America's Oldest Brewery

While he jokes that retirement is "indefinitely on hold," he also admits that his management style has a limited shelf life. "I'm good at running a small business," he says, "but we're not a small business anymore."

America's oldest brewery may no longer be a small business, but its transition is far from complete. "There are times you can call the brewery and ask for Dick Yuengling," says Chris Caffey, who is president and CEO of I.H. Caffey Distributing Co., a North Carolina distributor that handles Yuengling, "and the voice on the phone says, 'Speaking.'"

The company now has excess capacity, two modern plants, and a 160-employee, multistate operation. What it lacks is the additional layer of management needed to run such an operation. Dick Jr. boasts that his relatively flat, informal management structure prevents the company from getting too bureaucratic or corporate. But the result, as with many family businesses, is a top-heavy company that is often too reliant on one person, Dick Yuengling. "It's a fine line trying to maintain the laid-back, flexible attitude and yet still not become corporate America," concedes Jennifer. "It's hard. We don't have a board of directors. We don't have managerial meetings every week. There's basically one guy here that controls the whole operation. And that's something that, as we do expand, we're going to have to sit down and discuss."

That lesson was driven home with the 1999 move into Florida. Because the brand had always relied heavily on barroom buzz -- and very little on actual marketing -- it had always grown through baby steps, expanding into contiguous states and cultivating word of mouth. But Yuengling suddenly had a brewery in the Sunshine State, and it suddenly had to sell beer to people who -- far from clamoring for Yuengling -- had never even heard of it. "Florida put a kink in the whole thing," Casinelli says. "It was counterculture to what we were used to doing."

Although Florida is the nation's third-biggest beer state, Yuengling kept staff levels low and didn't throw a lot of money into marketing. The brand flailed initially. "We became a small fish in a big pond," Casinelli says. "We had to figure out where our place was." More recently, with the building frenzy behind them, Yuengling and Casinelli have been able to devote more time and resources to Florida, going region to region. Sales are up more than 40% in the past year, and Yuengling is now selling 5% of its beer there.

North Carolina proved easier. Rather than expand north from Florida, the brewery kept moving south from its core markets in the Northeast and entered North Carolina in 2002, with brand awareness already building. "Prior to the launch, I would have people ask me, 'Do you know where we can get Yuengling? When is it coming?'" says Caffey, the Greensboro distributor. "The old clichZ, 'It took off like a rocket,' is true." The brewery has captured a 3% market share in the Tar Heel State, selling as much beer there -- some 65,000 barrels -- as it does in Florida.

And for the first time in its history, Yuengling is looking to add middle management. The primary mover has been Casinelli, the outsider who came onboard in 1990. Eight months ago, he started looking at where the brewery could add new departments and the bodies to fill them. In March, consultants first set foot in the house that David Yuengling built, helping to draft a set of recommendations for his great-great-grandson. Among the ideas on the table: splitting the operation into two, with one focusing on Pennsylvania and Yuengling's other core markets, the other on expansion. Moving deliberately, as always, Dick Jr. has agreed to start searching for operations managers. "I don't think you can grow to the point we've grown and still be totally hands on," he says. "You can't call Microsoft and talk to Bill Gates. You've got to get people in the proper place. And sometimes as an owner, it's hard to do it. I at least recognize it."

"We don't have a board of directors. We don't have managerial meetings. There's one guy who controls the operation."

"Dick does recognize this," Casinelli says, "but I'm not sure if he's embraced it yet."

It is important for a company like Yuengling, says UCLA management professor Eric Flamholtz, who advised Starbucks on its rise from coffeehouse to coffee conglomerate, to maintain its unique culture -- but not in lieu of meeting the demands that come with rapid growth: formal long-term planning and a management team to carry out those plans. The "tipping point," says Flamholtz, usually comes at either the $100 million-revenue or 500-employee mark, and failure to address the infrastructure needs can sink a company. "I liked being a teenager," Flamholtz says. "But you can't be one forever."

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