Rolling Rock's Mug Runneth Over

Who knew? When Labatt's USA Inc. bought tiny Latrobe Brewing Co. in 1987, no one imagined its flagging Rolling Rock brand would become the marketing success it is today. Instead, the future looked grim: Throughout the '70s and '80s, many a regional brewery closed or was swallowed up when it couldn't compete with the big guys--Anheuser-Busch, Miller, and Coors. But at a time when the beer industry as a whole thirsts for growth, Labatt's USA has turned Rolling Rock into a splashing success.

Rolling Rock, or R as it's affectionately called, is the in brew these days: Its blue-collar pedigree seems just right for the reverse-chic 1990s. "It's hard to one-up the guy sitting on the bar stool next to you by ordering a Heineken. That's kind of old hat," contends marketing consultant Al Ries of Trout & Ries, who has been watching the beer's performance. And as it makes inroads into yuppieland, Rolling Rock stands out in a cluttered industry. Total beer volume fell 2% last year, but Rolling Rock enjoyed a 15% volume increase, capping a four-year national expansion (chart). Although it accounts for just under 0.5% of beer industry sales, Rolling Rock is a textbook example of savvy selling that contradicts the common wisdom that says a dying brand can't be revived.

HAPPY HIKER. Created in 1939 by the Tito family, five brothers who bought a tiny brewery the year Prohibition ended, Rolling Rock enjoyed all sorts of undermarketed assets: a distinctive long-neck, green bottle with a painted label, a cultlike popularity on campuses, and the quaint cachet of a single, spring-fed brewery in the small town of Latrobe, Pa. But the largely unpromoted brand began sagging as beer consumption took a sharp dive during the 1980s. In 1985, the Titos sold the brewery to Sundor Brands Inc., a juice marketer, for around $11 million. Sundor began moving Rolling Rock into a handful of new markets and raised the price a bit. But two years later, it sold Latrobe Brewing to John Labatt Ltd. for around $30 million.

The $5 billion Canadian company needed a growth product to energize its U.S. unit, and Latrobe fit the bill. It was "a niche company, the type of brand that could be positioned above the mainstream big-brewer brands," says Labatt's USA President Richard R. Fogarty. Labatt doubled the brewery's output and expanded distribution from its Pennsylvania, Ohio, and New Jersey base to all 50 states. Production next year should reach 930,000 barrels, company officials predict, up from 414,000 in 1985. To position Rolling Rock as an American beer of import quality, Labatt hiked its price about 70 a six-pack, to $4.49 or $4.99, depending on the market. Although the move irked local loyalists, it attracted more fans nationwide. "After the initial shock wore off, it wasn't that bad," recalls distributor Bob Tito, president of Tito Beverages Ltd. and grandson of one of Latrobe's former owners.

HOT AND HOARDED. Labatt now pumps $14 million a year into advertising and promotions for Rolling Rock. Using the slogan "Same as it ever was," the ads focus on the brew's nostalgic hometown appeal. "Budweiser is brewed in Newark, N.J., on the banks of the Hudson," snipes Rolling Rock Marketing Director John Chappell, whose river geography is a bit off. "That's not a great image."

In contrast, little Latrobe's image plays well on the banks of the Hudson and the Charles. And some 26% of its sales nationwide are in restaurants and taverns, giving Rolling Rock the sort of high visibility beer marketers covet. That's partly thanks to in-bar promotions, such as its "bucket of rocks"--six Rolling Rocks served in an ice-filled metal pail. Labatt's USA, with revenues of $200 million last year, won't reveal Rolling Rock's sales. But it accounts for 60% of U.S. volume.

Now that the beer is so popular, it may be harder to find this summer. The brewery is working at 100% of capacity, and some wholesalers are hoarding Rolling Rock. To ease the squeeze, Labatt is spending $8 million to expand the plant's annual capacity to 1.2 million barrels by January, 1993.

And then there's the mystery of "33." The unexplained number emblazoned on the back of the Rolling Rock bottle has confounded beer drinkers for decades. Theories abound: Prohibition ended in 1933. Or maybe 33 is the horse pictured on the bottle. Labatt runs an annual "33" contest, asking drinkers to send in their own theories or solve puzzles for clues to the meaning of 33.

What's the answer? Count the number of words on the back label: They total 33. The Titos, the story goes, noted that fact on their order to the printer, who mistakenly included the number on the printing plate. Or maybe not.

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