Introduction to the reading: This is an article about a marketing whiz who used
probability to his advantage to promote a failing beer brand. Read the article and discuss
it on the discussion board.
March 1, 1981, Page 003008 (The New York Times Archives)
MILWAUKEE Shortly after Frank J. Sellinger went to work at the Jos. Schlitz Brewing
Company in November 1977, he faced the first in a long list of problems.
A daughter, who then lived on the West Coast, telephoned and confessed: ''Daddy, I don't
like that beer.'' She had a lot of company. Schlitz, which had reformulated its flagship brand
in a disastrous economy move in the 70's, has been fighting a steady decline in sales ever
since. Earnings plunged from almost $50 million five years ago to a $50.6 million loss in
1979 when it sold its newest brewery.
Said Mr. Sellinger: ''I told my daughter, 'Honey, do me a favor. Try Schlitz Malt Liquor. If
you still don't like it, go back to Budweiser.' ''
After all, Mr. Sellinger said, ''Anheuser-Busch put bread and butter on the Sellinger table
for a lot of years.'' Mr. Sellinger was an executive there all those years. Now, as vice
chairman and chief executive at Schlitz charged with getting people to drink Schlitz again,
he has reworked its taste, pitted it against the major beers in taste competitions televised
live and gone on television commercials himself as the company's down-to-earth
pitchman. He has also pared expenses, cut excess brewing capacity and tightened quality
control.
For all that, Schlitz is still losing sales position. In its best year, 1976, the company sold
24.2 million barrels. In 1980, shipments declined 11 percent on the year, to 15 million
barrels. The company lost its fingertip hold on third place in the industry, behind the
Anheuser-Busch Companies, which sold 50.2 million barrels in 1980, and the Miller
Brewing Company, a subsidiary of Philip Morris Inc., which shipped 37.3 million barrels
last year. Schlitz dropped to fourth place, behind its crosstown rival, Pabst, which shipped
15.1 million barrels.
Schlitz embarked on an expensive campaign featuring live taste tests on television, pitting its
product, at various times, against Miller High Life and Anheuser's Budweiser and Michelob.
Half the 100 Budweiser drinkers pulled the lever for Schlitz in one test supervised by Tommy
Bell, a widely recognized referee in the National Football League. Other scores were
respectable. …..
Concluded Joseph Doyle, a brewing industry analyst at Smith Barney Harris Upham &
Company: ''All the media coverage (of the taste tests) is giving Schlitz a big bang for their
buck. I'd count the campaign a huge success if it arrests the decline of the brand, and it
looks like it is doing that.''
The company trumpeted the results in follow-up newspaper ads, but there are no current
plans to continue the live taste tests. Nevertheless, Mr. Sellinger's desk is piled with letters
and comments. ''Here's one from five students at Holy Cross - Bud drinkers - who have
started a Tommy Bell/Schlitz fan club,'' he said. ''The young drinkers are the ones you
want to win.''
Reflection question: Suppose Schlitz beer was really no different (or distinguishable) from
Bud and other competitors. How did the set-up of the blind taste work to Schlitz’s
advantage? Think about this from a probabilistic standpoint.
0
