The House of Heileman

While two large brewing conglomerates  —Anheuser-Busch InBev and MillerCoors — now account for more than 78% of US beer sales, and craft beers are enjoying a renaissance, these are relatively recent phenomena. As late as the 1990s, a significant number of regional breweries produced popular brands that had a major share of local markets in some of America’s largest cities. Among these was the G. Heileman Brewing Company, which operated from the small city of La Crosse, Wisconsin, for nearly 140 years from 1858 to 1996. Their legacy includes names still familiar to, and fondly remembered by, many American beer drinkers.

From The Old Country To The New

The roots of Heileman, like so many American brewing stories, go back to Germany, where Johann Gottlieb Heileman was born in the southern state of Wurttemberg in 1824. In 1852 he left for America and soon settled among many other German immigrants in Milwaukee, where he helped to found a bakery. Five years later he moved to the western Wisconsin city of La Crosse, which was growing due to lumbering and shipping on the Mississippi River. His first job there was at a small brewery recently started by fellow German immigrant Johann (John) Gund. After less than a year, Gund sold the brewery building and entered into an agreement with Heileman to build the new City Brewery. The partnership between Gund and Heileman lasted for 14 years until 1872, when Gund sold his interest to Heileman and went on to found his own John Gund Brewing Company. Heileman continued, changing the company name to G. Heileman Brewing, but was outsold by his former employer and partner. Among the problems was the sudden death of Heileman himself in 1878 at the relatively young age of 54. His widow Johanna struggled, but succeeded in keeping the brewery open, becoming the first female CEO of an American brewing company. She continued her involvement in the business until 1911, although in the later years operations were managed by son-in-law Emil Mueller.

A disastrous fire destroyed the Gund brewery in 1897. It was rebuilt, but the disruption allowed Heileman to expand operations and increase sales. In 1902 they produced more than 100,000 barrels and replaced their flagship brand, Golden Leaf, with Old Style Lager, a name that would be associated with Heileman throughout the rest of its history. In 1919, just before Prohibition ended the legal manufacture and sale of alcoholic beverages in the US, 285 people were employed at the brewery. During the more than 13 years of the “noble experiment,” Heileman reduced its staff and produced non-alcoholic “near beer.” In addition they sold malt, ostensibly to bakeries, but also to the public, including bootleggers and homebrewers who defied the law by brewing their own. Gund Brewing closed in 1920, with some of its facilities being used by Heileman. The Gunds moved to Cleveland, where they later became one of the city’s most prominent and wealthy families.

A Good Time For Beer

With Prohibition’s welcome repeal, Americans’ long delayed thirst for beer created a tremendous demand for those breweries that still had the ability to produce it. Heileman was inundated with calls from as far away as both the East and West Coast. Newly rehired workers labored during 7-day, 12-hour brewing shifts and managed to ship 2,500 barrels in the 48 hours following the legalization of beer on April 7, 1933. Office employees returned almost $100,000 in checks that accompanied orders that the brewery had no hope of filling.

The ensuing decades were good times for many American breweries, and Heileman was no exception. Often the easiest way to expand market territory and share was to acquire competitors. Businesses touted the economies of scale. Heileman responded by purchasing two smaller Wisconsin breweries, the first in 1959, followed by four more regional breweries in Minnesota and Kentucky during the 1960s. The largest acquisition came in 1969 with Milwaukee brewer Blatz, which had faltered after seeking to become a national brand. This expansion continued during the 1970s and included breweries from throughout the Midwest, as well as the East and Northwest with the purchase of Carling and Rainier, along with Texas brewer Lone Star in 1983. The number of American brewing companies shrank from nearly 700 in 1933 to 54 in 1975. While in 1956 Heileman was the 39th largest American brewer with  annual production of about 550,000 barrels, by 1978 they brewed more than 7 million barrels and were number five. In the 1980s, they briefly occupied third place behind Anheuser-Busch and Miller Brewing.

Marketing became increasingly important. Heileman was one of the earlier brewers to appeal to the then young generation of Baby Boomers who were coming of age. They updated the labels and packaging, promoted light beer lower in calories and alcohol, and found ways to enter new markets as well as to increase their share of traditional ones.

Among their biggest successes was their sales in Chicago, the nation’s third largest beer market. Despite rival Milwaukee brewers Miller and Pabst being closer, Heileman and its distributors aggressively priced and promoted their beer, and by 1977 Old Style was the largest selling brand in the Chicago area, a title it did not relinquish to Budweiser until the mid-1990s.

Heileman advertising emphasized its Wisconsin heritage by stating their beers were “brewed in God’s country.” It also featured a technical aspect of the brewing process, boasting that both Old Style and Heileman’s premium-branded beer, Special Export, were “fully kraeusened.” Beer drinkers were not expected to understand the complexities of the term, but the ads stressed that this more expensive and labor-intensive traditional German method was not used by other large American brewers and resulted in better beer. (Of course, kräusening was used by some other breweries, including Anheuser Busch, but not all breweries did this.)

Another popular Heileman promotion was the “world’s largest six-pack,” a set of six large outdoor tanks adjacent to the flagship La Crosse brewery that were encased in a plastic covering that matched the labels on cans of Old Style. Visitors who toured the Heileman brewery were given souvenir post cards of this attraction.
In addition, the company helped the city of La Crosse found its annual Oktoberfest, a popular event that continues today as one of the largest such celebrations outside of Munich.

Bond . . . Alan Bond (Or, A Bad Time for Beer)

Dramatic as the growth was, Heileman realized that the future lay in national distribution. There was speculation and brief discussion of merging with Wisconsin rivals Joseph Schlitz and Pabst Brewing Company during the early 1980s. The struggling Schlitz, once America’s largest brewer, was eventually purchased by Stroh, another relatively large Midwest brewery with expansion on its agenda. Nor was Heileman immune to corporate raiders. Among these was Alan Bond, who controlled mining and media businesses in Australia, and had recently taken over Australian brewers Swan, Castlemaine and Tooheys. Bond greatly desired to enter the American brewing market.

A dashing figure and captain of Australia’s victorious entry in the America’s Cup yacht races, Bond set his sights on Heileman. In September 1987, after an initial offer had been rejected, he persuaded Heileman shareholders to accept a package that valued the company at more than $1.3 billion. The transaction, known as a leveraged buyout (LBO), was financed with “junk bonds” that had little security, but offered investors high yields. LBOs use the cash flow from the acquired business to pay off the debt, in this case estimated to be $850 million. Faced with such a high debt load, Bond was under pressure to make Heileman perform.

Costs were trimmed, but instead of spurring growth and profit, the result was that sales declined and the company began to lose money. The Bond empire unraveled as world financial markets reacted to the excesses of LBOs and junk bonds. Beset by accusations of financial misdeeds in Australia, and by Heileman’s poor performance in the US, in 1990 Bond was forced to resign from his own holding company, which recorded the greatest single-year loss in Australian history. He later served four years in prison for financial fraud.

With the value of its growing debt exceeding its assets, Heileman declared bankruptcy in January 1991. They continued to operate under the protection of the court but were unable to hold back the tide of red ink. In 1993 the court allowed Heileman’s creditors to sell the company for $390 million to a Texas investment partnership that specialized in turning around troubled firms. The new owners had no experience in brewing and made several missteps, including offering a menthol-flavored version of Colt 45 Malt Liquor that drew charges of racism and calls for a boycott. In early 1996, faced with the inability to make required interest payments and meet its payroll, Heileman declared bankruptcy a second time, agreeing to be acquired by the Stroh Brewery Company of Detroit, which was fighting for its own survival. Stroh closed several inefficient breweries and used the Heileman facility in La Crosse to brew a variety of brands. However, beer sales flattened for all brewers in the late 1990s, and Stroh announced in 1999 that it would cease brewing and sell its brands, including Heileman’s, to competitors Miller and Pabst.

The End And A New (Old) Beginning

The La Crosse brewery, home to Heileman operations for 138 years, closed on August 8, 1999, marked by a black-bordered article in the local newspaper. More than 500 employees lost their jobs. A group of former Heileman managers and local business leaders sought to find a way to reopen the plant. There were several false starts, but by early 2001 the newly resurrected City Brewery (the original name used by Heileman and Gund in 1848) was again brewing beer. They secured contracts from other brewing firms such as Pabst, which had closed all of its production to become strictly a marketing company. And they produced other beverages, including packaged cocktails, coolers, tea and energy drinks, as well as bottled water. Heileman had long promoted and used an artesian well on the brewery property as the source of its water.

City Brewery did not own any of the former Heileman brands, which now belonged to Miller and Pabst, although ironically one of the beers they brewed under contract to Pabst was Special Export. For their own sales, they created new brands: La Crosse Lager and La Crosse Light used the former Old Style and Old Style Light recipes, while City Lager imitated Special Export. These were promoted as being “fully kraeusened” using the same methods and resulting in the same flavor as the original beers, and distributed in the heart of Heileman’s original Midwest market. The “world’s largest six-pack” at the brewery was recovered to resemble cans of La Crosse Lager.

In 2006 Anheuser-Busch took over regional brand Rolling Rock and closed the brewery in Latrobe, Pennsylvania, where it had been brewed for 67 years. City Brewery stepped in with a plan to duplicate their modest success in La Crosse. Again they struggled, and the plant was idled briefly in 2008; since 2009 it has again been producing contract beers for other brewers. More recently, in early 2011 City purchased its largest property, a brewery in Memphis built by Schlitz and later operated by Coors. They say they hope to expand production there.

Today City Brewery survives as the largest contract beer and beverage producer in the US, with more than 800 employees and the fourth largest capacity among American brewers.  Much of their production isn’t beer, however — they produce 4 Loko, Mike’s Hard Lemonade and other “alcopops.” No doubt it’s a different business than Gottfried Heileman envisioned back in 1858, but it does recall and preserve at least a portion of a long and proud brewing history.

The Recipe, Please

Many of today’s popular American lagers approximate the beers brewed by Heileman, especially during its last 40 years. However, the author admits to an attempt early in his homebrewing days to please a friend who claimed to drink only light beers. The result was a beer that was surprisingly close to Old Style Light, and which went on to win a Bronze Medal in the Light Lager category of the National Homebrew Competition.

The recipe also employs a technique used and highly promoted by Heileman. Kräusening is the use of newly fermenting wort that is added at bottling or kegging in order to carbonate the beer and provide additional conditioning.

In a lager fermentation, it is common for the yeast to produce vicinal diketones (VDKs) to such a level that they cannot take them all back up by the end of primary fermentation. The most well-known VDK is diacetyl, a molecule that lends a buttery or butterscotch character to beer and is generally considered undesirable. (A few ales, most notably Redhook ESB, intentionally retain a small amount of diacetyl as part of their flavor profile.)

One solution to the problem of diacetyl is to perform a diacetyl rest. The brewer allows the temperature of the fermentation to rise at the end of primary fermentation to around 60 °F (16 °C) from lager temperatures, which are lower than this. The higher temperature keeps the yeast active and they can then reduce the levels of diacetyl. Breweries that employ diacetyl rests monitor VDK levels and do not package the beer until they have dropped below the point at which they can be perceived by beer drinkers.

Kräusening is another method for lager brewers to deal with VDKs.   Instead of allowing the fermentation temperature to rise, and the heat to spur the primary yeast to keep going, fresh yeast is added to the beer. The fresh yeast is added in the form of fermenting beer, or kräusen beer. The fresh yeast have no problem taking up the residual VDKs left behind by the primary yeast and, as a bonus, the carbon dioxide given off by the active yeast can be retained to carbonate the beer. There is no doubt that it adds another level of complexity to the brewing process, but there are those who claim it results in a finer, more even carbonation and smoother flavor.

Detailed instructions for this procedure are in the recipe on page 28. (The recipe also can be brewed with normal carbonation via priming sugar or forced carbonation if you wish.)

One problem with kräusening is getting freshly fermenting wort at packaging time. A good solution for this is to save (unpitched) wort from your brew day in a sanitized container stored in your fridge or freezer.

A second problem for homebrewers is achieving the right carbonation levels. Because the kräusen wort is added at the peak of fermentation (high kräusen), the amount of sugar in the kräusen wort is decreasing constantly. You need to add it at just the right time, or your carbonation level will be off. For those who keg, this problem is easily manageable. If the beer is over carbonated, you can vent the keg a few times to bring the carbonation levels down. If the beer is undercarbonated, let it sit under the CO2 pressure you will use at serving for a few days.


Old Style Light clone
(American light lager)

(5 gallons/19 L, all-grain)
OG = 1.037  FG = 1.005
IBU = 14  SRM = 2–4  ABV = 4.0%

5 lb 10 oz. (2.6 kg) 6-row pale malt
1.5 lbs. (0.68 kg) rice syrup solids (add at beginning of boil)
2.7 AAU Cluster hops (60 mins)
(0.38 oz./11 g of 7.0% alpha acids)
1.3 AAU Mt. Hood hops (25 mins)
(0.25 oz./7.1 g of 5.0% alpha acids)
1.9 AAU Sterling hops (0 mins)
(0.25 oz./7.1 g of 7.4% alpha acids)
White Labs WLP840 (American Lager) or Wyeast 2272 (North American Lager) yeast

Step by Step
Mash 60 minutes at 149 °F (65 °C) Boiling time is 75 minutes. Ferment at 53 °F (12 °C). Use the following formula to calculate how much kräusen wort to set aside (after boiling the main batch of wort and before pitching the primary yeast):
Vk (qts.) = 12 * Vw (gallons)/D (sgp)

where Vk = is the volume of wort to set aside for kräusening, Vw is the the volume of post-boil wort and D is wort density in specific gravity points. Specific gravity points are the portion of the specific gravity to the right of the decimal point multiplied by 1000.  For example, in this recipe 1.037 is 37 gravity points.
Metric brewers can use this version of the formula:
Vk (L) = 3.17 * Vw (L) / D (sgp)

Add approximately one pint (500 mL) of wort to the calculated volume. This will allow for variations in the degree to which it has fermented before being added to the beer.

Freeze and store the retained wort in a sealed, clean container. Two days before bottling or kegging, add just a little water to account for the boiling losses, and boil the stored wort for 10 minutes to sanitize. Chill the wort after boiling and pour into a well sanitized vessel with enough volume to contain the saved wort plus an additional 10–15 percent. Pitch several grams (approximately 0.1 oz.) of dry, neutral yeast into the sanitized vessel. Stir or agitate well. Cover the vessel loosely with a sanitized lid or aluminum foil and allow it to ferment at room temperature. After two days (48 hours), the wort should be actively fermenting (at high kräusen), yet enough sugars should remain to provide carbonation. Add the fermenting kräusen wort in the same manner you would use priming sugar solution for the rest of the beer that is ready for bottling or kegging. You should leave behind most of the trub (sediment) that has settled to the bottom of the vessel used to ferment the kräusen wort. Carbonation should be completed in approximately 7–10 days at room temperature. (Thanks to homebrewer Kai Troester for the concepts and outline of this kräusening method.)

Old Style Light clone
(American light lager)

(5 gallons/19 L, extract)
OG = 1.037  FG = 1.005
IBU = 14  SRM = 5  ABV = 4.0%

Extract brewers will need to find American lager extract (made with corn as an adjunct).

4.25 lbs. (1.93 kg) American lager liquid malt extract
1.0 lbs. (0.45 kg) rice syrup solids
2.7 AAU Cluster hops (60 mins)
(0.38 oz./11 g of 7.0% alpha acids)
1.3 AAU Mt. Hood hops (25 mins)
(0.25 oz./7.1 g of 5.0% alpha acids)
1.9 AAU Sterling hops (0 mins)
(0.25 oz./7.1 g of 7.4% alpha acids)
White Labs WLP840 (American Lager) or Wyeast 2272 (North  American Lager) yeast

Step by Step
Boiling time is 60 minutes. Add hops at times indicated and rice syrup with 15 minutes left in boil. Ferment at 53 °F (12 °C) and kräusen according to instructions given in the all-grain recipe.

Issue: July-August 2012