The story behind the Stroh brewing family is truly a cautionary tale for enterprising families.
Frances Stroh’s great-great-grandfather Bernhard Stroh emigrated from Germany to Detroit, where the pure Great Lakes water was perfect for making beer. His beginnings were humble as he delivered his brew door-to-door out of a wheelbarrow. The Stroh Brewing Co. was founded in 1850, and Bernard and his progeny built it into a regional brewing powerhouse, Frances Stroh writes in her book Beer Money: A Memoir of Privilege and Loss.
Then, in the 1970s and early ‘80s, the fourth generation of Strohs (Frances’ father and her uncles) took a big step. They made a series of corporate acquisitions that catapulted the company onto the national stage – and the family onto the Forbes 400 list. Theirs became the largest private brewing fortune in America.
Also at that time, however, taste preferences began to change with the emergence of light beer. Competition was ferocious, and margins were shrinking across the industry.
A little over a decade later, Stroh Brewing would be sold for pennies on the dollar.
Today, Frances Stroh is a generational wealth coach who works with high-net-worth business families. In her book and in her coaching practice, the one-time heiress warns about the dangers of over-identification with the family business and its power to destroy corporate value, erode personal wealth and create mental health challenges for family members.
Earlier this year, Frances was a guest on my podcast Serious Coin: Rich Conversations About Wealth. In the following interview, we continued that conversation, digging deeper into the fall of this dynastic fortune, the mistakes that were made and the best practices that she encourages families of wealth to adopt through her coaching and professional speaking engagements.
Frances Stroh: We had taken on all this debt to buy Schlitz for $500 million in 1982. The Wall Street Journal called it “a minnow swallowing a whale.” And that’s exactly what it was. We didn’t have the budget to market the 45 brands we suddenly owned. The industry was changing, everyone’s margins were shrinking. They called it the “beer wars,” and we got caught up in the middle of all of that at exactly the wrong time.
We did have an amazing opportunity to get out of the business at the perfect time in the early ‘80s, when an Australian financier, Alan Bond, came along and offered the Stroh Brewing Company $1 billion for the business. We turned him down. Three to five years later, Coors offered $500 million. So obviously things had changed dramatically in that five years for us. And we were eager to take that offer. But for whatever reason, Coors backed out of the deal.
It’s really crucial for families who are in business together to take the opportunity to get out at the right time. And I’ve really thought a lot about the psychology behind that decision.
Why did the board make that decision?
It was a family-run board. There were outside board members, but they were really there just to sort of rubber-stamp what the family board members wanted. We didn’t have a system of checks and balances that a publicly traded company has. And ultimately, there was one guy making the decision. It was [Frances’s uncle] Peter Stroh, and he wanted his sons to work at the company.
We’d been in that business so long as a family, nearly 150 years, and they couldn’t imagine what life would look like after a sale of the company. Where would their sons work? They’d been groomed since birth to work at the Stroh Brewing Company. And that’s where families make a huge mistake, grooming their children to think that they should work in the family company.
That's where families make a huge mistake, grooming their children to think that they should work in the family company.
Frances Stroh
That’s right. Peter wanted to work for the CIA. He had an accident when he was in training and was hit by a truck. After that, he went into the family business. And my uncle Gari, he would have been happy raising horses and riding and doing shows and maybe playing polo. But he worked there. He was on the board. He ran the ice cream division. And my father was an artist at heart and wanted to be a photographer. His mother talked him out of going to art school, and after college, he went into the family business but was never happy there and never felt as if he was realizing his full potential.
I don’t think any of the fourth-generation family members who went into the business were exploring their true passions. And there were no other examples of people who had gone off and figured it out for themselves. Actually, the one who did, my Uncle Nick, sadly was killed in Africa; he was reporting on a war in Uganda and they didn’t like what he was writing about. So that was not a very great role model for everybody else because of what happened.
In hindsight, then, what do you think should have happened with the business?
Of course, it’s always easy to look back with 2020 hindsight, and I know they did the best they could at the time with the information they had. But getting some education (which may not have existed in the ‘80s) about how to support the next generation to go out and find vocations that match their passions, that would have been wise.
When you put your dreams aside to please your parents or fulfill some idea they have for your future, all too often the depression and the feelings that arise around giving up your dreams leads to substance addiction and other forms of dysfunctional behavior and mental illness. And then that has a generational impact.
It’s tragic when that happens, because it’s so hard to reverse that downward spiral that a family can get into. And it really starts with supporting each generation to fulfill their dreams in the best and most authentic way.
And you have done that successfully. You were quite determined to be independent from your family at an early age, it seems.
Well, it was easier for the girls because we were not pressured to join the family business. In fact, we weren’t encouraged to on any level. So in some ways it sounds sort of funny, but that patriarchal family structure was the best thing that ever happened to me.
I can’t help but wonder, though, what it was like for you growing up with having the Stroh last name in the city where the company was so hugely successful. How much of your identity at a younger age was also tied to this business, even though you didn’t work in it?
I don’t think much of my identity was tied up with it because I didn’t ever think, “Oh, I’m going to grow up and work there.” And my mother also really tempered the messaging. She was very good at helping us understand, or at least helping me understand, that this business might not always be there, and that we couldn’t count on it. I also went away to boarding school when I was 14, and even though Stroh’s was just going national, people didn’t really know about it on the East Coast yet. And so I got to be just one of the kids at the school, and that was great.
It was only in the Detroit area where people, it seemed at that time, knew the name and would ask, “Oh, is that, you know, the beer?” And my mother always said, “Yeah, tell them it’s just the same name but it’s not the beer family.”
Why do you think she did that?
I think she just she liked to be very low key. She didn’t want to draw a lot of attention to herself. She wanted us to be that same way. She was wise and prepared you well. You don’t want to mislead people. She might have gone a little overboard.
That’s right. I think I identified more with my mother’s side of the family. Interestingly, my great-grandmother, my grandmother and my mother all became investors. Either they got divorced or their husbands died young, and so they had to figure out how to invest on their own and how to manage their finances. And that was a path that really sort of inspired me. And I’ve always been interested in investing and have always done my own investing.
Tell me about your life today and what you’re investing in.
Mostly technology and also some real estate. I’m also investing in my business, which is coaching high-net-worth families who are either in business or have been in business or are looking for ways to guide their kids into the world — whatever age their kids happen to be — in a healthy way. Whatever stage they happen to be in, whatever generation they happen to be in, to be able to be the most contributing, high functioning citizens they can be.
Kelly Willis Green is an independent marketing advisor to organizations seeking to better understand, reach and satisfy the unique needs of high-net-worth individuals. She is the creator and host of Serious Coin, a podcast that explores the financial, emotional and lifestyle benefits and challenges of coming into wealth.
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