The brewing industry's capacity utilization had hovered in the 60% range in the 1950s
because of stagnant demand. It increased in the 1960s and early 1970s as demand rose rapidly:
the large brewers, particularly Anheuser-Busch and Schlitz, added relatively large breweries and
sold them out quickly; many smaller breweries were closed. The industry's capacity utilization
peaked in the mid-1970s at close to 90%. In the late 1970s, capacity surged despite stagnant
demand. Miller's expansions were the most aggressive, but the other national brewers also moved
to tap economies of scale. For instance, only four out of Anheuser-Busch's ten breweries
exceeded four million barrels apiece in 1977; by 1985, all eleven of its breweries cleared that
hurdle. Capacity utilization dropped toward 80% and stayed at that level throughout the 1980s.
In 1984, excess capacity in the East forced Miller to take a $280 million pretax write-off on a
nearly completed 10-million-barrel brewery in Ohio that it had intended to open in 1982.Exhibit 1 depicts changes in breweries' actual capacities since the late 1950s, and Exhibit
2 summarizes the production configurations of the major U.S. brewers in 1985. By that time, all
of them except Coors operated several breweries apiece. Multiplant configurations reduced the
risk of catastrophic shutdowns due to strikes, fires or explosions, permitted centralized production
of low-volume packages (which increased run lengths), and let brewers absorb the output
repercussions of a large new brewery over several existing ones.