Story Behind Scheidt’s Prior Beer Has Czech Connection
How Norristown Supplied the U.S.A. With Pilsner During WWII
Transcribed from trade journals by Rich Wagner, Pennsylvania Brewery Historian.
American Brewer January 1939
Seen in Some Famous Old World Breweries.
by Phillip Berkes, Brewmaster Adam Scheidt B.C., Norristown, Pa.,
Summary of a Talk Before District Philadelphia, Master Brewers Association
In Copenhagen I met Director N. Hjelte Claussen of the Carlsberg Brewery. Director Claussen acted as host and guide for three days. I was greatly impressed by the activity developed in the brewery. Institutions of Art and Science in Copenhagen are financed from the income of the brewery.
It was in the Carlsberg Laboratory that Col. Charles Lindbergh did considerable work on his invention of the mechanical heart.
No discoveries Kept Secret
It would be perhaps outside the scope of this talk to deal in greater details with the Carlsberg Foundation, but let me quote the golden rule covering the work of this institution: “No result of the activities of the institute, which is of importance wither theoretically or practically, shall be kept secret.” In line with this policy, no patent was taken out on the development of the pure culture process, which is the work of Prof. Emil Christian Hansen of the Carlsberg Foundation.
Tuberg, the next largest brewery and friendly competitor of Carlsberg, has an entire cellar of stainless steel. Tests are being made there on a large scale of the sue of stainless steel for storage of beer. Their cool ships, made by Krupp in Essen, also attracted considerable attention, particularly for design. One of these containers was fabricated with a corrugated bottom, thus enlarging the cooling area. In their bottling departments, I was amazed to find their pasteurizing equipment made of open wooden troughs. The trays are loaded at the crowner and transferred by power hoist into these pasteurizers where only sufficient water is contained to reach up to the filling point of the bottle.
Pilsen’s Six Miles of Cellars
Upon visiting the Pilsen Brewery, the methods and equipment there were found to be exactly the same as they were one hundred years ago. The beer produced is of a highly digestible type. The barley grown is of the finest type, and in the malt house, handwork is done. They have, however, recently added several automatic malting systems to their equipment. They are using the average type of Bohemian hops.
Regarding the sources of water there is first the river water, a brewing water which is very soft and used only in a filtered state; secondly, unfiltered water used for cooling, and thirdly deep well water which has to be de-ironed and is used in the malt house and fermenting room because of its especial purity.
The brewery contains eighteen brewing units, coal fired kettles, some hand fired and some stoker fired. The three-mash system is used.
They have twenty-eight cool ships of ordinary iron in which the wort lays five inches deep. There are 2,400 fermenters with a capacity of about 25 bbl. each, uncoated and with no attemperators.
The beer is cooled and the fifteen-day period of fermentation is begun. The maximum temperature during fermentation is 7° R [47.8° F] At the end of this period, the beer is passed into 200-bbl. mixing tanks and from there into small casks. A mall amount of Kraeusen is added and the casks bunged for from three to four months. No safety devices on the bunging apparatus are used to take care of the excess pressure.
The storage cellars, whose total length is nearly six miles, consist of 96 divisions hewn out of solid rock. These form a very impressive underground town, and are considered a special feature of the Pilsen Brewery.
Causes of Pilsen Quality
This Pilsen beer owes its qualities undoubtedly to old established and tried methods of brewing, and also to local conditions of a special non-transferrable character which influence the whole process of production, and which have been recognized as originating in the geological properties of the soil on which the Citizens Brewery at Pilsen has been erected.
Pitch is used in the trade packages as well as storage casks, and the company manufacturers its own pitch. 6,500 casks from 45-65 bbl. capacity are in use, and they are taken out every three or four months for repairs and repitching. The cellars are refrigerated by brine.
The beer is racked into trade packages by machines similar to ours. The few steel packages in use are for the purpose of pasteurizing beer in bulk for foreign shipping.
Mr. Claussen is now pensioned, but he still plays an important role in the Carlsberg Laboratory where he now, as his hobby, has begun an intensive investigation of the origin of Sarcina.
July 15, 1940 Brewers Journal
Eastern News and Events. By William Crawford Hirsch
Prior Beer Now on Market.
Atlantis Importers and Distributors, New York, report encouraging success in the marketing of “Prior” beer, which is being brewed according to a special formula by the Adam Scheidt Brewing Co., Norristown, Pa. The distributors were formerly identified with the importation of Pilsner Urquell, a Czechoslovakian beer, and of Holland beers. When importations from these countries no longer were possible, Atlantis Importers and Distributors decided to match Urquell beer as nearly as possible in an American brewery. In this they claim to have been eminently successful with a beer that Adam Scheidt Brewing Co., spent considerable time on to get it as “sueffig” as the imported Pilsner. Marketing of it in draught form also brought an innovation, the retail price being set at 15 and 20 cents a glass, somewhat higher than the run of domestic beers. The bottled product is to sell at 25 cents. The industry can profit only from pioneering effort in the quality field. We have become so accustomed to price uniformity in the retail beer market as a means of making possible the sales volume required to support the industry’s capacity that the possibilities of a quality market, by the side of the quantity market, have been almost overlooked.
Excerpts From FORTUNE August 1946.
“Prior Beer, Case History of a Gratifying Brew, A Lucky Quartet, and a Sagacious Business Principle.
…the finest American beers and the newest success in the brewing industry is the product of an old-world brewing attitude and a new-world financial theorem. The beer is Prior, light and …ve favorite of gourmets (15 to 35 cents a glass), premium beer of the 80-year-old Adam Scheidt B.C. or Norristown, Penna. Its success, in marketing terms, is …ed by an almost vertical rise in sales from scratch in …a restrained schedule of 100,000 barrels in 1946. Its success derives from the incomparable Pilsner of Czechoslovakia, …theorem is “p.v.,” profit-volume relationship, a secret of the …and success in an industry that has seen the collapse of …ddicts of straight volume since 1933.
Four men brought off this good brew. They were fortunate …providence that brought their gifts together in the combination required to overcome a standing inhibition of the industry …American brewers have grown away from making beer along European lines. They have developed a distinctive American beer consistent with American taste and… prewar market for foreign beer was insignificant in terms of total U.S. consumption. Taste for European beer to lie chiefly among first or second-generation families (the English prefer ale, of which… masters) and among people who travel …tion to this marketing belief, American… although susceptible to modification, w… ways different from European. The … hazards are a traditionlist importer, a b..ing optimist, and an established finance… scene was the importer, Arthur Kallman… began on his darkest day, November 13…
Providence for four
On that day the last prewar shipment of beer from Czechoslovakia was unloaded from an… Manhattan- and Kallman was out of a job. H.. ordinary sense, for his clientele was an …was cut off from a long connection in … connection went back to 1920, when his … of Maximilian Stein, German beer bank… Pilsen brewery, led to Kallman’s becoming … Pilsner Urquell. He was seized with the spirit of the great Bohemian brewery in a way known only to the professional beer fraternity. When the approach of Hitler persuaded him to leave Germany, the simultaneous approach of repeal in the U.S. led him to take up the distribution of Pilsner Urquell in the epicurean centers of America. On the day of his last shipment in 1939 he calculated the number of weeks – twenty or so- before the Pilsner taps of the country would go dry. He had made several false starts toward protecting himself after the war broke out, including a failure to secure a contract with Anheuser-Busch to distribute its fine Pilisner-type American beer, Michelob- of which Prior is a competitor in the East. The St. Louis kings of brewing preferred to keep distributor rights within their own organization. Kallman then drew a simple line of logic between his sentiment for Pilsner and his need for a product: a beer like Pilsner, made in the U.S.
Kallman’s equipment was modest. He owned the Atlantis Importers & Distributors, Inc., affiliate of Pilsner Urquell Importing Co., Inc., until then used chiefly to import Salvator, a Munich (dark) beer, the model now for Prior dark beer. [A splendid brunet beverage, of which some 2,000 bbl. a year are sold, chiefly in NYC. It is temporarily off the market for lack of materials.] He also held the U.S. rights to the tradename Prior, discontinued by a Pilsen brewery in 1926. He had a considerable amount of good will in the carriage trade. But he had very little money. Altogether it was a well-shaped but empty stein with which to do a beer business.
Kallman’s idea, however, was modest too: to fill the stein with custom-made new beer from an established brewer, sell it under the name Prior, as an Atlantis product- and thus to begin anew with his old customers. He worked fast. Which brewery to address? Not one, but several. Which ones? Those, he thought, that had imported European malt- a factor that had less value than it appeared to have, for American brewers often imported malt not out of interest in old-country brewing, as Kallman thought, but to offset conditions in the American malt market. Kallman’s factor, however, was turned by coincidence into the semblance of the highest wisdom. From a malt importer he obtained the names of five of the many eastern malt-importing breweries. Two weeks after the last shipment of Pilsner Urquell arrived, he sent out five identical letters. Shortly afterward, in response to the most favorable reply, he headed for the Adam Scheidt B.C. of Norristown, in the old Pennsylvania Dutch country.
Brewery troubles
The brewery’s President, Karl Scheidt, a financial skeptic, had none of Kallman’s old-country lore in mind when he invited the importer in. Nor did Scheidt consider the Prior idea a big one. It was simply one of those interesting small matters to which he customarily gave attention. Among the characteristics of the Scheidt Co. that account in good part for its steady dividend record of 51-years is its resourcefulness in little matters and the constant breakdown of its business into small-unit accounting entities. At this time its chief products, Valley Forge beer and Rams Head ale, which are well known in the East, were doing nicely with a sale of 276,162 bbl. in 1939 for a gross of $4,395,000.
SIDEBAR: Pilsner of Pilsen – Prior of Norristown
Before bombs intended for the Skoda works partly destroyed the famed Czech brewery, the plant (below left) spread itself horizontally over many acres, deep into cellars- a large collection of small brewing operations rather than one big brewery.
The Adam Scheidt plant at Norristown, Pennsylvania, has the compact, vertical shape characteristic of American breweries. Its equipment, larger than Pilsner’s in unit size, taxed Scheidt’s ability to approximate the old country’s style of brewing.
Most American beers, unlike Prior, are fermented and stored in large steel casks such as the 600-bbl. pitch-lined monsters at right, where Scheidt’s standard products are stored. Modern large-volume brewing is closer to engineering than art.
But breweries had been folding up in droves since 1937 (the number of U.S. breweries dropped from 711 in 1937 to 602 in 1940). Beer consumption tied to the workingman’s pocketbook, had leveled off since the “recession” of that year. Harried by high fixed costs, brewers had inevitably sought higher and higher volume. Many small breweries chanced everything for volume, and lost. And ever since repeal all breweries had felt the pressure of costs in heavy advertising, favors to the trade, price wars- even a solid medium-sized company like Scheidt’s could not feel secure.
Another matter that occupied Karl Scheidt’s attention was an excel capacity of about 200,000 bbl. Back in 1937, when his volume showed a four-year upward curve and his 27-year-old brewing machinery was wearing out, he had built a new brewhouse. It cost little more to build a capacity of 550,000 bbl. than the old 350,000 bbl.; so the house could hold 550,000 while the business remained below 350,000. Karl was ready to move into that space with small lots or large. Altogether, with his excess capacity and his interest in small-unit, large-profit items to better his profit-volume relationship, he was moderately interested in the few thousand barrels of well-paying premium beer promised by Kallman’s idea.
Scheidt brought in two men to see Kallman: sales manager Oliver H. Greenfield, a marketing optimist, a master brewer Phil Berkes, an artist at his calling. It was quite coincidental that Kallman had found the Scheidt company at all, and here the coincidences began to pile up. For in addition to the special circumstances that drew Karl Scheidt’s interest, Kallman found a sales manager who had been plugging for a premium beer without avail for some time, believing he know the market for it; and, as fortune would have it, there was also a superb brewer with an old-style passion for his art, just back from a visit to the Pilsner plant in Czechoslovakia. As a courtesy to his position as president of the U.S. Master Brewers’ Association, Berkes had been privileged to acquaint himself closely with Pilsner’s ancient processes. Thus, quite apart from considerations of the market or finance, Berkes found Kallman’s idea an attractive prospect. Scheidt’s first decision was to let Berkes try making so unusual a beer.
Taste in beer
Refinements of taste in beer defy description. Pilsner is light, and slightly bitter with hops, unlike Munich or other Bavarian beers, which are dark and sweet. Like most European beers, Pilsner is mildly carbonated by natural fermentation. American beers are more highly carbonated (many by artificial injection of CO2), characteristically pale and neutral in taste. De gustibus non est disputandum [There is no disputing about tastes]. Yet something can be said on the subject. The four basic tastes from which all others are said to derive- beer has them all in a rare blend- are sweet (to the tip of the tongue), and salt (all over). All four have intensities that vary with temperature; dry white wine, for example, may be distastefully sour at room temperature but has a fine tang when chilled. Beer tastes, in the opinion of gourmets, reach their full potential at about 48°, are severely tested with each drink. In the 48° competition Pilsner Urquell has come out on top.
The Pilsner Urquell formula has always been open to inspection- but that fact has never done other brewers any good. The secret, clearly, is not in the formula, and no one knows exactly where it is. Pilsner was once described in a communication of the Master Brewers’ Association as a “distinctly opalescent beer of golden, yellowish-greenish color [possessing] a snow-white, dense foam; its taste is bitter, clean and characteristic. A slight pitch-like flavor seems also to be present… It has always seemed to have been the purpose of the management to produce a beer of especially high degree of fermentation… Easy digestibility and tolerance for inhibition of large quantities without contracting ill effects is said to be promoted thereby.” But this technician closes with the ancient mystery of Pilsner taste: “Routine chemical analysis does not reveal great differences between Pilsner and other light beers.”
Pilsen economics
Baffled by their own mystery, Pilsner brewers have clung to their ancient methods of brewing for fear of losing their magic in modern chemistry and industrial engineering. * The brew rights in the town of Pilsen go back more than 500 years. In 1842, 250 families of Pilsen pooled their resources and brewed together as a town cooperative known as the Citizens’ Brewery. Its product was the same Pilsner Urquell that Kallman lost in the war. The brew rights were attached to real estate- until recently one was still attached merely to a gate in the town- and each family took a share. At first the shareholders got their dividends in beer; but as the brewery’s fame grew throughout the world individual brew rights rose in value- in the 1930’s to as much as $70,000, exclusive of the real estate, earning $3,000 a year. One effort to buy up the shares got as far as 35, but the rest of the citizens hung on.
*John A.W. Hartung, a former chairman of the technical committee of the Master Brewers’ Association, wrote a number of years ago: “It appears to the casual observer as if the retention of many …brewing methods are medieval, backward, or even ridiculous, and it may thus seem as if simplified, cheaper, more practical, or even more modern methods… should replace the old ones … With great determination and judgement, the management has prevented the introduction of any methods or procedures which even in the slightest degree could change the…
The second citizen-owned brewery, Gambrinus, separated only by a wall from the Citizens’ Brewery, was started in 1869 with a product later known as Kaiserquell. The Genossenshaft Brewery, one of whose founders was Kallman’s father-in-law, Maximilian Stein, opened in 1896 with the product Prior. In 1911 there was a Svetovar Brewery. By 1932 all these companies had returned to Citizens’ Brewery. Prior and Kaiserquell beers were discontinued and Pilsner Urquell reigned alone. The brewery’s greatest misfortune was to be situated near the Skoda works. Two weeks before the war’s end, a rain of bombs intended for Skoda demolished a good part of the brewery. Since then it has been nationalized by the Beneŝ government, rebuilt in part, and is again producing, but recovery of its world position is retarded for lack of grain and transportation.
Although brewing scientists- Thausing, Windisch, Lintner, Jalowetz- have studied and written papers about the Pilsner way of making beer, German brewers who tried for years were unable to reproduce the product. American Prior today is not considered by its maker to be a duplicate of Pilsner; modifications began in the production procedures. Beer, like bread, has a general recipe. It is a malt beverage. Brewing-malt is barley that has been steeped in water, germinated, and kilned. American brewers usually use 30% or more adjuncts, chiefly corn grits and rice, along with the barley malt. These adjuncts, in part responsible for American-type beer, modify the rich protein content of standard American barley malt; without them beer would become too full bodied, hence to satiating for most beer drinkers. Europeans, with their lighter barley, are pure maltists. The ingredients of beer in all are few: malt and adjuncts, water (and its minerals), hops, and yeast. The general recipe is simple, as many Americans discovered during prohibition: brew the malt, flavor with hops, and ferment with yeast. But the differences among brewers are as great as those among bakers, with whom brewers were originally connected.
Prior brewing
Pilsner methods and materials differ in countless ways from the typically American. They are reflected in the brewery itself. The Pilsner Urquell plant, sprawling over 135 acres of surface and down into labyrinthian underground rock cellars, is more an assemblage of many small breweries than a single establishment. This is characteristic, for mass production in the American style is avoided. Eighteen complete sets of brewing equipment are set up in four brewhouses; the fermenting room contains 2,100 small wooden vats in about 20-bbl. capacity; lagering-storage- is done in 6,500 wooden casks with a maximum capacity of 65-bbl., laid in 96 sections with a total aisle length of six miles, as against compactly arranged American glass- and pitch-lined steel casks of up to 2,500-bbl. capacity.
It was impossible, Berkes knew, to reproduce in Norristown the conditions under which the great Pilsen brewery operated. But the Scheidt company fortunately had in its cellars a number of the old-type open-top wooden fermenters and lagering casks, similar to those in Pilsen though larger in size. The brew kettles too were larger, but could be operated at less than capacity. Next, the materials. Water from Scheidt wells tested close to the Pilsner model. The beer of course would be made entirely with malt, using the plump, two-row Bohemian-type barley known as Hannschen, grown on the West Coast, and a stockpile of Czechoslovakian hops, reputed to be the finest.
Prior’s yeast involved an ingenious and dramatic procedure. Brewers’ yeast is pedigreed; every brewery in the world has its own yeast culture. Any change in the yeast strain will change the character of a beer; brewers guard their strain with elaborate practices for keeping the master culture pure. The fact that yeast culture is alive necessitates the extreme cleanliness of breweries. Berkes attached his Prior brew to Pilsner by direct descent, drawing a jug of pilsner at Luchow’s, the famous New York German restaurant, isolating and then culturing a single healty yeast cell. The master culture is kept in a pure state at the Wallerstein Laboratories * in New York City; this strain is now used exclusively at the Scheidt plant for all its products.
*Regular samples of Prior are sent there to be checked for chemical composition, CO2 content, foam, etc. Many breweries use such a service.
Berkes made three trial brews. His procedure departed at several points from usual American methods. Beer is made in three general operations: mashing to produce a sugary liquid, wort; fermentation of the wort; storing and finishing. A good brief elaboration of this was given by Salem in his History of Beer: “A certain quantity of malted barley is taken and ground; it is then mashed with hot water, the sweet liquor or wort extracted, a portion of hops added, and the whole boiled until the preservative quality as well as the aroma of the hops are obtained. It is then allowed to cool, and afterward fermented with yeast to produce the small quantity of alcohol it contains, and to give it life.
The following are some of Berkes’ important departures from standard practice; he used the European three-mash system, by which one-third of the mash is treated three times in the cooker at successively higher temperatures and returned to the whole, creating a different malt-enzyme action on the proteins and starch, resulting in conversion to a desirable variety of sugars. In the brew kettle hops were more liberally used (.75 as against his usual .43 lb./bbl.), in order to extract from them their most delicate bouquet. The wort was cooled to a temperature three degrees lower than usual, to retard subsequent fermentation. After the introduction or yeast, the wort was fermented slowly in the open-top wooden tubs for fifteen days, as against ten for his other products. In the final operation, lagering, the brew stood for three months instead of the normal four weeks. This was in order to get more thorough clarification and maturity through the natural precipitation of yeast cells, proteins, hop resins, and other unwanted substances, and to produce the esters that give the final touch to beer’s bouquet and flavor. Many American beers are carbonated artificially; Berkes “krausened” his beer in the old way, by the addition of about 20% of unfermented brew to the completely fermented end product. As a result of new fementation the beer in time naturally carbonated itself. Although this whole method resembles brewing at Pilsen, it is so different in some details, and in the use of standard Scheidt equipment, that it must be regarded as a modification of both Pilsen and American brewing. Prior, in this sense, was a new beer.
Baby’s adoption
In March, 1940, after rounds of delighted tasting and toasting, one of Berkes’ three brews was chosen as the product. In May the idea man, Kallman and the brewer, Scheidt, reached an agreement by which Kallman held title to the name Prior and was advanced a small sum for promotional work. The price, set at $31 a barrel wholesale, was the highest in the U.S. for domestic beer. (Standard beers wholesaled around $16 a barrel, other premium beers as high as $24 a barrel) “Then I worked,” says Kallman, “sometimes night and day, for two years. It was a one-man job. My only means of advertising were little table cards and bar signs. At the end of 1942, undercapitalized and without a substantial advertising budget, I was at the end of my rope. I had increased sales slowly, and now I wanted to do something bigger, Karl said, ‘It’s your baby.’ I said, ‘Haven’t you ever heard that a baby can be adopted?’ ”
Specifically, Kallman asked Scheidt for $75,000 for advertising. Sales manager Greenfield swore he could sell Prior in his regular market. Scheidt, with his own profit-volume formula behind him, was almost persuaded; but, with sound business instinct, he told Kallman that such a budget would involve the brewery without a guarantee of permanent connection. The name Prior still belonged to Atlantis; Scheidt was the non-owning manufacturer. Kallman’s baby talk ended in adoption. He received compensation for what he had put in, and traded the Prior title for the cream of the distribution rights in two areas centering around New York and Illinois. Prior became the legitimate offspring of the Adam Scheidt B.C.
When Scheidt took over Prior, Kallman’s one-man job had sold 1,082 bbl. in 1940, 1,799 in 1941, and 3,185 in 1942. Prior could be had in New York at the Waldorf, Luchow’s, the Colony, the Blue Ribbon, and less elegant Bohemian restaurants, where the gourmets had given it an approving reception in the place of the old Pilsner Urquell. The 3,185 bbl. at Kallman’s peak were merely a drop in Scheidt’s bucket of 316,000 bbl. of regular beer. But there were several fine things about Prior in Karl Scheidt’s mind.
First was the way those few barrels appeared as No. 1 in the profit-volume unit chart. Further, the competitive outlook was good. Potential competition among premium beers lay chiefly among several- Budweiser, Pabst, Schlitz, National Premium- that were quite unlike Prior in taste and character, One beer could provide competition in type. Anheuser-Busch’s Michelob; but Michelob was strictly a keg beer, and Scheidt was headed for an average three-to-one bottle-to-keg volume. Scheidt had the distributor setup of its regular beer trade through wich to run Prior in any desired amounts. The country was spending freely, andwould pay the price. And, while beer production was on the rise, the demand was greater than the supply Tavern proprietors were courting the brewers. And, finally, Scheidt decided to advertise: $10,000 (1943), $30,000 (1944), $120,000 (1945), and $185,000 (1946 budget). Without opening any new Scheidt distributor accounts, Prior sales proceeded to race from 16,163 bbl. in 1943 to 50,362 bbl. in 1944, to 84,183 in 18945, to a pre-rationing schedule of 100,000 bbl. in 1946. With plans for national distribution under way, sales manager Greenfield is now dreaming of a million barrel a year.
The Scheidt’s of Norristown
The success of Prior is probably the finest feather in the Scheidt cap. Battler in an embattled trade, the company ranks No. 27 in size in the U.S. and is moving ahead. The Scheidt company was long owned equally by five major interests, all Scheidts. Some of the stock has been transferred to their heirs. Like many breweries’, the commpany’s origin is German. Norristown is on the fringe of the Pennsylvania Dutch district, where Charles Scheidt, Karl’s uncle, settled in 1865. Across the street from the office of the present company he ran a hotel- and made beer. The beer business outgrew the hotel and he shifted entirely to brewing. In 1878 he was joined by his brother, Adam, father of the present owners, Charles died young, and in 1887 Adam took over the company through the purchase of Charles’s half-interest from the German heirs. An original capitalization n 1890 of $125,000 rose to $200,000 in 1893 and $300,000 in 1908. As with many companies, depreciation was charged to expense until income taxes in 1913 caused a flurry of historical research and recapitalization at a higher figure. The present capitalization dates to 1922, when through a stock dividend it was expanded to $1,200,000.
Karl grew up in the company, became President when his father died in 1933. An attractively shy man who draws his chin back and appears nonplussed without being so, he is a youngish family patriarch at fifty. His brothers, Adam J., Jr., and L. Paul, share management with him as purchasing agent and secretary. The Board of Directors consists of the three brothers, their attorney, and a representative of the bank that holds their sisters’ shares in the trust.
Through 1918 the business was steady. That year, which was the last before prohibition, gross sales were $1,400,000 on a volume of 93,000 bbl. Prohibition threw the company on its wits, and wits its management had. Dividends rose from a pre-prohibition level of $8,400 to $48,000 in 1930. The company made near beer profitably until the bootleg competition knocked near-beer sales from 75,000 bbl. in 1926 to 26,000 bbl. in 1932. But Scheidt also made alcohol, ice, malt syrup, and soft drinks, and, unlike hundreds of other breweries, was ready for business again on the day of repeal. In 1933 it more than doubled its 1918 volume with 230,000 bbl. Each year thereafter the sales curve went up until 1937, when it held level to 1940 with the apparent fulfillment of demand. During the war boom it rose again, reaching Scheidt’s enlarged capacity of 550,000 bbl. in 1945.
The young Karl Scheidt’s teacher at the Wharton School of Finance and Commerce, University of Pennsylvania, was Charles Reitell, now a partner in Stevenson, Jordan & Harrison, Inc., New York management engineers. From Reitell, Karl learned the principle of the relation between profit and volume. In 1935 he brought Reitell to Norristown to set up the standard cost system of expenses this philosophy of business operation. Up in Karl’s office the vagaries of the brewery business, beginning with its high fixed costs, are charted like a military operation. Standard costs, broken down by zone, product, and even packaging, are set with budgetary control for the year ahead. The interplay of costs, prices, volume, and profit can be seen at a glance at any given point; cost variances can be traced to their source in operating efficiency and volume fluctuation. Six days after the close of each month’s business, Karl is able to study the performance in relation to the standard. The over-all break-even chart, showing the relation of profit to volume for each product, determines the course ahead. It was this system rather than his taste in beer that led Karl into Prior.
He has every reason to be satisfied with his newest brew. His others, Valley Forge beer and Rams Head ale, are good and established products in the East. But Prior has meant profits: ponder this, that for 100,000 bbl. of Prior, out of a total projected production of about 500,000 bbl., the net operating profit is more than 50% of the company’s total. In a nutshell- 20% of the volume, 50% of the profits.
Karl Scheidt looks at the future with his customarily skeptical eye. Plans for plant expansion at present are scaled up to 750,000 bbl. of all products, in which Prior goal is about 30%. Karl cautiously considers several factors: after the present boom in beer has passed, the industry will soon be back on a highly competitive basis. Premium beer will not escape; new brands have appeared on the market. The shortage of beer will pass. Easy money has aided the sale of premium beers; but will easy money stay? And European beers will return.
Karl’s response to these factors is wary but not pessimistic. He will not sacrifice the profit sheet for volume. As a premium beer, Prior has quality, acceptance, and a heatstart. When the beer shortage passes, Prior may lose certain outlets; but it may gain others. Hard money would shrink the premium market, but who can guess the course of money? And though Eruopean beers do come back, Karl Scheidt’s ace is the market he has opened among American beer drinkers for a fine American-European beer.
Acknowledgments: All photographs for FORTUNE by Jesse E. Hartman. With the exception of p. 111 (beer stein) Courtesy National Gallery of Art, Index of American Design. P. 112 (left) Courtesy Arthur Kallman. p. 114 (upper left) Claude W. Huston-Pix; (center) Courtesy Karl Scheidt.
Captions. …Ferment and Lager
In the brewhouse is the spic-and-span copper kettle (left) where the liquid …the malt-mash is flavored with hops. Prior wort- yeast added- continues in comparatively small European-style open-top fermentation vat (below left) and …a wooden cask for storage, called lagering (below right). The Scheidt brewery was fortunate to have such antiques around the plant.
Beer For Brewers: They Like Their Product. By union contract Scheidt breweryman have the privilege of drinking the plant’s beer from their own copper mugs at two ten-minute periods during working hours (10:00 A.M and 2:00 P.M.) Beer at lunch at after work rounds out the day.
Adam Scheidt 1854-1933.
Kallman Had the Idea. Before the war an American distributor of Pilsner beer, he has since kept his customers with a seductive American substitute.
Berkes Had the Art. Back from a recent visit to Pilsen, he seized a home-ptown opportunity to practice old-world brewing skills.
Greenfield Had the Salesmanship. He fondly fancied and generally proved that his ordinary outlets would take an extraordinary product at a premium price.
Scheidt Had the Brewery. From his habitual attention to small but promising matters he has derived a small but highly profitable premium-beer business.
The Brewers Digest August 1946
A Study in Contrast.
Prior Beer, Premium Product of the 80 Year-Old Adam Scheidt Brewery, is a Modification of an Old-World Brewing Attitude and a New-World Financial Theorem.
There is a strong bond between the Adam Scheidt Brewery, located in Norristown, Pa., along the peaceful Schuylkill River – and the Pilsen Brewery in war-torn Czechoslovakia. Both use the same formula in the brewing of their respective beers – Prior and Pilsener Urquell.
Last month A. Vlasak, master brewer at the Pilsen Breweries on a four week visit to the United States went to Norristown to compare notes with Phil Berkes, master brewer at the Adam Scheidt Brewery. Mr. Vlasak saw one of America’s handsomest breweries in the course beginning their post-war construction program. It was then that he brought forth the pictures shown on these pages, depicting the construction job faced by the Pilsen Brewery at the end of World War II.
Mr. Vlasak visited quite a few eastern breweries, saw many new things in the way of mechanical progress – and in all instances, received a hearty American welcome. He extends to all American master brewers a cordial invitation to visit Pilsen and see beer brewed in the old traditional way.
The case history of Prior beer is told, with full color illustrations, in the August issue of Fortune magazine. The article relates how four men – Arthur Kallman, Karl Scheidt, Oliver H. Greenfield and Phil Berkes were responsible for this brew.
How Prior Beer Was Developed Here.
For many years prior to 1939, Arthur Kallman of New York was American distributor for a famous Czechoslovakian beer. When the war hit Europe his source of beer supply was ended. During the years he had built up quite a following which included many fine customers among the better outlets throughout the country. It really looked like he was out of business permanently.
However, he held the U.S. rights to the tradename Prior, discontinued by the Pilsen brewery in 1926. The brew rights in the town of Pilsen go back more than five hundred years. In 1842, 250 families of the town pooled their resources and brewed together as a town cooperative known as the Citizens’ Brewery. Its product Pilsner Urquell, the beer Mr. Kallman had lost as a result of the war.
The second citizen-owned brewery, Gambrinus, separated only by a wall from the Citizens’ Brewery, was started in 1869 with a product later known as Kaiserquell or Gambrinus. The Genossenshaft Brewery, one of whose founders was Mr. Kallman’s father-in-law, opened in 1896 with Prior. In 1911 there was a Svetovar Brewery but by 1932 all these companies had returned to the Citizens’ Brewery. Prior beer was discontinued in 1926. Only Pilsner Urquell and Gambrinus beer were brewed from then on. Just before the end of the war a load of bombs, intended for Skoda, wrecked a large part of the brewery.
The pre-war for foreign beer was insignificant. Taste for European beers was thought to be chiefly among first or second generation German and Czech families and among people had traveled in Europe. In addition to this marketing belief, American production methods were and still are set in ways different from European.
Controlling the American rights to the trade name “PRIOR,” he looked around for a brewery qualified to produce a type of beer worthy of the name and up to the standard previously set for that brand. He found such a brewery in Adam Scheidt Brewing Co. of Norristown, Pa. Having traded the title for certain distributor rights, Mr. Kallman now has a beer matching that previously offered the class beer market and Adam Scheidt have a premium product, in addition to their Valley Forge beer and Rams Head ale, of which they are justly proud.
3-9-64 Tap & Tavern (Pennsylvania Liquor Industry Trade Paper)
Prior Preferred Has Direct Ties to Old World Brew.
PHILADELPHIA, Pa. – Beer is an ancient beverage. It was brewed and drunk by Pharaohs of Eastern and Central Europe, and it has traveled across time to the present day.It is generally agreed, however, that brewing came uniquely into its own in Western Europe, where the great German, Bavarian and Czechoslovak brewmeisters turned its manufacture into an art. Today, Americans can drink the best brews Europe has to offer, but none of them is better than an American beer, born in 1939 out of necessity. The beer is Prior Preferred, a direct descendent of Pilsner Urquell, rated among the world’s best. Prior Preferred is full embodiment of Europe’s brewing legacy, the only American beer product literally conceived in Pilsen. Never heard of Prior Preferred? Well, many Americans have, and more are going to. Long a favorite in the gourmet restaurants of New York and Chicago the beer is now being introduced throughout the East. Prior Preferred has a fascinating history. It is a product of human ingenuity – and Schmidt’s of Philadelphia. To arrive at American Prior Preferred beer as it is today, we must go back in time. In ancient days in Western Europe, specifically Pilsen, Czechoslovakia, brew rights were conferred by edict and passed from generation to generation. In Pilsen, these rights go back more than 500 years. In 1842, 250 Pilsen families pooled their rights and created a cooperative, known as the Citizens Brewery. Its product was Pilsner Urquell, accepted far and wide as the finest. The quality of the beer was partly attributable to small-lot brewing methods and natural fermentation, part to Pilsen’s unusual water and yeast, and part to long aging, four months. Over the years, disagreements within the cooperative occurred and at least three groups of shareholders withdrew and began production of their own versions of Urquell. Each vied with the other as possessor of the original formula and quality. Prior beer as a distinct labeled brand was born in Pilsen out of this dispute, the title coming from the Latin word meaning… first, to be first. Later, a robed Prior was incorporated into the label, since, historically a Prior is a religious leader. The competing brands existed in Pilsen until after World War I when they were reincorporated as the Citizen’s Brewery. The Prior name was discontinued at that time. Urquell, reunited once more, first came to the United States under the distributorship and control of Arthur Kallman, a German native and son-in-law of one of the Pilsen brewery’s owners. During the Thirties Kallman, by now an American citizen, had developed Urquell into a significant market item. In September, 1939, disaster struck. Hitler invaded Poland, World War II was on, and imports of Pilsner Urquell dwindled and, in November, stopped. Out of this calamity, American Prior Preferred was born. Determined to stay in business, Kallman went to work. Within two weeks of getting his last shipment, he was on the hunt for an American manufacturer to produce an Urquell-type beer. He found his brewery in Norristown, Pa. The Adam Scheidt Brewing Co. (Schmidt acquired the firm in 1954), most closely reproduced Pilsen conditions, in equipment, water and managerial capacity, attention to detail. Then, the most important step toward American Prior Preferred a true Pilsner beer was undertaken. A stein of Urquell lager was drawn at New York’s famous Luchow’s Restaurant and delivered to the Wallerstein Laboratories where healthy Pilsen yeast cells were cultured out, developed and used to create an American Pilsner. Ultimately Schmidt’s Norristown plant developed a remarkable formula undetectable from the original. The brew was christened Prior after the old Pilsner Prior name. Today, Prior Preferred, as it is now called, is undergoing a new resurgence. As previously announced, Schmidt’s plans an extensive merchandising and promotional campaign for Prior Preferred. It will be available in draught, non-returnable 12 oz. Bottles and six-pak cans and will come in two distinct brews, golden light Pilsner and double dark Muenchner. The campaign is being developed in two stages with the first stage centered around Prior Preferred draught. The draught campaign, already in progress, is setting the stage for the introduction of the package campaign in early Spring. For the package drive emphasis is being placed on the use of an elegantly designed brown bottle molded exclusively for Prior Preferred. The 12 oz. non-returnable container has a long, gracefully tapered neck on which is a raised pattern illustrating malt and hops. An artistic label and foil cap have been created to compliment the overall appearance of the bottle. The label (cont. on p. 6) PHOTO Captions. Schmidt secretaries Thelma Bispels (left) and Barbara Shazes proudly display new package designs for Prior Preferred. As with draft, Prior Preferred in packages will be available in golden light Pilsner and double dark Muenchner. Schmidt’s package drive for Prior Preferred gets underway this spring. Photos showing interesting transition of Prior Preferred labels from the past to the present. Today’s modern version (center) is colorful gold, black and red symbolizes the noble background of the 500 year old beer brewed to today’s tastes. The liquid luxury quality of Schmidt’s Prior Preferred brand is very much in evidence in this interesting photo. Prior Preferred is double dark Muenchner and golden light Pilsner is now availbalbe in draft throughout the brewery’s 14-state marketing area.