Prohibition turns 100: How brands like Bacardi, Jim Beam, and Budweiser survived
A year ago, just over one-fifth of Americans participated in Dry January, a trendy refrain from booze for 31 days to kick off the year with a healthy start.
Americans didn’t have much of a choice when it comes to alcoholic beverages a century ago. That’s when the nation became really, really dry as Prohibition was federally mandated as of Jan. 17, 1920. A 13-year ban on the sale, production, or importation of alcoholic beverages ensued.
The timing couldn’t have been worse for Bacardi. At the turn of the 20th century, cocktail culture was just starting to emerge in the United States, and sales for Bacardi’s rum were picking up so strongly that the company opened a production facility in New York City in 1916. Like many distillers, Bacardi had to cease operations and retreated to Cuba.
But a travel boom helped lift spirits. From 1916 to 1928, American tourism more than doubled to Cuba, to 90,000 visitors annually. Bacardi spent $7 million (in 2020 dollars) to expand its Santiago distillery to meet demand.
“They hit this roadblock that was their largest market where they were selling Bacardi and demand was high, so how do you reach these people?” asks Rachel Dorion, a sixth-generation family member, who runs communications for the Bacardi Archive.
Bacardi produced postcards that served as token ads to promote a romanticized view of Cuba. A downtown Havana bar owned by the company hosted “influencers” of the day including Bing Crosby, Errol Flynn, and Bob Hope. By the time drinking became legal again stateside, tourists were among those ordering rum when Prohibition lifted in 1933. Bacardi also issued official advertisements that connected the liquor to Cuba.
The marketing was so effective that Fortune in November 1933 would call Havana “the unofficial U.S. saloon” and also reported that U.S. citizens heard about Bacardi from their bootleggers.
American distillers weren’t so lucky. Lem Motlow and Jess Motlow, who ran Jack Daniel’s distillery, returned to their farms, and Lem would breed horses, sell farm equipment, and auction mules. When Prohibition hit, Jim Beam was rumored to store a large barrel of whiskey in his attic for personal use. He did, in fact, put a padlock on the doors of his Kentucky distillery.
Many professionals within the industry had hoped Prohibition would be temporary insanity, not stretch out for over a decade.
Bootlegging flourished, but Beam didn’t think selling whiskey was worth going to jail. “He tried his hand at farming in Florida, which he did miserably at,” says Fred Noe, seventh-generation master distiller at Beam. His ancestor didn’t fare much better at coal mining in eastern Kentucky, nor when he tried to sell limestone rock.
Just down the road, the Samuels family (which now produces Maker’s Mark) got into the banking business, but their timing was terrible as they opened their doors just weeks before the Wall Street crash of 1929. Leslie Samuels also placed a bet on the auto industry but failed at that, too. The family got back into the business only when his son, William, returned from World War II and went back to working in a distillery because his restlessness was driving his wife crazy.
“She decided he needed a job,” says Maker’s Mark chairman emeritus Bill Samuels Jr., the grandson of Leslie. Samuels Jr.’s father created the Maker’s Mark liquid, while his mother, Margie, conceptualized the bottle’s melted wax top.
Only six distilleries in Kentucky were lucky enough to remain in business by securing medicinal licenses. Old Forester was among the lucky few, but for most of Prohibition, it sold depleting stock. It also acquired a peer, Early Times, to secure additional inventory. “We were the first legal distillery to open after repeal,” says Campbell Brown, president and managing director of Old Forester.
The American whiskey industry was devastated by the years of Prohibition. Whiskey requires years of aging in barrels, so most of the stuff sold after repeal was of poor quality. “All of a sudden, Prohibition ends,” Brown adds. “Demand in the United States is immediate, but there’s very little aged inventory.”
Whisky from Scotland and Canada advantageously poured into the market. Americans needed capital to build barrels and buy bottles, but they didn’t have adequate resources with the nation suffering from the Depression. It isn’t entirely a coincidence that the company that makes Old Forester, Brown-Forman, went public in 1933 to raise proceeds and rebuild. Brown-Forman, which also makes Jack Daniel’s, is the only major publicly traded American spirits maker in existence today.
World War II would interrupt production again, as the government restricted the use of corn for the war effort. The Motlow family business didn’t fully recover until the 1950s, when singer Frank Sinatra provided unpaid endorsements by lauding Jack Daniel’s as the best booze in the world.
And while half of the nation’s breweries failed to reopen after repeal, a few notable names managed to stay afloat. Anheuser-Busch sold soda, carbonated coffee- and tea-flavored drinks, and a nonalcoholic cereal beverage called Bevo. The operation made ice cream, refrigerator cabinets, and other goods that it could legally sell.
“We were trying anything we could to keep our employees employed, bottling up to date, and keep in business,” says Tracy Lauer, Anheuser-Busch’s archivist.
Anheuser figured Prohibition wouldn’t last forever, but the company didn’t anticipate that so many Americans would be willing to break the law to drink. In fact, studies have shown that consumption actually increased as Prohibition dragged on. Taste buds changed too. One of the brewer’s earliest comeback ads was called “The Budweiser Test,” asking drinkers to try the brand for five days straight before going back to the beverages they had during Prohibition, which were overly sweet.
Sales seesawed wildly in those years. One million barrels were produced in 1901. But by 1919, production was at essentially zero. A new packaging innovation—Budweiser started selling in cans for the first time in 1936—helped boost sales to 2 million barrels by 1938. To celebrate repeal, two of August A. Busch Sr.’s sons gave him a six-horse Clydesdale hitch. The Clydesdale, of course, remains a Budweiser marketing mainstay.
Meanwhile, Adolph Coors Sr. foresaw Prohibition, and before it arrived in Colorado in 1916, he took ownership of a porcelain company that made tea sets, cookware, and ashtrays. He also produced malted milk that was sold to Hershey, even for decades after repeal. A nonalcoholic replacement was marketed under the Mannah brand.
And by midnight, when repeal was finally official, Coors had beer ready to ship. “Beer was put in the front of the train, right behind the engine, to ensure they were delivered ASAP to California,” says Coors archivist Heidi Harris.
With repeal official as of Dec.5, 1933, Americans flocked to bars. Years of drinking in speakeasies led to fast changes in drinking habits that caught society off guard. “Old retainers in prominent hotels looked puzzled and scratched their heads as they accepted repeated orders for hard drinks,” wrote the New York Times in a piece that reported with alarm that “WOMEN DRINK LIKE MEN.” The concern? Unescorted women were ordering whiskey and soda.
The great irony is that 100 years after Prohibition started, nonalcoholic libations have become trendy. Brands that survived Prohibition are among those actively exploring nonalcoholic drinks. Anheuser-Busch InBev hopes that by 2025, 20% of sales will be nonalcoholic. Molson Coors has invested in nonalcoholic beverage creator and incubator L.A. Libations, while also marketing Miller64 as “dry-ish.” Guinness and Smirnoff maker Diageo has bought stakes in nonalcoholic spirits makers including Seedlip and Ritual Zero Proof.
Why? Well, it turns out Americans don’t need a government intervention to curb their drinking. Beverage alcohol consumption has dropped for three straight years, according to research firm IWSR, as more consumers are mindful about wellness. Meanwhile, nonalcoholic beverages including bottled water, coffee, and kombucha are worth $7 billion more at retail than just four years ago, Nielsen reports.
Still, things could be worse.
“To be honest with you, the last thing any of us want to do is remember Prohibition,” says Samuels Jr. “It was horrible.”
More must-read stories from Fortune:
—The most anticipated books of 2020, according to Goodreads
—Why this sustainable Icelandic salt is becoming a chef favorite
—The magic of the wedding industry’s most exclusive conference
—No-alcohol whiskey and gin alternatives
—The best travel destinations for every season of 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.