LIQUOR: The Schenley Reserves

As boss and chief stockholder of Schenley Industries, Inc., Lewis Solon Rosenstiel built a $438 million empire and a reputation in the liquor trade as a confident hustler. During Prohibition, while distillers were folding up, Rosenstiel, then a whisky broker, bet his money on Repeal ; he bought up all the whisky he could lay his hands on. Result: the year after Repeal, his new Schenley company had sales of $40 million.

During World War II, when grain spirits were short, Rosenstiel confidently started using potato spirits in Three Feathers, one of his most popular blends. Result: Three Feathers was a top-selling U.S. whisky all through the wartime shortage—largely because it was the most available. Rosenstiel put on his greatest show of confidence by expanding. During and after the war, he bought the Blatz Brewing Co., put Schenley into wines and vermouth (Cresta Blanca, Roma and La Bohème), rum (Carioca), cordials (DuBouchett), brandies (Coronet, J. Bavet and Jean Robert), gins (Silver Wedding, Schenley, Gibson, etc.), and even set up a chemical division to make penicillin and other antibiotics.

Cause for Concern. Recently, Hustler Rosenstiel has tripped a few times. When other brands came back on the market in volume, Three Feathers sales slumped about 90%; last year the brand did not even place in the top 25. When grape prices skidded five years ago, Rosenstiel dropped close” to $14 million by buying at the wrong time. And when penicillin prices cracked recently, he took another beating. Rosenstiel miscalculated on another score: figuring that the public would turn back to straight whiskies after the war, he plugged his straights (I. W. Harper, Ancient Age, Old Charter) more than did other distillers. But the public preferred blends. Straights now account for only 30% of the whisky sold today, v. 60% prewar. Rosenstiel also spread his advertising funds over so many products that his top blends (Schenley Reserve, Melrose Rare) were not plugged as hard as competing whiskies.

The results of all this started to show last year. While competitors (Seagrams, National Distillers) were setting records, Schenley’s sales were at the lowest level ($450 million) since 1944. And this year, though all distillers are in a slump, Schenley is in a much deeper one. Recently its sales have been off 55% v. a drop of only 28% to 36% for Seagrams, Hiram Walker and National Distillers. Schenley’s troubles and its vast expansion have caused the company to borrow $150 million, although its assets are greater than any other U.S. liquor company.

New Platoon. Last week it looked as if rven Lew Rosenstiel thought it time for a pick-me-up. At 61, he stepped out as president of Schenley (but stayed as chairman), and elevated a whole platoon of young Schenley reserves. Into the presidency went Ralph Taft Heymsfeld, 44, a Columbia-trained lawyer who joined the company 18 years ago and has specialized, as secretary and counsel, in fighting for fair trade and against high liquor taxes. Up to executive vice president stepped Treasurer Sidney Becker, 42, who started with Schenley during Prohibition.*

Schenley’s new top team, pointing to the company’s net of $22 million last year, insists that Rosenstiel will still be the boss, and that no big changes will be made. But Schenley now seems to have a somewhat healthier respect for the lowly blend, and may push its blends harder in the future. Says President Heymsfeld: “You can’t sell a man a Cadillac when all he can afford is a Chevrolet.”

* Other changes: Carl Kiefer, 71, moved up from executive vice president to assistant chairman; Henry Gayley, 51, became treasurer; Earl Gassenheimer, 41, comptroller; Richard Gilbert, 50, vice president.