IN THE ILLINOIS BREWING INDUSTRY: 1870 - 1920
NORTHERN ILLINOIS UNIVERSITY
A NON-THESIS RESEARCH PAPER SUBMITTED TO THE GRADUATE SCHOOL
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE DEGREE
MASTER OF SCIENCE
DEPARTMENT OF GEOGRAPHY
MARK L. HEALY
BACKGROUNDBrief History of the US Brewing Industry
Locational Factors in the US Brewing IndustryLocational Factors in the Ale Era
Locational factors of the Lager EraCultural Factors
Locational Factors of the Concentration EraEconomic Factors
Cultural and Other Factors
Illinois: Breweries and GermansThe Brewing Industry in Illinois
Germans in Illinois
METHODOLOGY AND FINDINGSThe Study Question
Methodology and Findings
There has been tremendous growth in the number of breweries in the United States in the past two decades with the "introduction" of microbreweries and brewpubs. This renewed interest in beer has attracted academic research into the history, economics, and geography of the brewing industry. In 1966 Baldwin noted a lack of such studies, especially geographical studies. But several studies of the industry have been done since then (Downard 1973, Dick 1981, Greer 1981, Cook 1987, Kelsey 1988, Smith 1990, Higgins 1993, Peterkin 1996, Simon 1998). Many of these have been of a non-geographical nature, yet interest in the geography of the industry has grown as well.
An earlier expansion in the number of breweries in the United States occurred during the latter half of the nineteenth century. This growth coincided with a large increase in the number of German immigrants coming to the US. Large numbers of these Germans settled in the mid-western states, including Illinois.
Many writers have qualitatively discussed this historical relationship between German immigration and the number and the location of U. S. breweries (for example: Cochran 1948, Alexander 1963, Baldwin 1966, Dick 1981, and Smith 1990). John Alexanders (1963) discussion of Germans and the brewing industry is quoted in Dick (1981, p 200):
Here the location of a particular type of people who have both an unusual desire for the beverage and a particular aptitude for making it is a determining influence on the location of this industry. Germans have long been recognized as adept braumeisters, and many brewery companies bear German names. Few other industries in the United States have a locational pattern that illustrates so well the power of an ethnic factor in influencing location.
Baldwin (1966 pp. 25-26) writes, Specifically, it was the German segment of these immigrants who were so intimately involved with the growth of brewing in America . . ." Although most brewery studies discuss this German influence, I have found no quantitative studies on the importance of German immigration as a locational factor in the U. S. brewing industry. Furthermore, little research has been done on the history of the brewing industry in Illinois. Illinois neighbor to the north, Wisconsin, is well known for its beer production ability and its heavy German population (beer and brats). Yet, Illinois also was a major brewing state in the nineteenth century. The Chicago Tribune noted that Chicago was once considered the beer capital of the United States (Sawyers 1989) and not without reason. Illinois was also a destination for a large number of German immigrants during the waves of German immigration in the 1800s.
The question to be studied is quite straightforward: what is the relationship between the number and location of German-born residents to the number and location of breweries operating in Illinois from 1870 to 1919?
# of breweries = f (# of German born residents)
This study describes a statistical connection between Illinois brewing industry and its German population during the late 19th and early 20th centuries.
The need for this research is based on a number of factors. There is growing interest in the consumption of beer and in the history of the brewing industry in the United States. Most of the research on the brewing industry has been of a non-geographical nature and the geographical research on brewery location has been qualitative rather than quantitative. Finally, little has been written on the location of breweries in Illinois.
This paper will begin with a brief overview of the history of the U. S. brewing industry. I will then identify and discuss the brewery locational factors within this historical context. An examination of German immigration to Illinois and the number of breweries in Illinois during the second half of the nineteenth century will follow. This will prepare us for a discussion of the available data, and the research design and results.
Brief History of the US Brewing Industry
Baldwin (1966) has identified three eras of the American brewing industry based on the number of breweries operating: the ale era up to 1840; the lager era from 1840 to 1873; and a period of concentration from 1873 to 1979 (figure 1). It appears that we are currently in a fourth era that is characterized by renewed growth in the number of breweries as changes in technologies and laws have promoted a new microbrewery industry.
The ale era began with the earliest settlements along the East Coast and continued up to about 1840. This era was characterized by slow growth in the number of breweries and by the production of ales, much of which was produced at home. The number of breweries reached 132 by 1810 and about 400 by 1840.
The lager era began with the operation of the first lager brewery in the US in 1840. This period is characterized by rapid growth in the number of breweries, which peaked in 1873 with 4231 breweries operating in the United States. The rapid increase in the number of breweries after 1840 was the result of a gradual change from the home brewing of ales to the commercial brewing of lager beers, the preferred beer of the large population of German immigrants. Lager beer requires a two-week lagering period during which the temperature must be kept near freezing. This requirement along with the increased demand from the German immigrants encouraged commercial brewing and resulted in a dramatic increase in the number of breweries.
Figure 1. Number of breweries in the US and Beer Production, 1810-1964 (from Baldwin 1966).
The lager period was followed by a period of concentration. A slow and steady decline in the number of American breweries was accompanied by a steady increase in beer production as breweries merged and took advantage of new economies of scale. Prior to prohibition in 1920 approximately 1600 breweries were in operation (Smith 1995). On April 7, 1933, the 21st amendment to the US constitution was ratified and prohibition was repealed. By June, thirty-one breweries had reopened and 756 were back in operation in 1934 (Bull 1984), but the number of breweries soon continued its decline.
The current era is a second period of growth represented by the increasing number of microbreweries. Peterkin (1996) states that the beginning of the craft brewing industry in the United States began in 1979 with the repeal of a prohibition era law banning home brewing. By mid-1995 approximately 606 craft breweries were operating in the US.
Locational Factors in the US Brewing Industry
The factors influencing the number and the location of American breweries can be organized into four categories: cultural factors, economic factors, legal factors, and other factors (figure 2).
Figure 2. Locational Factors in the American Brewing Industry
CULTURAL FACTORSPre-German ales
Effect on production
Effect on consumption
Introduction of lagers
ECONOMIC FACTORSRaw Materials and Transportation Costs
LEGAL FACTORSTemperance and Prohibition
The civil war
OTHER FACTORSHistorical inertia
Locational Factors of the Ale Era
Both cultural and economic locational factors could be expected to have had an influence during the ale era of brewing in America. Prior to the settling of North America beer was a popular drink in Europe. It was often used as a substitute for contaminated water and it was therefore a standard provision on ships making the trip to the New World. Early colonists drank ales that were popular back in their native England. These brews were prone to spoilage, but could easily be brewed at home where most early brewing took place. The first commercial breweries therefore were market oriented and arose in the urbanizing areas of the northeast. Furthermore, the procedure for brewing ales requires fermentation at temperatures of less than 75°F which are more easily attained in the north. Further south the stronger spirits were manufactured.
Locational Factors of the Lager Era
The lager era is characterized by a rapid increase in the number of breweries in the United States (see figure 1), especially in the mid-western states of Wisconsin, Minnesota, Illinois, Michigan, and Ohio. Concurrently, growth continued in the market oriented northeast. These northern and midwestern locations can be explained by cultural and economic locational factors. Furthermore, the large increase in the numbers of breweries can be explained by the German preference for lager beer and by idiosyncrasies in the lager beer brewing process which makes the home brewing of lager beer more difficult than that of ales. Many of these new breweries brewed lager beers and were owned and operated by German immigrants.
According to Smith (1990) between 1820 and 1900 over five million German immigrants settled in the United States (one million more than the Irish, the next most populous immigrant group). Between 1840 and 1879 two million, eight hundred thirty five thousand (2,835,000) Germans emigrated to the United States. This represents thirty-one percent of all immigrants during this time. States with high German immigration include the eastern states of New York, Pennsylvania and New Jersey, the midwestern states of Wisconsin, Minnesota, Iowa, Illinois, Michigan, and Ohio, as well as California in the west. The German settling of the midwest moved the market for beer westward and new breweries followed.
Classical industrial location theory is based on the work of the German economist Alfred Weber. Webers work begins with the assumption that transportation costs are directly related to distance and weight. He then classified raw materials as either ubiquities (universally distributed) or localized (found only in specific locations), and as pure raw material (those that lose no weight in the production process) or weight-losing (those which do lose weight). The total transportation costs (TTC) then include the costs of bringing the raw material (RM) to the plant and of distributing the final product (FP) to the market (TTC = RM + FP). The rational, profit-maximizing brewer then would locate the brewery where total transportation costs are lowest (assuming constant production costs).
Beer is composed of four main ingredients: water (which makes up 97% of its weight), grain (usually barley, but corn, rice, sorghum, wheat, and others are also used), hops (a bitter tasting flower of a plant in the cannabis family), and yeast (used to promote fermentation).
Water could be considered a ubiquitous raw material (assuming that water quality and taste is the same everywhere). Therefore there are no transportation costs to deliver water to the brewery and the only transportation cost is to deliver beer to the market. Locating a plant at the market then would minimize these costs (figure 3). Since water is by far the largest component of beer we would expect the location of breweries to be market oriented. Furthermore, prior to the invention of pasteurization, beer was easily prone to spoilage requiring consumption to occur temporally, and in the nineteenth century, geographically close to production.
Figure 3. Transportation Costs: Ubiquitous Raw Material
A second economic factor affecting the location of breweries during the lager era of industry growth results from characteristics of the brewing process. Simple Weberian location theory assumes production costs do not change with location or with the size of the plant. (I will discuss economies of scale later). We have already seen that at a national scale during the ale era, the production of ales occurred in the northern states due to the ease (lower costs) of achieving the required 75°F or lower temperatures there.
Brewery location on a regional scale during the lager era is also affected by characteristics of the production process. This is a consequence of the German preference for lager beer. One difference between lagers and ales is that lager beers require a second fermentation, or storage, period (lager in German means to store) of over two weeks at near freezing temperatures. Prior to mechanical refrigeration in the 1880s, this required large quantities of ice. Ice is a somewhat localized, weight-losing, raw material. Classical industrial location theory would indicate that the preferred (lowest cost) location would be at the source of the raw material (figure 4), i.e. in states in the north with sources of ice.
Figure 4. Transportation Costs: Localized, Weight-Losing Raw Material
This raw material orientation is due to the higher transportation costs of hauling the weight-losing raw material (ice) to a market oriented plant (brewery) compared to the cost of shipping the final product (FP) from a resource oriented plant. This is especially true for ice since it is a perishable raw material and much would be lost shipping it to breweries located at markets with warmer climates.
The net result of these economic factors can be seen in figure 4. During the lager era a majority of the new breweries were located in the northern states near a source of ice. Within this region, the numerous small breweries were located near their markets.
Dick (1981) identifies micro-scale locational factors to explain the location of breweries within towns or to explain which towns had more breweries. Natural caves and hillsides into which caverns could be dug were the preferred locations. The natural cooling within these caves and caverns reduced the need for ice.
The other raw materials needed for the brewing of beer (barley, hops, and yeast) had little locational impact. Barley was grown locally throughout the midwest or was transported from the east. Hops were used in such small quantities that the transportation costs were negligible.
The temperance and prohibition movement, and the taxation of the industry were the major legal factors affecting brewery location during the lager era. Curiously, the early temperance movement promoted the use of beer as an alternative to distilled spirits with their higher alcohol content. For example, the first federal alcohol tax imposed in response to temperance advocates was imposed only on distilled spirits. In general though, where temperance movements were strongest, there were fewer breweries. (Baldwin, 1966, p. 129).
Locational Factors of the Concentration Era
The number of breweries in the United States peaked in 1873 at about 4,231. The number of breweries initially dropped very quickly to less than 3000 by 1875 and then a slower decline continuing up to the microbrewery era of renewed growth beginning in about 1979. Beer production, after an initial slight decline, continued to grow through this period of industry concentration except for the thirteen years of prohibition from 1920 to 1933.
Obviously, beer production per brewery increased during this era. The result was fewer small breweries with a local market and two types of larger breweries: those with a large regional market and those with a national market. An investigation of this industry structure will illuminate additional location factors. Several questions arise: Why did the brewing industry become more concentrated? Where were the large regional breweries? Where were the new national breweries? And finally, where were the small breweries that survived?
Several inventions of the later nineteenth century contributed to the growth of individual breweries to meet increased demand. Steam power ran the machines and boiled the wort (the liquid separated from the mash of cracked grain and water). There were inventions to cool the wort after boiling, mechanical refrigeration for the lagering process (eliminating the need for ice), pasteurization to retard spoilage, and bottling which promoted the home consumption of beer. Finally, an improved national transportation system of railroads allowed individual brewers access to a much larger market.
According to Baldwin (1966) in 1877 only two of the nations ten largest breweries had a national market and of the thirty-two largest American breweries, six were national. But by 1895, five of the nations eight largest brewers had national distribution systems. All five of these national brewers were located in the midwest (Best [later called Pabst], Schlitz, and Blatz in Milwaukee; Moerlein in Cincinnati; and Lemp and Anheuser in St. Louis), while all but three of the large regional brewers were located in the northeast with fifteen in the state of New York alone.
Several locational factors contributed to this distribution. Cochran (1948) explains the prominence of Milwaukee (and the midwest) by citing lower labor costs, a nearby supply of ice, small local population, location relative to Chicago, differential influence of prohibition, and differential costs of expansion.
A few of these deserve further explanation. The small size of the local market, according to Cochran, encouraged the Milwaukee brewers to compete nationally as the local markets soon became saturated. Whereas the large eastern brewers had less incentive to do so since they had much greater local demand. Furthermore, this practice of exporting was encouraged by the neighboring large Chicago market and by the great Chicago fire of 1871, which destroyed five breweries including the Lill and Diversy brewery, the largest brewery in the west. Following the fire, exports of beer to Chicago from Milwaukee increased 44 percent.
Growth of national breweries in the midwest was also encouraged by the comparatively lower expansion costs. Cochran argues that the eastern breweries faced higher costs of expansion in the large crowded cities of New York and Philadelphia compared to those found in the midwest.
Finally, the prohibition movement was stronger in the more populated east, making eastern brewers more reluctant to invest in expansion of a plant that may soon have to be closed.
To these factors, Baldwin (1866) adds that the growing markets to the west were becoming more accessible with the expanding railroad network. This gave mid-western breweries an additional advantage.
Cultural and Other Factors
Economic and cultural factors help to explain the location of the smaller breweries that survived longer during the era of concentration.
Baldwin (1966, p. 102) states that of the thirty-eight small breweries (annual capacity of 20,000 to 75,000 barrels) in the United States in 1964, nineteen, or 50% were located in the state of Wisconsin. Of the remaining nineteen, six were located in neighboring Minnesota with no other state having more than two. In 1964 Wisconsin had a total of twenty-seven breweries. With nineteen small and six national breweries, only two breweries had an annual output in the 250,000 to 3,000,000 barrel range and could therefore be classified as regional breweries. In other words, in 1964 Wisconsin had 43% of the nations large breweries (annual capacity over 3,000,000 barrels) and 50% of its small breweries, but very few breweries of an intermediate (regional) size.
Several factors can be offered to explain this distribution. First, Milwaukees large national brewers had little interest in the sparsely populated areas of their hinterland as they focused their attention and shipping skills on more lucrative markets. Second, Milwaukee was Wisconsins primate city with a population in 1960 of 866,404 far surpassing that of its second-ranked city: Madison (1960 population of 126,706). Such a population distribution discourages growth of larger regional breweries. Finally, Baldwin (1966, p.108) credits the brewing and beer drinking traditions of the descendants of the German immigrants for the large number of small breweries that survived in Wisconsin and neighboring states, states that received large numbers of German immigrants during the concentration era.
Illinois: Breweries and Germans
The Brewing Industry in Illinois
The first brewery in Illinois, operated by William Lill and Co. (later called Lill and Diversey), opened in 1833. (There is evidence of an earlier commercial brewery in Casaquias, IL, which may have opened in 1765 [Bull 1984].) The number of breweries in Illinois peaked in 1874. In that year alone 88 breweries began operations, although many failed within a few years. According to Bull (1984) prior to the current microbrewery period, Illinois ranked fifth in the total number of breweries operated in the state with a total of 366 (see table 1). One hundred fifty six of these were located in the city of Chicago.
Two significant events are unique to Illinois brewing history: the Great Chicago Fire in 1871, and Chicagos response to prohibition. Cochran (1948), Baldwin (1966), Smith (1995), and others have noted the importance of the Great Chicago Fire on the growth of Milwaukees brewing industry. As Smith (1995 p. 147) states, "It had a big impact on beer . . . . as the fire swept north the breweries were among its casualties. Many rebuilt, but not before the companies from Milwaukee had taken advantage of the misfortune of Chicagos brewers by grabbing a huge share of the beer market." Actually, only 6 Chicago breweries closed permanently in 1871, but Milwaukees future as Americas beer capital was sealed. Prohibition had a smaller impact on Illinois brewing history (especially Chicagos) than it did elsewhere in the nation. Fifty-nine Illinois breweries closed in 1920, the start of prohibition, and another 17 closed before prohibition was repealed in 1933. Six, all in Cook County, remained open throughout prohibition legally brewing "near" beer (Bull 1884). But as Smith (1995 p. 147) notes: "As law-abiding breweries tried to limp along, the mob gangs of Bugsy Malone and Al Capone became rich by running as many as twenty breweries right through prohibition ."
Table 1: Number of Breweries by State (excluding microbreweries)
Dist. of Colum.
(from Bull, 1984)
The last of the lager period breweries in Illinois closed its doors in the fall of 1988. The Stag Brewery (then owned by G. Heileman Brewing Co.) had been in operation in Belleville, Illinois, since 1851. Its closing ended an era of local and regional breweries in the state of Illinois just as the first of many new microbreweries had opened their doors in Chicago just a year earlier.
Germans in Illinois
Table 2: Number of German Born Residents by State (sorted by 1870 data).
1870 1880 1890 1900 1910
METHODOLOGY AND FINDINGS
The Study Question
The question studied is quite straightforward: what is the impact of the number of German born residents on the number and location of breweries operating in Illinois counties from 1870 to 1919?
# of breweries = f (number of German born in county)
BREW = b0 + b1 * GER
Data for the number of breweries operating in each county of Illinois was compiled for the following decades: 1870-1879, 1880-1889, 1890-1899, 1900-1909, and 1910-1919. Data for the number of people in each county of Illinois who were born in Germany was gathered from census data for the following years: 1870, 1880, 1890, 1900, and 1910. This data can be found in appendix A and is illustrated in Figure 5 (for 1870 only) and summarized in Table 3.
Figure 5.: Number of Breweries and German Born Residents in Illinois, 1870
Table 3. Number of Breweries and German Born Residents in Illinois
YEAR # BREWERIES GERMAN BORN POP. GERMAN BORN AS % TOTAL 1870-1879 182 203788 (1870) 8.0 1880-1889 154 235786 (1880) 7.7 1890-1899 155 338382 (1890) 8.8 1900-1909 144 331605 (1900) 6.9 1910-1919 109 319164 (1910) 5.7
Data for the study came from two sources. The number of breweries operating in Illinois was compiled from American Breweries by Bull, Friedrich, and Gottschalk (Bull 1984). American Breweries contains a list of breweries known to have operated in the
United States (Smith 1990, p. 50). It is organized by state and city and lists the brewery name, name changes, and years of operation. Although their list is often used by researchers, some significant omissions have been found. Smith (1990, p. 118) notes that prior to 1875 it is noticeably incomplete and it lists just over ninety percent of the 2741 breweries known to exist in 1880.
Census data on the number of German born residents living in Illinois by county was retrieved from the internet (ICPSR 1998). The data used included the "number of persons born in Germany" for the years 1870, 1890, and 1900; "the number of persons born in the German Empire" for 1880; and the "number of white persons born in Germany" for 1910.
A decision was made to regress the number of breweries operating the decade following a census (e.g. 1870-1879) on the number of persons born in Germany for the census taken at the beginning of that decade (e.g. 1870). Regressions using the number of breweries operating in the decade prior to the census date were also run with very similar results.
Methodology and Findings
A bivariate ordinary least squares regression was run using data for each decade and using the combined data (all 5 decades). Table 4 gives the results.
A surprisingly high correlation was found. R2 values ranged from .9187 to .9813 for the individual decades and .9013 for the combined data. All values were also highly statistically significant.
These results from Illinois strongly support the qualitative evidence found in the literature connecting the number of breweries in the US with the increase in German immigration during the nineteenth century. The very high R2 suggests that the number of German residents was a powerful locational factor in the US brewing industry.
The readiness of researchers to attribute historical brewery location to German immigrant settlement patterns is understandable. This population provided a market for beer as well as a source of brewers. In this study several locational factors of the U.S. brewing industry were identified in their historical contexts. A short review of German immigration to Illinois was presented, and results were offered showing a close correlation between the number of German immigrants and the number of breweries.
Further studies on possible other locational factors such as climate, proximity to weight-losing resources (ice), and population (market-orientation) may also be useful, yet the results of this study would indicate that the German population is a primary locational determinate.
If geography is truly the study of where, why there, and why do we care?, this study indicates that an investigation into brewery location in the United States should focus on the locational factors affecting the destination of German immigrants in the pre-prohibition period and on the causes of those migration decisions: to where did they immigrate and why did they go there?
As to the why do we care? component of geography cheers!
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