American Breweriana Journal November/December 2005
The Rise and Fall of Schmidt's of Philadelphia
by Rich Wagner
The Rise
Christian Schmidt was born in Machstadt, Wurtemberg in 1833. As a youth he became a brewer's apprentice in Stuttgart before sailing for America at the age of eighteen. After working in Philadelphia breweries for eight years he became brewmaster at Robert Courtenay's brewery (PA 396) in the city's Kensington section. Kensington was an early manufacturing suburb of the city and home to dozens of small breweries. Courtenay produced about 500 barrels of ale and porter a year, mostly for the corner saloon adjacent to the brewery. In 1860, Schmidt acquired an interest in the company and three years later he became the sole owner, changing the name to Christian Schmidt's Kensington Brewery.
Thus began his continuing effort to expand and improve the business. He started by building a new brewery which increased production ten-fold. It contained a coal-fired steam boiler which heated a 120-barrel wooden kettle and supplied power for grinding malt and pumping beer. His brewery employed forty-five men.
In 1870 Christian Schmidt added a 50,000 bushel malt house across the street which included an underground 4,000-barrel storage cellar connected to the brewery with pipes. By the end of the decade, Schmidt's was the only brewery in Kensington producing over 10,000 barrels. However there were over eighty breweries in Philadelphia, and Schmidt's 14,000-barrel production amounted to only 2% of the city's total.
A new brewery and ice house were constructed in 1880 for the production of lager beer. The malt house was doubled to accommodate the increase. From 1883 through 1914 Otto C. Wolf, the city's pre-eminent brewery architect and engineer, executed no fewer than twenty-five projects at Schmidt's. One early innovation was the installation of a water heater that utilized exhaust steam to boil and purify brewing water. Before the end of the decade Schmidt's had the capacity to produce 50,000 barrels.
When sons Edward A., Henry C. and Frederick W. were admitted in 1892, the firm became known as Christian Schmidt and Sons. Christian Schmidt's prominence extended far beyond his own brewery. He was a member of the Board of Trustees of the Philadelphia Lager Beer Brewers Association, a Director of the Northwestern National Bank (also known as the "Brewers' Bank") and was involved in the formation of the Pennsylvania Brewers Association. He was also Treasurer of the Canstatter-Volkfest-Verein and a Director of one of the city's fire insurance companies. But at the age of 61, while on his fourth visit to the Wildbad resort in Germany, it was reported in The Western Brewer that he was "stricken with apoplexy." He made it home but died shortly after his arrival on September 6, 1894.
His eldest son, Edward A. Schmidt, became head of the firm. As a practical brewer, he was a tireless innovator and continued expanding the business so that by 1896 Schmidt's had the capacity to produce 100,000 barrels. He was married to Emma Poth, daughter of Frederick Poth, a wealthy brewer from Brewerytown. The Schmidt and Poth families became involved in real estate development in West Philadelphia. Edward A. Schmidt became President of the United States Brewers Association, Treasurer of the Pennsylvania Brewers Association, President of the Philadelphia Lager Beer Brewers Association, President of the Northwestern National Bank, and Director of the Peerless Bottle-Filling Machine Corporation. Henry C. Schmidt was sales manager until his death in 1919.
In 1896 Schmidt's purchased the Robert Smith Ale brewery (PA 534) which dated back to 1774 and was famous for its Tiger Head Ale. It had just moved into a new 50,000 barrel plant about three miles up Girard Avenue at 38th Street, across the Schuylkill River from Brewerytown. Ten years later the company purchased the Schemm brewery (PA 452), another old firm dating to the mid-1800s. Located about a mile away at 25th and Poplar Streets, it was also a 50,000-barrel-a-year plant which had been built twenty years earlier.
The firm was incorporated as C. Schmidt & Sons Brewing Company in 1902. Otto Wolf's last project for the brewery was a brand new brew house and power plant completed in 1914. It was the last major expansion before prohibition, making it a 200,000-barrel plant capable of producing a tenth of the city's beer.Prohibition and Repeal
When prohibition arrived in 1920, two generations of meticulous planning, growth, and innovation all seemed to be for naught. Schmidt's began marketing Puritan Special and Green Label cereal beverages, and despite one raid in 1925 where agents found tanks containing 20,000 barrels of high-powered beer along with 400 barrels and 7,000 cases ready for shipment, the company stayed clear of the law.
The Peter Schemm branch had already been closed in 1918 due to war rationing, and when prohibition arrived the company shut down its Robert Smith Ale brewery as well. When South Philadelphia's Continental Brewing Company (PA 582) closed, John Gardiner, son of the founder, who was married to Christian Schmidt's daughter Caroline, came on board at Schmidt's and brought in his company's trade.
As president of the United States Brewers Association, Edward A. Schmidt lobbied lawmakers and worked tirelessly to repeal prohibition. As head of the Pennsylvania State Brewers Association, he wrote extensively and published a book of "facts and fallacies" on the dry law, providing figures enumerating the economic benefits of the brewing industry.
April 7, 1933 marked the beginning of repeal and Schmidt's was ready to hit the market with over 4,000 barrels of "3.2 beer." Edward A. Schmidt was quoted as saying, "This is a wonderful thing the President has done, I've always been a Republican, but I'm for Roosevelt now. We have a large stock of beer on hand ready to serve as soon as it becomes legal; in full barrels, half barrels and quarter barrels. We haven't given much thought to price yet, but certainly our idea is to be able to supply a nickel glass of beer," adding that Schmidt's was capable of producing 3,000 barrels a day to meet the anticipated demand.
On the eve of repeal, Mr. John Gardiner exclaimed, "The general depression has been here for three years, but our depression has lasted thirteen years." At 12:02 A.M. when Edward A. Schmidt opened the gate to the shipping room, a cheer went up from the "wet" crowd who, ironically, had just been drenched by a sudden cloudburst. They rushed onto the loading platform and pushed their way past police guards. They swarmed through the office and into the brewery where 500 half-barrels were stored. They walked over the barrels clamoring for beer and engulfed the first truck waiting to be loaded. Police had to close the doors, ease the crowd out of the brewery and clear the loading platform so that the parade of 157 trucks could begin making their deliveries. It was estimated by one brewery official that about 35,000 cases left on the first run.
The Rise Continues
A year following repeal there were fourteen breweries in Philadelphia. With annual production of 500,000 barrels, Schmidt's emerged as the state's largest brewer producing a third of the city's beer. In 1940 the company published a book illustrating its 1930s expansion programs. Modern Brewery Age published a story entitled "Pioneer in Modernization, Schmidt of Philadelphia." The company was the twentieth largest brewery in the nation with a canning line and four bottling lines. Schmidt's pioneered the quart can and bottle as well as the six-pack package and remained the city's top selling brand. Part of the building program involved the construction of an "ideal tavern" used to educate licensees on proper beer handling and tavern management.
Edward A. Schmidt continued to lead the company until his death in 1944. Frederick W. Schmidt, the last remaining son of Christian, became president for one year before becoming chairman of the board. In 1945 Christian H. Zoller, son of Christian Schmidt's daughter Anna, became president and was responsible for the biggest sales expansion in the company's history.
From 1947 through 1950 postwar expansion increased capacity to over 1,000,000 barrels per year. In the mid-1950s, the brewery purchased the Adam Scheidt Brewing Company (PA 349), a modernized 400,000 barrel-a-year plant twenty miles up the Schuylkill River from Philadelphia in Norristown. The company was well-known for its Prior ("imported quality at domestic prices"), Rams Head Ale and Valley Forge Beer brands. Schmidt's became the nation's twelfth largest brewer, producing just under 2,000,000 barrels in 1955.
In 1958, Carl von Czoernig, 40, grandson of Edward A. Schmidt, became the company's fifth president and one of the industry's youngest brewery executives. His ambitious intention was to increase sales by 30% in three years. A practical brewer, von Czoernig by no means ignored the technical side of the business, but his emphasis was on improving methods of distribution and solidifying relationships within the trade which extended to fourteen states.Schmidt's innovations now extended to modern marketing techniques. Von Czoernig introduced a new management-marketing team and hired a public relations firm which launched the "Full taste beer for the one man in four" campaign. The labels were redesigned and a unified packaging design developed to present a modern image.
Nineteen-sixty marked the brewery's centennial year which was celebrated in fine style. A Modern Brewery Age cover story proclaimed that Schmidt's had more of its own original custom-made equipment than any other brewery in the country. Chief Engineer Richard Slama was responsible for most of these innovations, none the least of which were five "circular pasteurizers" he designed, manufactured, and improved upon, which could be squeezed into the bottle house where there was no room for a traditional tunnel pasteurizer.
Two years later, Schmidt's entered the Cleveland market and in 1964 purchased Schaefer's (OH 142) plant there to produce beer for Buffalo, Erie, and Pittsburgh and open up potential for Ohio and West Virginia. Schmidt's became the first Pennsylvania brewery to produce 2,000,000 barrels and the first in the nation to use computers for production, planning and inventory control. The same year it launched the "Schmidt's, One Beautiful Beer" campaign. In 1965 the company inaugurated a $3.5 million building program involving all three plants.
In 1971 Schmidt's moved into Cleveland's Carling brewery (OH 108) and closed the old Schaefer plant. In an effort to capture even more of the market, Schmidt's acquired the labels of Pittsburgh's Duquesne Brewing Company, Cleveland's third largest selling brand. That year Schmidt's purchased the Pepsi-Cola Bottling Company in Wilkes-Barre, Pennsylvania, and continued to operate it as a wholly-owned subsidiary.
The Fall
The "Beer Wars" raged on and Schmidt's lost money for the first time in 1974. The following year they closed the Norristown plant, laid off 62 truck drivers, and stockholders approved a $16 million sale to Heileman. But the brewery happened to get some great press over a "How Good is Coors?" taste test featured in the The Philadelphia Inquirer's Today Magazine, where Schmidt’s came out on top. Schmidt's immediately capitalized on the publicity and created an ad campaign around the fact that most people preferred Schmidt's over Coors at a time when Coors had developed quite a mystique on the east coast where it was unavailable. The resulting blip in sales caused the stockholders to briefly take down the "for sale" sign.
However, in 1976 when it looked like the brewery was ready to close, a local beer distributor named William H. Pflaumer, also known as Billy, or "the beer baron," put together a deal and purchased Schmidt's for $15.9 million. Pflaumer grew up tough in Kensington and had started a beer distributorship with one truck, $7,000 and a 3,000 square foot warehouse back in 1961. In the ensuing years he purchased thirty beer distributorships, making him the largest in the state, owned a trucking company, and was Schmidt's largest hauler.
Pflaumer adopted the strategy of purchasing the brands of troubled regional brewers to gain market share. He started with the Old Reading brands which added 200,000 barrels to production, giving Schmidt's a 13% rise in sales for the year. The following year, he acquired Rheingold's brands, including the Knickerbocker label, which added 800,000 barrels, bringing production to 3.5 million barrels and making Schmidt's the eleventh largest brewer in the nation. The same year Schmidt's dedicated a brand new $7.5 million packaging plant, despite the fact that the brewery was running at only 75% of its capacity.
In 1978 Pflaumer made a bid to purchase 29% of Schaefer stock. Schaefer was then the tenth largest brewer in the country and had just built a new plant in Fogelsville, Pennsylvania. The deal wound up in court. Schaefer impugned Pflaumer's integrity by saying his previous brushes with the law would jeopardize their licensing in New York and New Jersey. Two years later the judge ruled Pflaumer's bid to be a violation of anti-trust laws and made him pay Schaefer's legal fees which amounted to nearly half a million dollars.
Schmidt's acquired the Erie Brewing Company's brands, then Ortlieb's. The company signed a $10 million contract to ship 2 million cases (120,000 barrels) of beer to Taiwan. But it was a losing battle.
In the early 1970s "popular priced" beer produced by the nation's regional brewers accounted for 60% of sales. By 1979 the demographics had reversed and the top five "national brands" had a 70% market share. The top ten brewers were selling 98% of the nation's beer. Schmidt's was running at 60% of its capacity while A-B was at 90-95%. In 1983 A-B and Miller sold half the beer in Philadelphia while Schmidt's and four other regionals each had a 5% share of the market. With industry trends showing the biggest gains in "premium" beers, Schmidt's rolled out its Select and Classic brands and invested $2 million advertising them. Pflaumer's unsolicited offer to buy the ailing Pabst Brewing Company for $131 million baffled industry experts. Pabst was a national brand, four times larger than Schmidt's and operated five plants around the country. Pflaumer's plan was to become the nation's third largest brewer in an effort to survive.
Unfortunately William Pflaumer was involved in an elaborate scheme to avoid paying $125,000 in federal excise taxes on fuel purchased for his trucking company in three states. He was convicted of tax evasion and appealed his case for two years, but in March of 1986 he was fined $25,000 and began a three-year sentence at federal prison in Lexington, Kentucky. He was permitted only one fifteen-minute phone call per day which restricted his ability to run the brewery. Advertising had been virtually eliminated and production dropped to 1.85 million barrels, just half of 1983's output.
In April of 1987, Pflaumer was furloughed from prison to negotiate a deal with Heileman which bought the brands and moved production to their Baltimore plant. A few years later they combined the Minnesota Schmidt and Philadelphia Schmidt's brands into one label with a composite "look."
On June 1 the remaining 250 to 300 workers (down from 1,400 in 1983) were out of a job. The following year Pflaumer was released from prison after serving twenty months, and he began the huge task of dismantling the "Dowager of Girard Avenue." The all too familiar site of holes being poked into walls for tank removal began and continued for several years. Equipment was bought up for pennies on the dollar and ended up in other breweries or in the scrap yard.
The property was sold to a real estate developer named Bart Blatstein, who proposed a variety of projects. The site was even considered for the city's new baseball stadium. In late 2001 demolition began in earnest and brick by brick a mountain of rubble replaced what had been Pennsylvania's premier brewery. The debris has been trucked away leaving the site vacant, awaiting its next inhabitant.
Three Generations of Brewmasters at Schmidt’s
A sense of tradition was always important for Schmidt's brewery and its workforce, which included three generations of brewmasters.
Like Christian Schmidt, William Hipp came to America from Germany at the age of 18 in 1879. He worked in breweries in Philadelphia for four years, then spent nine years working in breweries around the country. He returned to Philadelphia in 1892 to become brewmaster at Schmidt's. He was president of the Philadelphia Brewmasters' Association for over a decade and was honored in 1917 for 25 years of distinguished service and recognized for his contribution in making Schmidt's one of the city's leading breweries with production of a quarter million barrels.
Perhaps the "profile" offered in the November 1947 issue of The Case, Schmidt's house organ, best describes how William Hipp passed the torch to his son: "Once upon a time when fathers had some say in the behavior of their sons, there was a man who felt his offspring was getting out of hand. He thereupon set on his child with a punishment of working here at Schmidt's. Now that was a long time ago, but even then fathers found that sons had a way of beating punishments. This son beat his punishment by liking it and staying on the job. Arthur H.P. Hipp is the fellow we're talking about.”
The punishment took place in 1909. Arthur came here as an apprentice boy and worked 'til he went to Wallerstein's, where he found out the secrets of brewing. Then followed a few years at other breweries and a return to Schmidt's in 1914. Here he worked with his Dad, who was brewmaster at the brewery, until 1921, when on the passing of his Dad, Arthur became brewmaster. That job he held until sometime in 1944, when a new title was handed him- that of General Superintendent. In 1947 he was presented with a silver bowl in recognition for Schmidt's first millionth barrel.
Arthur's son, William A. Hipp joined Schmidt's after receiving a degree in agricultural biological chemistry from Penn State and worked his way up through the ranks becoming assistant brewmaster and safety director, then brewmaster in 1956. Three years later he was promoted to production manager and in 1962 became vice president in charge of production. Bill was a long-time president of MBAA District Philadelphia, frequent contributor to the Technical Quarterly and was president of the Master Brewers Association of the Americas. The MBAA has endowed a yearly scholarship fund for its members in his name.
Schmidt's of Philadelphia - Innovations and Firsts
1884. Otto C. Wolf installs Baragwanath water heaters which boil and purify brewing water by means of the exhaust steam.
1937. Erects the world's largest steinie bottle (50 feet tall and 22 feet wide) on the Philadelphia side of the Ben Franklin Bridge—seen by 130,000 commuters daily.
1940. Chief Engineer Richard Slama, first to recognize the application of the Nye pulsometer pump, normally used for dredging and sand pit operations, for removal of spent grains.
First brewery to install a unit for sterilizing all compressed air used in moving, bottling or barreling beer and ale, and for aerating yeast cultures.
Keg Washing Unit. Another in-house innovation: a new type of aluminum keg washer with three stations: internal chemical rinse, drains the barrel and clear water rinse. The chemical employed is non-injurious to humans, it is unnecessary for the operator to wear either gloves or goggles.
Pioneered the use of the Selas gas-fired steam superheater for depitching kegs.
First to adopt Jensen wort cooler.
First to adopt the DeMarkus system for complete liquefication of all surplus carbon dioxide gas.
Pioneered packaging innovations including the quart bottle, cans and six-pak. For a time, Schmidt's was the largest seller percentage-wise and in total volume of quart cans.
1946. Schmidt's becomes the leading brand in Philadelphia market.
1948. First Slama circular pasteurizer is installed.
1951. January 1, C. Schmidt & Sons, Inc. makes television history with a public service telecast of the Mummers' Parade... nine hours and forty minutes... the longest continuous sponsored telecast in the history of the TV industry.
Slama hop strainer, designed and manufactured by Chief Engineer Richard Slama.
1953. Largest mash filter in U.S.A. installed (725 barrels).
1954. Introduced innovative palletization system, many features of which are copied by their distributors and other breweries.
1956. From July 1, 1954 and March 3, 1956 Schmidt's worked 3,000,000 man-hours without a disabling injury, a world record for the brewing industry.
1958. Company awarded first prize in its class for efficiency in unloading and loading freight cars in a contest.
1960. James Layton, a Schmidt engineer, develops the Layton packers which are used on the can machines. The entire unit was built and designed in the plant.
Schmidt's is the first brewery in the region to create an outdoor display using the new neon intensity tubing Luminare, which is eight times stronger than neon.
1961. Schmidt's installs industry's fastest quart line capable of turning out 300 bottles per minute.
1963. Schmidt's wins first place among major breweries having more than 750 employees in the annual safety contest sponsored by the United States Brewers' Association. In the same contest, Valley Forge, attaining the best safety record in its history, tied for first place in its division. Norristown employees worked a full year without a disabling injury.
Schmidt's puts a new Pullman Hydra-frame 60 rail-car into operation. Hydraulic shock system eliminates breakage, car hold 3,000 cases.1964. Schmidt's automated production lines can turn out over 2.5 million cans and bottles per day. It was one of the earliest and most enthusiastic promoters of the non-returnable bottle in the East.
Schmidt's becomes the first brewery to utilize a computer for production, planning, and inventory control.
December 1964. First and only PA brewery to break 2 million barrels a year production.
1965. New continuous blending cellar and filtration includes 40,000 bbl. blended beer tank building (20 2,000 bbl. stainless steel tanks) and ingenious in-flow processing technique, closed-loop manifold system to supply bottle and can-filling equipment.
Schmidt's first brewery to introduce "glass quart can" with resealable "twista cap."
1968. Introduced Prior brand in new tin-free conoweld can. First to use the new can on a permanent basis.
1981. Bill Hipp receives MBAA's first Award of Honor.
UPDATE 02-25-18
Here's a short video clip of Schmidt's, where my first Philadelphia Brewery Tour met just a few weeks after they closed.
Pic of the “World's Largest Sixpack” outdoor beer storage tanks at Schmidt's.
And a link to my Flickr album showing an exhibit at National Brewery Museum in Potosi, WI featuring Schmidt's and Philadelphia's Brewerytown.
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