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Paul Kalmanovitz

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Paul Kalmanovitz (1905–1987) was a millionaire brewing and real estate magnate best known for owning all or part of several national breweries and their products, including Falstaff Brewing Company and Pabst Brewing Company. Most of the Kalmanovitz Estate was left to create a charitable foundation for hospitals and universities.

Biography

Kalmanovitz was born in Łódź, Poland. His family emigrated to Egypt at the end of the World War I and he later worked for Sir Edmund Henry Hynman Allenby. Kalmanowitz arrived in the United States in the 1926 by jumping a merchant marine ship[1] and jumped from job to job, working for several notable people such as Franklin D. Roosevelt, William Randolph Hearst, and Louis B. Mayer (MGM).

In 1950 Kalmanovitz acquired the Maier Brewing Company in Los Angeles, California and officially entered the brewing industry. Maier Brewing, makers of Brew 102, struggled for a number of years, and in 1958 faced a strong push to be bought out by the Falstaff Brewing Company. Kalmanovitz refused to be bought out, even after being threatened by Falstaff to either sell or Falstaff would bury the Maier Brewery.[2] Within a few years Kalmanovitz turned the Maier Brewery around and began making a profit. Along with the brewery and numerous other investments, Kalmanovitz's net worth began to swell. In 1970 Kalmanovitz purchased Lucky Lager and merged it with his Maier Brewing Company to form the General Brewing Company with S&P Corporation as its parent.

By 1974 Falstaff had fallen on hard times and was in need of cash. Falstaff's purchase of the Ballantine brands in 1972 had proven to be a major mistake and stretched the company a little too thin. Falstaff sold Kalmanovitz its San Francisco brewery. The cash couldn't save Falstaff, and in 1975 the company was once again in trouble. Kalmanovitz offered to inject $20 million into Falstaff for 100,000 shares of preferred stock. On 28 April 1975, Paul Kalmanovitz gained the controlling interest in the Falstaff Brewing Company. Kalmanovitz more than quadrupled his brewery interests and became a major force on the American beer market.

With the purchase of Falstaff, Kalmanovitz moved the Falstaff headquarters from St Louis, Missouri to San Francisco to combine it with General Brewing Company's headquarters. By June, more than 175 of Falstaff's corporate employees were laid off. The United States Securities and Exchange Commission (SEC) opened an investigation of the Falstaff purchase, and found it provided shareholders with false and misleading information. Kalmanovitz was prohibited from committing further securities laws violations and Falstaff stock was barred from trading and removed from the New York Stock Exchange. Falstaff appealed all the way to the US Supreme Court and lost.[3] Falstaff workers unhappy with the new direction of the company staged a company lockout, which Kalmanovitz and General Brewing called a strike.

Eventually things settled down with Falstaff and production resumed. Kalmanovitz's plans to make a profit off Falstaff were not to turn the company around and reestablish its brand strength in the market, but rather to cut costs drastically throughout. The biggest change was the advertising budget where Kalmanovitz eliminated all types of marketing. Falstaff's market share continued to slide, resulting in plants closing and employees out of work. Falstaff was profitable for the S&P Corporation, but at a cost to works and the communities around the breweries. Kalmanovitz acquired an ailing brewery, fired the corporate personnel, reduced budgets, sold off equipment, stopped plant maintenance, and eliminated product quality control. Kalmanovitz established a standard with Falstaff that was repeated as he purchased Stroh's, National Bohemian, Olympia, Pearl, and Pabst.

Breweries were not Kalmanovitz's only interests, he was also involved in helping Guide Dogs for the Blind and several other charitable organizations. Upon his death, Kalmanovitz's net worth was said to be in excess of $250 million. A sizable portion of his wealth was donated to numerous California hospitals. In addition, his estate also donated the money for the Paul and Lydia Kalmanovitz Library at the University of California, San Francisco, Kalmanovitz Hall at the University of San Francisco, and the Paul and Lydia Kalmanovitz Appellate Courtroom at the University of California, Davis School of Law (King Hall).[4][5][6]

Criticism

Kalmanovitz specialized in leveraged buy-outs,[7] which take over businesses to sell off their parts for profit, closing plants and laying off employees. After a takeover in St. Louis, brewery employees flew the American flag at half-staff and upside down.[3]

In 1975, after Kalmanovitz gained control of Falstaff, most of its 175 corporate office employees were laid off. Some of the employee's severance checks bounced. “Kalmanovitz thought nothing of throwing hundreds of brewery workers out onto the streets, cutting off their pension and health benefits … ” according to one historian. Forbes magazine wrote that “Kalmanovitz went through Falstaff like Grant through Richmond. ... He took no prisoners.”[8][9]

In a 1979 court case, Bloor v. Falstaff, Kalmanovitz's brewery was fined $1.3 million. The judges described his management style as "Profit Uber Alles".[3]

Personally, he has been described as mean-spirited, controlling and eccentric. He banned telephones from his office and every time he would catch his employees installing a line, he would rip it out.[9]

After his death, a former legal secretary said, his associates toasted him with Jack Daniel's, saying, "Ding dong the king is dead."[9]

Other Kalmanovitz breweries

Notes

  1. ^ Forbes v155.n11 (May 22, 1995): pp46(2)
  2. ^ Falstaff Beer History. Falstaff Beer History. Accessed September 1, 2006.
  3. ^ a b c http://www.falstaffbrewing.com/history-falstaff-brewing.htm
  4. ^ Paul and Lydia Kalmanovitz
  5. ^ University of San Francisco (USF) - Kalmanovitz
  6. ^ "UC Davis News & Information :: School of Law Receives $1 Million Gift for Appellate Courtroom". News.ucdavis.edu. 2009-02-17. Retrieved 2012-08-17.
  7. ^ http://rightinsanfrancisco.typepad.com/right_in_san_francisco/2012/01/assessing-bain.html
  8. ^ http://qctimes.com/lifestyles/home-and-garden/falstaff-collector-s-dad-had--plus-years-of-service/article_0e255086-252e-11e2-b701-001a4bcf887a.html
  9. ^ a b c George Cothran (September 20, 1995). "The Family Jewels". San Francisco Weekly.
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