The tale of wealth often resembles the changing seasons—temporary and fleeting. One generation may accumulate riches, while the next squanders them. Whether wealth is preserved or lost often hinges on one’s outlook for the future.
Is the focus on saving resources for tomorrow’s needs, or do personal desires take precedence? Those who set aside something for future growth inevitably find themselves in a more prosperous position, yet not everyone can resist the lure of immediate gratification.
Some individuals take reckless chances with inherited wealth, opting to expend their resources in pursuit of questionable ventures. Stories of fortunes that falter due to poor decisions are both captivating and cautionary.
A recent issue of Forbes Magazine chronicles the Stroh family’s ascent and rapid fall from grace in the beer brewing industry. As highlighted in an article titled, How to Blow $9 Billion, the Stroh family took over a century to create the largest privately-owned beer fortune in America, yet lost it in mere moments due to a series of missteps.
How could a family, once favored by fortune for so long, meet such a grim fate? This inquiry invites further exploration.
A Bright Idea
Lessons on sustainable success abound from the Stroh saga. The essence lies in recognizing core principles: the importance of mean reversion, staying grounded in one’s expertise, and avoiding overreach.
Bernhard Stroh immigrated to Detroit in 1850, bringing more than just ambition—he carried with him a cherished family beer recipe from Germany, along with the know-how to market it effectively. His sons adeptly continued this legacy.
For its first hundred years, the Stroh beer business thrived in Detroit by adhering to fundamental values: honoring customers and valuing employees. Catering to the tastes and budgets of the Midwest’s working class while treating each employee as a vital part of the family fostered deep loyalty.
The Stroh family’s long-term perspective allowed them to gradually cultivate a dedicated customer base. Yet, for reasons unknown, Peter Stroh, who assumed the CEO role in 1980, opted for a dramatic shift—seeking rapid growth through acquisitions rather than strategy.
In 1981, Stroh acquired Schaefer, followed by Schlitz the next year. Initially, these deals seemed promising. In 1988, Forbes valued the company at $700 million, recognizing the Strohs as one of the wealthiest families in the U.S., with 30 relatives sharing in the fortune. Unfortunately, these acquisitions would soon contribute to their downfall.
The Decline and Fall of the Stroh Family Beer Business
By the late 1980s, the pinnacle of success for the Stroh family was reached, but inherent weaknesses in the Schaefer and Schlitz acquisitions became apparent—these were funded through substantial debt rather than profits. Peter Stroh had overextended himself.
With limited funds available for marketing after servicing debt and operational costs, Peter had an epiphany: acquiring national customers comes at a steep cost, and unlike regional patrons, they can be unpredictable.
Stroh Brewery Company found itself unable to compete with the extensive advertising budgets of national giants like Anheuser-Busch and Miller. By 1989, layoffs began, and a decade of desperate attempts to salvage the business followed. Unfortunately, every effort to restore stability only caused further decline, culminating in the sale of the 150-year-old Stroh family business at deeply discounted prices in 1999.
Today, the Stroh family business, along with any collective financial legacy, has vanished. While the fifth-generation Strohs might still enjoy a comfortable lifestyle, they appear destined to lose the family’s wealth within six generations. In simpler terms, the Stroh family has returned to the mean…
“Building a family business meant to endure is challenging, but it’s astonishingly easy for any successor to jeopardize it.”
This lesson extends beyond families to nations as well.
Sincerely,
MN Gordon
for Economic Prism
Return from The Decline and Fall of the Stroh Family Beer Business to Economic Prism
