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At one point, the Stroh family was one of the richest in America.

Dolan started with the founding father - Bernard Stroh, who emigrated from Germany to Detroit in 1850. All he had in his pocket was a $150 and a beer recipe. He took that and started selling brews door to door out of a wheelbarrow and eventually that led to a bigger company - Stroh?s Beer.

The company had built up a loyal clientele in the Midwest. In 1980, fourth generation family member Peter Stroh became CEO and went on an acquisition spree. He purchased F&M Schaefer in 1981 and Joseph Schlitz Brewing in 1982. The deals made Stroh?s the third largest brewery in the country.

At the time, Forbes put together a list of the great family fortunes, and the Stroh family came in as one of the richest families in the country. Based on the value of the brewery, they were worth as much as $700 million in 1988. Dolan reports that just by matching the S&P 500, the family would currently be worth about $9 billion.

Dolan says now in hindsight, family members told her when they acquired Schlitz, ?it was like a minnow swallowing a whale.? Stroh's had one plant; Schlitz had 6. The sheer volume of the deal overwhelmed the Stroh?s company. It had taken on too many different brands and too much debt and lacked the marketing muscle to compete on a national level with rivals Anheuser Busch and Miller.

Peter Stroh made more disastrous purchases, changed marketing strategies and even tried to diversify. Nothing worked and eventually Stroh's was sold to Pabst for $350 million. He took a bet on biotechnology and one on Detroit real estate, rather than fix the core beer business. The company lost millions more.

By 1999, there was so much concern that the company would even be able to make interest payments on its debt, that it sold itself for scraps.Miller Brewing bought some of the brands, while Pabst came in and bought the rest at around $350 million.  Most of that went into debt service and employee pension fund liabilities.The rest when into a fund for the family that gave out checks until 2008 when it ran out.

Peter?s brother Eric worked in the brewery and then quit after a fight with the CEO. Eric Stroh's daughter, Frances, told Dolan, ?Her father liked to spend money on antiques, guns, guitars, cameras.

It?s a cautionary tale on how to squander a great American fortune. Based on the story, we asked Dolan what she took away from the riches to rags story. Dolan replied, ?When I inherit a beer company, I will be very careful about expanding it.?

 

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