in Pennsylvania, Latrobe Brewing distributes its beer coast-to-coast, touting its glass-lined tanks and the distinctive long-neck, green bottles of Rolling Rock beer. The company is controlled by Labatt U.S.A., which in turn is 70 percent owned by Interbrew S.A.

Origins

The original facility used by Latrobe Brewing began operating in 1893, erected in the town from which the brewery drew its name, Latrobe, Pennsylvania. A small community situated at the foothills of the Allegheny Mountains, Latrobe was reputedly inhabited by an enclave of Benedictine monks, who, according to local legend, were the first brewers at the facility. The brewery remained in operation until 1920, when the promulgation of the 18th Amendment prohibited the production and sale of alcohol in the United States. The death knell sounded by Prohibition severed the tie connecting residents of the Laurel Highlands in southwestern Pennsylvania with the Latrobe Brewing name, suddenly ending the first chapter of the brewery’s history.

The region, along with the rest of the nation, waited 13 years for beer-making to gain legitimacy from the federal government. Anticipating the end of Prohibition, the Tito family—brothers Frank, Robert, Ralph, and Anthony—purchased the Latrobe Brewing Company, betting the Roosevelt Administration would repeal the 18th Amendment. The gamble paid off, putting the Tito family and Latrobe Brewing in business by 1933. Initially, the brothers brewed two beers, Latrobe Old German and Latrobe Pilsner, but the brand that would become synonymous with the Latrobe Brewing name was not introduced until six years later. In 1939, Rolling Rock Beer was introduced, its name reportedly adopted as a tribute to the smooth-pebbled streams from which the beer was made.

Rolling Rock became the Tito family’s signature beer, serving as the financial mainstay for Latrobe Brewing in the decades to follow. Although the Tito brothers consistently invested in improving the brewery’s production processes and its capacity, they never seriously attempted to promote Rolling Rock as a national brand. The Tito family, in fact, never developed a genuine marketing department to support the sale of Rolling Rock, relying instead on the most basic of sales promotions. Well into the 1980s, Latrobe Brewing’s sales force restricted its efforts to buying rounds of beers in neighborhood taverns.

Waning Sales in the 1970s and Recovery in the 1980s

Despite the company’s less than ambitious promotional efforts, Rolling Rock developed a loyal following in southwestern Pennsylvania and gained an established presence in several markets in the northeastern United States. By 1974, Latrobe Brewing was producing 720,000 barrels of Rolling Rock a year, a record high recorded on the 35th anniversary of the brand’s inception. Unfortunately for the Tito family, the production total reached in 1974 represented Latrobe Brewing’s peak year. In the years to follow, production totals declined alarmingly as the Tito family fell victim to the more aggressive, more ambitious marketing efforts displayed by other brewers.

Not long after Latrobe Brewing registered its record production total, the dynamics of the brewing industry began to change. Major brewers began hiring packaged goods experts who transformed the business of selling beer into a battle de cided by sophisticated marketing programs. The Titos, historically reluctant to engage in anything more than minimal promotional efforts, refused to follow the industrywide trend. They chose to remain focused on production rather than adopt a marketing orientation, and the sale of Rolling Rock suffered. By 1985, after labor disputes erupted into two strikes, production volume had dropped to 450,000 barrels, the nadir reached after the peak of 750,000 barrels in 1974. The plummet in production prompted the Tito family to sell the business, ending its more than half-century association with Latrobe Brewing.

In 1985, Sundor Group acquired Latrobe Brewing. A leveraged buyout firm based in Darien, Connecticut, Sundor Group intended to reverse the fortunes of Latrobe Brewing and then sell the brewery for a profit, its aim, according to the June 20, 1994 issue of Brandweek, to effect a “quick turnaround play.” The company initiated several marketing programs, greatly expanded Latrobe Brewing’s distribution network, and replaced much of the brewery’s sales force, but the results were not in the best long-term interest of the ailing brewery. When Sundor Group acquired Latrobe Brewing, the leveraged buyout company had recently purchased several juice products companies, its original business. The acquisitions had saddled the company with debt, leaving it in a weak financial position to engineer Rolling Rock’s transformation into a national brand. Sundor Group lacked sufficient financial muscle to support such an expansion, critics contended, and was forced to greatly reduce capital spending, something the Tito family had always refused to do. Accordingly, Rolling Rock’s market exposure was increased, but at the expense of quality. When Sundor Group sold Latrobe Brewing in 1987, it accomplished its primary objective by making what analysts described as a sizable profit. Latrobe Brewing, however, enjoyed little benefit from its two-year relationship with the leveraged buyout firm.

In 1987, Latrobe Brewing was acquired by Labatt U.S.A. Executives assigned to spearhead the revival of the Rolling Rock brand inherited a product that had changed very little since the early years of the Tito family’s ownership, particularly the bottle used to package Rolling Rock beer. Featuring a distinctive painted-label green bottle and a horsehead-and-steeplechase icon, Rolling Rock stood out among the ranks of bottled beers occupying retail shelves. A slogan painted on the bottle referred to mountain springs and the glass-lined tanks of Old Latrobe, followed by a cryptic “33” imprinted beneath. One of the brand managers employed by Labatt U.S.A., John Chappell, decided the distinctive package was Rolling Rock’s strongest asset, prompting him to center marketing efforts on the unique look of the brand. Through marketing research, Chappell discovered the “33” imprinted on the long-neck bottles was capable of cultivating near cultlike interest. The Rolling Rock slogan contained 33 words, but, as Chappell discovered, Rolling Rock customers demonstrated an avid interest in imagining their own theories to explain the derivation of the mysterious 33.

Chappell decided to use Rolling Rock’s heritage as the basis for marketing the brand. In 1987, he wrote a position statement for Rolling Rock that set the tone for the brand’s marketing programs. As quoted in the June 20, 1994 issue of Brandweek, Chappell’s statement read: “A natural, high-quality beer with an easy, genuine charm that comes from the Rolling Rock name and the traditional, small-town Latrobe Brewery that uses the mountain spring water in special green bottles.” Using this statement, which, according to Chappell, contained 33 words only by accident, Labatt U.S.A. began restorative work on the troubled brand, leveraging its quaint heritage to bring Rolling Rock to a national audience.

While Labatt U.S.A. experimented with national television advertising, sweepstakes, and merchandise programs, it also supported Latrobe Brewing in other ways. The experienced sales force and entrenched distribution network that were hallmarks of the Labatt organization provided significant support during Rolling Rock’s rapid recovery during the late 1980s. Capital spending was increased as well, enabling Latrobe Brewing to recover from the lean budget years of Sundor Group’s ownership.

Growth in the 1990s

By the beginning of the 1990s, Latrobe Brewing ranked as the eighth largest brewer in the United States, its vitality buoyed by the efforts of its parent company. Rolling Rock was recording encouraging growth, increasing its sales at a ten percent annual rate. The robust growth rate signaled the company’s recovery from its low point in 1985, when production languished at 450,000 barrels. As the 1990s began, Latrobe Brewing, with the capability to produce 800,000 barrels annually, was producing 726,000 barrels per year, eclipsing its previous record of 720,000 barrels in 1974. Perhaps most promising, the growth had been achieved as the retail price of Rolling Rock increased, a feat heralded by industry observers. In the June 20, 1994 issue of Brandweek, the publisher of Beer Marketer’s Insights remarked: “It’s the first example of a sliding regional brand that turned it around and at the same time increased its price.” Having avoided discounted prices as a means to increase volume, executives at Labatt U.S.A. and Latrobe Brewing were growing increasingly confident of Rolling Rock’s potential as a national brand. Their confidence was demonstrated by a period of aggressive expansion that stretched more than half a decade.

Company Perspectives:

The Rolling Rock pledge. Printed on the back of every bottle is the embodiment of our purpose. A 33 word mission statement, if you will. In it, some Rolling Rock fans find hints of Keats, Shakespeare, and even great greeting cards. Other fans, of course, simply find the inspiration needed to drink another Rolling Rock. Truly words to live by, regardless of your SAT score.

During the first half of the 1990s, Latrobe Brewing began to expand its production capabilities in earnest. In 1991, a sales agreement to purchase brewing equipment was signed with G. Heileman Brewing Co., the nation’s fifth largest brewing company. The acquisition agreement represented part of Latrobe Brewing’s plan to increase production capacity by more than one-third. The new equipment, coupled with the company’s internal expansion, was expected to increase Latrobe Brewing’s production capacity to 1.1 million barrels, a level the company hoped to reach by 1994. Projected growth expectations soon ran higher, however, as the company embarked on the most ambitious expansion program in its history. A three-phase, $26 million expansion project was begun, with the goal of reaching a capacity of two million barrels per year. The second phase of the project was completed in May 1994, one year ahead of schedule, lifting the brewery’s capacity to 1.5 million barrels. Meanwhile, Latrobe Brewing was registering record production totals, confirming the need for additional capacity. In 1993, a milestone was reached when the company surpassed the one-million-barrel mark, fueling expectations for further growth as the decade progressed.

Against the backdrop of physical expansion, Latrobe Brewing began to augment its brand line. In an era when most brewers relied on a family of brands, Latrobe Brewing depended almost entirely on a single brand. Aside from Rolling Rock, the company could count on only one other brand extension, Rolling Rock Light, which accounted for a mere 4 percent of the company’s sales volume, far below the 30 percent average contributed by light beers in the industry. In 1991, the company began to develop an additional Rolling Rock variety, which debuted in the Northeast, Chicago, and Denver markets in September 1993. Described by the company as a “smooth, deep amber lager” in the August 16, 1993 issue of Modern Brewery Age, Rolling Rock Bock was priced 30 percent more than the flagship Rolling Rock brand. Provided it fared well in test markets, Rolling Rock Bock was scheduled for national distribution in 1994, the same year the company planned to introduce Rolling Rock Ice.

During the latter half of the 1990s, Latrobe Brewing directed its energies in many of the same areas that occupied its attention during the first half of the decade. The company devoted itself to product line extensions and physical expansion as it recast its image. After a dip in performance, Latrobe Brewing moved away from presenting itself as an unassuming brewer with a quaint and charming heritage. The philosophical, low-key nar ration of Latrobe Brewing’s small-town values—the essence of its marketing efforts—was replaced with rockumentary-style television commercials that projected the company as a supporter of contemporary music. The alteration invigorated sales during the late 1990s, ensuring that celebrations for the 60th anniversary of Rolling Rock were not undermined by sliding sales. As Rolling Rock began to demonstrate its resilience again, the size of Latrobe Brewing’s portfolio of brands was expanded. In 1997, Latrobe Brewing introduced a line of three European-style craft beers, Latrobe Bavarian Black, Latrobe Bohemian Pilsner, and American Pale Ale.

As Latrobe Brewing entered the 21st century, it did so from a position of strength. The company was praised for its success in recasting its image during the late 1990s. Brandweek, while noting that the company had “reinvented” the brand for the second time in its history, hailed the success in its November 13, 2000 issue, declaring that the feat represented “an almost unprecedented accomplishment not just in brewing but in any market segment.” Spurred by this success, Latrobe Brewing prepared for further growth. In 2000, the company announced its intention to double production capacity by spending $14.5 million on a new packaging line, which was expected to reduce beer-processing costs by 20 percent. Based on the consistent success recorded under the tutelage of Labatt U.S.A., Latrobe Brewing promised to enjoy further success as the decade progressed and the 70th anniversary of the Rolling Rock brand approached.