The Formation of Industrial Brewing and the Transfer of Knowledge and Demand in Mandatory Palestine

1 Introduction

In the 1930s, restaurants in Mandatory Palestine opened beer gardens, promoting them through print media advertising.^[1] A similar structure would have hardly been established in a restaurant or any other public space in Palestine two decades before. Most people preferred wine and arak, and beer was not a popular drink in the country in the late Ottoman Empire.^[2] Primary accounts illustrate that almost every grocery store sold wine and arak, and indigenous and foreign people from all ethnic and religious backgrounds consumed homemade and store-bought beverages in private and public spaces in the interwar era. Drinking arak and wine was deeply woven into social values as people offered these to attendees at weddings and other special occasions, and to guests as a sign of hospitality.^[3] Cultural preferences, however, did not encourage the production of beer in the same way.

Another major reason for the public preference for these alcoholic drinks over beer was related to their widespread production in the region. For example, international Zionist capitalists started to invest in the large-scale production of wine and contributed to the steady commercialization of the winegrowing industry in the late nineteenth century. Winegrowing businesses had become a mature industry by the late 1920s whereas breweries failed to upscale their production due to the colonial government’s disinterest in encouraging local companies, leaving the country dependent on beer imports in the same period.^[4] Beer producers failed to provide an alternative to arak and wine until the 1930s due to these demand- and supply-related factors. The formation of new breweries in this decade, however, shaped the particular tastes and meanings associated with alcoholic beverages and created a new drinking culture for men and women alike in a short period of time.

As this article deals with this transformation, it foregrounds trans-local and transnational factors in shaping the brewing industry in Palestine from the formation of the British Mandate in 1920 to the establishment of Israel in 1948, with an emphasis on the transmission of brewing expertise and knowledge, as well as the transfer of demand between this country and the rest of the world. I use the concept of the transfer of knowledge to describe a characteristic historical pattern in which the development of brewing took place through the growth of an international network that connected people together through the production, consumption, and promotion of beer across time and space. Having a broad definition of this term, I concentrate not only on the dissemination of experience and knowledge of beer production but also on the complex exchange between Palestine and foreign countries that encompasses lobbying and customer engagement strategies. I further consider marketing a subset of knowledge transfer since company owners continually sought to learn new techniques, such as brand awareness, product design, public relations, and modernist messages, from their foreign counterparts and applied that knowledge to reach prospective consumers and secure a thriving beer industry in Palestine.

The article focuses on Zionist entrepreneurs as almost all major breweries were owned by them.^[5] It assigns a priority to the Palestine Brewery Ltd. since its production in Rishon LeZion (the first of Zion) in late 1935 was a watershed in the history of brewing and signaled the manufacturing of large quantities of beer for the first time.^[6] Together with its subsidiary companies, Cabeer Breweries Ltd. and Levant Brewery Ltd., which were founded in 1937 and 1942 respectively, this company dominated the local markets from its nucleus in the mid- 1930s to the partition of the mandate in 1948.

As the first extensive study of the Palestine Brewery Ltd. and industrial brewing in Mandatory Palestine, this study is based on a rich trove of archival material, Zionist periodicals in and outside Palestine in different languages, and other documentary evidence. It argues that the ability of the Palestine Brewery Ltd. to fine-tune its program, together with its continuous formulation of new survival strategies, not only made possible the transfer of knowledge in brewery industries but also enabled this company to thrive in a short period of time. Its managers implemented a series of strategies, pursued a concentric diversification strategy, remained aware of local tastes, developed a network of branches and offices in large cities, made business contacts, especially with Jewish entrepreneurs, in Europe and the United States, sold its shares to a variety of men and women in various parts of the world, and built a strong reputation as the icon of the national economy and Zionist modernism to gain a strong position in the local markets.^[7]

These strategies were combined with the company’s success in meeting growing civilian and military demand for beer due to the arrival of European Jews and British troops in the interwar era. The Palestinian market became diverse as all kinds of beer companies from multiple countries around Europe strove to barrel into the Palestinian market. The Palestine Brewery Ltd. successfully responded to the dynamic expansion of the consumer base and ultimately replaced foreign brands. Not only newcomers but also the older residents of the country gravitated toward its locally-produced beer instead of the products of well-known, established overseas companies. The company’s ability to transfer knowledge in diverse ways was vital to its survival in this competitive market.

Overall, this paper adopts a thematic approach to evaluate the development of breweries in Mandatory Palestine in different institutional and political contexts. Section 2 traces the economic and political history of breweries in Palestine from the end of World War I up through the formation of the Palestine Brewery Ltd. and discusses the reasons, such as foreign competition, high cost, and low demand, why the growth of breweries remained limited in the first decade of the mandate. Although there was an emerging market in Palestine, the existence of colonial rule and the dependence of Palestinian industries on the British hindered the progress of local beer industries. As a result, several entrepreneurs who attempted to build extensive breweries failed to put their ideas into action. The imperial tension between exporters from the metropolis and settler colonial brewers was widespread as well.

The paper then explores the formation and growth of the Palestine Brewery Ltd., which stemmed from three simultaneously applied strategies: fostering closer ties with the government, transferring capital and technology, and creating and preserving a customer base. Section 3 explores relations between company managers and political authorities and the struggles faced by its owners, such as the unwillingness of the government to grant an exemption on excise duty. This section further sheds light on how inimical these obstacles were to the financial success of the company and why it suffered a loss in the late 1930s. The decision to turn beer production over to the war effort, however, gave the company rewarding government contracts that allowed it to enlarge its physical plants in the early 1940s. Section 4 provides an overview of the vast amount of work that entailed the transfer of capital and technology. US-American and European Jewish capital played a key role in the development of brewing and the transfer of knowledge in this sector. Section 5 discusses the strategy of the company to acquire information about consumer preferences and to tailor its marketing to appeal to the target audience, i.e., European immigrants and British troops, in the following decade. The last section presents concluding remarks and looks at the development of the company from the war’s end to the establishment of Israel when it retained its position as the nation’s top beer producer.

2 Brewing in the First Decade of the Mandate

The formation of the mandate initially had a limited effect on industrial brewing in Palestine since British authorities proved unwilling to support the development of breweries in this country in order to safeguard the interests of British companies operating in the mandate. Entrepreneurs in England communicated with the High Commissioner for Palestine Sir Herbert Louis Samuel to grow high-quality malt barley in 1922. They thought that there was barley “of good malting quality” in Palestine but barley imported to England arrived in a mixed condition. These entrepreneurs wanted the Palestinian government to send samples from different parts of the country to determine what kinds of barley could be cultivated for brewing. As with other centers of international beer industries around this time, the production of beer significantly declined in the United Kingdom.^[8] These initiatives aimed to help beer industries revive. Colonial authorities in Palestine, however, were disinclined to support their scheme because they believed that Palestine barley, as a whole, was “not up to British malting standards.”^[9] They further claimed that the government did not have the capacity to form an experiment station for the selection of the best kinds and the trial of new introductions in 1923. Although official departments sent new samples to England the next year, and English entrepreneurs found some samples of barley useful for malting purposes, there was no practical step for the cultivation of barley on the part of colonial authorities.^[10]

As the government did not take any tangible measures in the direction of improving raw materials for breweries, Jewish businessmen sought to initiate new enterprises in Palestine. Zionists claimed that agricultural conditions in the Ottoman Empire were primitive and prevented the economic progress of the country. They were hopeful about the impetus that Jewish colonization would give to industrial agriculture.^[11] Palestinian brewery, however, was still in its infancy in the 1920s, as several factors hampered the expansion of beer industries. The formation of a brewery and the high cost of freightage in Palestine, which had a warm climate, was the first obstacle.^[12] Many Palestinian firms were still craft breweries and did not have machinery, experts, nor cold storage accommodation. More importantly, Palestinian brewers were subjected to heightened foreign competition not only by European firms, such as enterprises from Czechoslovakia, Germany, Great Britain, and the Netherlands, but also by beer industries in surrounding countries, particularly Lebanon and Syria. The predominance of Syrian firms was related to the Palestine-Syria Customs Agreement of 1929. When the terms of conditions had been decided on, there had been no brewery in Palestine, and the British agreed to exempt Syrian producers, including French-owned enterprises that operated in this country. This exemption gave Syrian enterprises an advantage over locally-produced beer and handicapped the development of the local beer industry.^[13] There was rivalry between Palestinian and Syrian industrialists that culminated in economic nationalism on both sides in the 1930s.^[14] The battle between Palestinian and Syrian beer producers was consistent with this larger rivalry.

Against this backdrop, the Zionist leadership attempted to increase the competitiveness of Palestinian beer industries in national and international markets. The Zionists’ Bureau of Commerce in Jerusalem sought to attract and promote foreign investment and provide sufficient capital to buy machinery and bring expert brewers from Europe through interactions with Zionist capitalists in Europe and the United States.^[15] A small brewery was formed in Jaffa.^[16] Moreover, a growing number of entrepreneurs directed their energy to the formation of new business enterprises in this regard.^[17] For instance, the company Margolin & Tropp founded the first Jewish brewery in Palestine in 1922, installed a piece of new machinery to optimize productivity, and intended to export to the rest of the Middle East in the years ahead.^[18] Claims of export markets were common in trying to finance new breweries in other countries as well, but like many craft breweries today, most would be lucky to build up a local clientele. Other inward-looking breweries targeted local markets. For example, J. Pross of the German colony in Haifa produced German beer for the residents of the colony.^[19] Another brewery began to operate in Tel Aviv in 1925 and produced only 1,000 bottles of beer per day which was typical of these enterprises.^[20] Accordingly, beer remained a decentralized industry, with several centers possessing at most one or two small-sized startups.

The World Zionist Movement persisted its efforts for the invigoration of breweries in the late 1920s. The assistance of Keren Hayesod (the Foundation Fund), which was formed at the World Zionist Congress of 1920 to fund Jewish colonization in Palestine, was particularly important. Soon after its formation, Keren Hayesod accelerated its fundraising efforts and created more interconnected economies and business communities across Europe, the Middle East, and the United States.^[21] With more sources gathered, it provided capital for Jewish entrepreneurs wishing to develop factories and businesses through the Palestine Zionist Executive, which managed the funds of Keren Hayesod in Palestine. Consequently, the Executive financed a plethora of industrial activities in Palestine, ranging from manufacturers of chemical fertilizers and soap to factories of cement and shoes. The beer industry was one of the sectors that received financial support. For instance, it extended a loan of £300 to the construction of a brewery in Acre. With such initiatives, the number of breweries in Palestine rose to 22 in 1932.^[22]

The national political context, however, continued to mar the Zionist-led development of breweries in Palestine in the late 1920s and early 1930s. At home, Arabs organized a nationwide uprising in protest of Zionist colonization in 1929. Riots led to political strife and social upheaval and created tremendous instability in the business world. Moreover, the self-interest approach of the British towards local enterprises blocked the business aspirations of prospective investors in the early 1930s. The experience of Max Delfiner was emblematic of this. Delfiner, a Jewish industrialist in Vienna and a citizen of Romania, opened a silk factory in Tel Aviv in 1924, that was considered “the first modern factory” in Palestine. Although the factory ceased its operations in 1926, it resumed its activities in 1932. In an attempt to diversify his businesses, Delfiner intended to erect a brewery in Mikveh Israel, Tel Aviv and sent proprietors of breweries in Europe to Palestine to start preparations. Delfiner invested £80,000 (approximately £6,000,000 in 2022) in this venture and ordered the purchase of machinery for mass production. He asked the Palestinian government for exemption from duty on ferments and malt until these materials would be produced locally in Palestine. Yet, after the government had not responded to his demand for eight months, Delfiner had to give up his project losing significant sums of money.^[23] Other entrepreneurs attempted to pursue similar business opportunities in beer-making but the refusal of the government to lower the duty on malt precluded them from constructing large-scale breweries.^[24] Thus, colonial authorities in Palestine were the major barrier to the development of breweries and the transfer of knowledge in this period.

3 Nurturing Relationships with the Colonial Government

Not to meet the same fate as Delfiner, the managers of the Palestine Brewery Ltd. made plans meticulously and communicated with the Palestine Government before they started production. The government was unenthusiastic about backing their scheme because it regarded the company’s strategy to produce beer as “an unwarranted attempt to compete with the import of English beer.”^[25] Undeterred by this lack of enthusiasm on part of the government, the company ratcheted up pressure on colonial authorities and eventually received an exemption from import duty for hops and malt.^[26] The government further decreased the excise duty from 20 to 9 Mils per liter.^[27] According to the government, the reason why the government opted not to eliminate the duty thoroughly was to place the new company “in a position to compete on fair terms with foreign beers.”^[28]

Although the company was jubilant over the exemption from import duty and the decrease in excise duty, it sought to find a way to avoid any duty. As it labored in this cause, company owners intended to create a growing and constructive influence on the government via media outlets. An anonymous letter to The Palestine Post, a politically influential Zionist newspaper in Jerusalem, exemplified such an endeavor. The letter first stressed the “Buy Palestine Products” campaign that aimed to aspire economic nationalism among the local populace. It stated that the government had to help Palestinian industries become more competitive in the foreign markets for the campaign to be successful. The letter further called for the government to do “its part” for the ideal of “Buy Palestine Products” to have any real value.^[29]

At the same time, company managers presented a petition to the government to codify the Intoxicating Liquors Ordinance for the company not to pay excise duty, but to no avail. According to the Intoxicating Liquors Ordinance, a beverage that contained more than 2 percent of alcohol was an alcoholic beverage and did not qualify for the exemption. Since the alcoholic strength of malt beer was under 2 percent and was not considered an alcoholic beverage by the ordinance, company managers contended that their company was eligible for exemption. As the company produced lager and malt beer in the same building and the latter was regarded as an alcoholic beverage by the ordinance, however, the government continued to levy duty on malt beer as well.^[30] Although the government found the samples of the company “of excellent quality,” it was unwilling to make any provision for the exemption from excise duties.^[31] Despite repetitive attempts of the company, the lingering burden of excise duty disabled it to defray the high costs of production of malt beer in the following years as well.^[32]

A variety of factors prompted the government’s rejection. The Palestinian government considered the world prices, transport and freight charges, and the possible effect on the existing wine industry while granting a certain degree of protection to the Palestine Brewery Ltd.^[33] A more important reason was the government’s desire to ensure the economic interests of British businesses.^[34] The beer industry was not alone in this. For example, when Palestinian citrus exporters and textile producers wanted the government to foster their incipient industries by means of tariff barriers, it rejected these demands because British businesses perceived the competition of Palestinian enterprises as a threat.^[35] The reluctance of the government to give the Palestine Brewery Ltd. what it wanted was an illustration of the lack of official endorsement of local enterprises.

Almost one year after the company’s formation, the colonial government agreed to introduce a customs duty of 10 mils per liter on Lebanese and Syrian beer.^[36] Press campaign, as well as the pressure of Zionist leaders on British politicians in London and the High Commissioner in Palestine, turned the government’s initial reluctance into a relatively favorable attitude. Although the Palestinian government increased the competitiveness of local brewing sectors against Syrian firms, it still showed a disinclination to protect local industries against the British. Nonetheless, even the limited support of the government led to the enlargement of its factories and the issuance of new shares for a total amount of £25,000, raising its authorized capital to £75,000.^[37] Indeed, already in its first year, the company’s production accounted for 75 percent of the total consumption needs of Palestine, leading to a significant reduction in imports. The company nearly eclipsed foreign imports, especially Syrian beer, which had previously dominated the country.^[38]

As the late 1930s was characterized by political turmoil due to the Arab Revolt that swept across the country, however, the company’s growth was slowed down. Despite the global economic crisis, the Yishuv enjoyed a period of economic growth thanks to Jewish immigration and Zionist investments from 1929 to 1936.^[39] This prosperity further exacerbated the divide between Arab and Jewish economies, which was a stark characteristic of Mandatory Palestine, since Arab enterprises experienced an economic downturn in the same period. Certain Arab groups attacked Jewish businesses even before the revolt.^[40] The revolt continued to fuel Arab-Jewish conflicts and affect the company adversely until its end. Years of turmoil and strife drove up the prices of raw materials and forced the company to shut down its factories occasionally and discharge some of its workers.^[41] The stagnating market decreased the company’s production from 1,946,000 liters in 1936 to 1,830,000 liters in 1937 and 1,724,000 liters (rounded) in 1938.^[42]

Another turning point for the company came with the advent of World War II. The war’s effects on industrial brewing in Palestine were varied and far-reaching, with its short-term effects being mostly negative. A primary challenge was access to raw materials. The Palestine Brewery Ltd. could not import malted barley from Egypt since the Egyptian government issued a full prohibition of its export, which created a shortage of raw material and generated a long-lasting effect on the company’s reliance on Palestinian barley. Furthermore, Palestinian ports suffered direct hits from Italian aid raids, which further restricted the transfer of goods and commodities into and out of the country.^[43] Another central problem for beer companies was rising manufacturing costs as the war fueled inflation. The colonial government raised taxes to finance the war effort, and beer was not spared. The company had to pay a higher excise duty that became a significant constraint on its progress in 1943. When the company wanted only the consumer to bear the price increase, the government opposed it. In protest, the company ceased its production for a short time.^[44]

Despite the hardships the company endured, the war created the conditions for collaboration between the government and its managers. As the war dragged on, breweries grew with the need for military forces, giving rise to the transition of the Palestine Brewery Ltd. from a money-losing to a profit-making company. Faced with the challenge of meeting the demand of troops, the government had to choose how to allocate beer carefully and took measures to prioritize military troops and curb civilian consumption.^[45] Although its relations with political authorities had been tense before 1939, company managers cultivated good relations with people who were close to power during the war. Government officials paid visits to the headquarters of the company and met managers. They publicly expressed their gratitude to the company.^[46]

The company catered to military forces and achieved higher sales volume from its products thanks to its adaptability to the war economy. The suspension of beer imports brought a tremendous increase in the demand for local beer in Palestine despite high prices and a lack of raw materials.^[47] Encouraged by the military’s desire to purchase more beer, the Palestine Brewery Ltd. ramped up its capacity, and 1940 became the “best year” of the company, with the production of 4,451,000 liters against 2,017,000 liters (rounded) in 1939.^[48] But still, it could not keep up with growing demand. After the government established priorities in the distribution of beer, the company undertook a major upgrade with the installation of a second brewery in Bat Yam, Jaffa. Constructed with the assistance of military authorities, the factory was charged with responsibility for manufacturing only for military consumption.^[49] The Cabeer Breweries Limited was assigned this job and worked under heavy pressure from the government. As demand for beer grew briskly, beer shortages emerged, and the Palestine Brewery Ltd. repeatedly extended its plants in the final stages of the war. The production reached a new climax in 1945 with 18,027,900 liters.^[50]

The growth of the Palestine Brewery Ltd. during World War II should be evaluated from an international perspective since it was a common experience around the globe. The war years brought the development of breweries not only in combatant countries, such as Japan and the United States, but also in the countries where European military troops were located.^[51] Beer drinking was declared to be essential for public morale, and both civilians and military troops drank it to maintain a certain level of sobriety.^[52] As part of the global trend, the Palestine Brewery Ltd. tied its production to the needs of the military, which became the foundation of the company’s growth throughout the war.

4 Transfer of Capital and Knowledge

The roots of the transfer of brewing knowledge between the West and the Middle East date back to the late Ottoman Empire. One agent of transmission was the foreign companies that pursued business opportunities in the Middle East. With the formation of the Bomonti Beer Factory and Company in Istanbul in 1890, for example, local producers began to acquire a working knowledge of modern breweries from European firms. The Ottomans who migrated to Western countries and later returned to the empire likewise carried their knowledge and experience home. The migration of Jews from Eastern Europe to Palestine during the First Aliyah furthered the transfer of knowledge.^[53] The formation of the British and French mandates in the Middle East stimulated the transfer of knowledge in an unprecedented manner. The effects of this process were felt most in Palestine owing to the presence of British authorities and experts and the migration of Jews from Europe, North Africa, and the rest of the Middle East. These immigrants “brought with them their experience and knowledge” to Palestine.^[54] The development of industrial brewing bore witness to this transfer of knowledge.

The emergence of the Palestine Brewery Ltd. was closely linked to the changing economic ideas of the National Zionist Leadership that prioritized industrialization in the mid-1930s.^[55] Jewish enterprises in Palestine forged business relations with their coreligionists in other countries.^[56] Within this flourishing business environment, Jewish entrepreneurs in Europe and the United States were eager to do business with Palestine, including the production of alcoholic beverages. The company successfully bridged the business aspirations of Jewish entrepreneurs in Palestine and abroad. Chaim Weizmann, president of the already mentioned World Zionist Organization, was credited with originating the idea of a nation-wide brewery in Palestine. He delivered a speech at Sorbonne, France and addressed the growing Palestinian demand for beer that could enable potential investors to begin a business in this sector. After his speech, Weizmann had a conversation with French industrialist Gaston Dreyfus.^[57] Fortunately, Dreyfus also owned breweries in Africa and Asia. After Weizmann convinced Dreyfus that industrial brewing was a safe investment with high returns, the Bank leased a portion of wine cellars in Rishon Le-Zion for 45 years and converted them for factory use.^[58]

Baron Edmund de Rothschild was another important figure behind its formation.^[59] As a long-life champion of Zionist colonization and a world-wide tycoon, Rothschild had sponsored economic activities in Rishon Le-Zion since the late nineteenth century.^[60] Thanks to his close ties with British politicians in London, the Baron expanded his investment and influence in Palestine during the colonial rule. The Distillers and Brewers Corporation of the United States, for example, decided to import wine from the wine cellars in Rishon Le-Zion.^[61] The choice of Rishon Le-Zion as the center of production and administration for the new beer company was further linked to the changing economic landscape of the country. Possessing an economy that was more modernized than their Arab counterparts, Zionist leaders determined to make Tel Aviv the center of the Palestinian economy. As Jewish colonization spurred the development of Tel Aviv and surrounding areas, including Rishon Le-Zion, former economic centers, such as Jaffa, began to lose their vitality.^[62]

The company was able to produce different types of beer in Western standards thanks to the transfer of the production methods of European beer in a short period of time. The company founders brought European engineers to oversee construction. An English expert, for example, supervised the installation.^[63] A British traveler who paid a visit to the factory labeled the manufacturing of the beer as “the most English-looking scene” in Palestine.^[64] Furthermore, when the Cabeer Breweries Ltd. was formed, it transferred novel methods of production from George Younger Ltd. of Scotland, which was one of the new company’s founders.^[65] A. Wurzburger, a German Jew and former owner of a large brewery in Heilbronn, Germany took over the supervision of this new brewery.^[66] Jewish immigrants, such as Wurzburger, who came to Palestine from Central and Eastern Europe, brought an incredible reservoir of skills that stimulated the transnational transfer of knowledge between Europe and Palestine and used their hands-on experience in Palestinian industries.

The systematic persecution of Jews in continental Europe, however, damaged international business networks of which Palestinian Jews had become a central part. Anti-Jewish decrees and measures in the business sphere dated back to the Nazi seizure of power in Germany in 1933. Nazis ordered the liquidation of Jewish businesses, including Jewish-owned breweries, such as the Hoesel Brewery in Dusseldorf. In a similar vein, governments in the Balkan and Baltic countries seized Jewish breweries on the eve of World War II. The Soviet Union joined this anti-Semitic campaign during the war and seized breweries owned by Jewish businessmen, exemplified by Zionist leader Wolf Engelman.^[67] As Jewish businesses faced waves of persecution in Europe, their suffering affected Palestinian breweries. Following the Nazi occupation of France, Louis Dreyfus lost control of his firms in this country. His only business venture became the Palestine Brewery Ltd. ^[68] Other shareholders moved to neutral countries, such as Switzerland, and the countries beyond the reach of Nazis, such as the United States.^[69]

Despite the interruption of international connections and a drop in capital inflow, war conditions called for many Palestinian local enterprises to retool their production and provided them with better capacities for innovation, which played an active part in the progress of industrial brewing in Palestine as well. The Palestine Brewery Ltd. increasingly relied upon local firms for its production. For example, the Palestine Rubber Textile Co. Ltd. in Jerusalem developed an artificial cork as a substitute for natural cork in 1942. The Palestine Brewery Ltd. took up considerable quantities of the new cork.^[70] The company further began to cultivate malt from barley locally.^[71] At the same time, it procured machines from local factories for beer production.^[72]

5 The Creation of Customer Base

The main impetus behind the domestic demand for beer was closely tied to the increasing settlement of European Jews in Palestine. Although the British had wholeheartedly supported Jewish immigration to Palestine in the immediate aftermath of World War I, following the resistance of Arabs, they soon decided to regulate it, allowing Jews to settle in the country by taking Palestine’s “economic absorption capacity” into account.^[73] The migration, albeit in a restricted way, fostered the economic generation of the Yishuv, thanks to capital inflow and resulted in the political hegemony of the middle classes.^[74] These factors led to a Europeanized, modern consumer culture that was based on a new, national Jewish identity.^[75] The consumption of beer reflected this trend.^[76] The arrival of Jewish immigrants soared domestic demand and opportunities for European beer. Palestine imported 835,000 and 1,050,000 liters in 1932 and 1933, respectively. Newspapers in Hebrew were full of classified ads for imported Czechoslovakian and German brands.^[77] The Nazi seizure of power and the subsequent boycott of German products by the world Jewry, however, affected the patterns of beer consumption. Since Germany had been the principal exporter of beer to Palestine, the boycott created an even higher demand for beer.^[78]

Within this atmosphere, the Palestine Brewery Ltd. tried to build a solid customer base for its potential products by targeting particularly the consuming power of Jewish immigrants even during preparations remained on track.^[79] The success of its business required substantial input of knowledge about the socio-economic situation of Palestine. It organized a competition for the designs of its bottles, which was open to any resident of Palestine, to build up knowledge on the preferences of customers. Competitors needed to give a name to the beer and take the suitability of their designs into consideration.^[80] The company took their feedback seriously and implemented the design of the first winner, “an eagle flying over a foaming glass of beer” as its trademark.^[81] Different companies, such as Anheuser-Busch, Budweiser, and Michelob, had already used an eagle as a mark for their beer in the Western World. The choice of an eagle as the trademark for the company mirrored the company’s desire to fabricate prospective customers and acquaint itself with their established choices and preferences, which were guided by Western beer.^[82]

Despite this European influence, the company’s managers attached much importance to publicizing their products widely throughout the country by using nationalist language. They benefited from mass media to keep public attention on its national beer even before the beginning of sales. Newspapers wrote that Palestine will drink its own beer with the production of the company.^[83] As with the local press, Jewish newspapers and magazines outside the country applauded the company and touted it as the symbol of the success of Zionist colonization in Palestine. They portrayed and promoted it as the “first brewery” of “Jewish homelands.” Zionist periodicals heralded the company, hoping that Jewish entrepreneurs would set up other businesses with the “national capital” in Palestine.^[84]

The use of nationalist propaganda was the product of a specific national culture. As the mounting tension between Arabs and Jews discouraged the development of a shared national identity between the two groups, both sides promoted a strong sense of nationalism that affected the economic sphere as well.^[85] Arabs grew steadily more alarmed about the rise of a Jewish brewery, and the Arab press called on Arab entrepreneurs to follow suit and produce their own beer.^[86] The company’s managers created and circulated content to seize the opportunity of this nationalist atmosphere. With inclusive messaging, they targeted different segments of audiences within the Yishuv and advertised its beer as “everybody’s drink.”^[87] They equated their beer with economic nationalism and branded their beer as a “national product.” As propagated in one of the company’s ads, the consumption of “the only beer produced in Palestine” would mean not only the support of a local company but also the employment of their countrymen.^[88] Undoubtedly, the company’s Palestine included only Jewish residents of the country.

When the sale of beer began in 1936, the above-mentioned nationalists in the media allowed the Palestine Brewery Ltd. to convert its customers from its target market into a customer base. It signed contracts with different agents for the distribution of beer across the country. The dealers and branches in Jaffa, Haifa, and Tel Aviv delivered the company’s beer to houses if customers bought a minimum quantity of one dozen large bottles or two dozen small bottles. Thanks to sophisticated distribution networks, its products were on sale at leading cafes and restaurants, especially in cities where Jews represented a considerable section of the population.^[89]

The company sought to extend its prestige as a national product beyond Palestinian boundaries. During the course of the preparations, international Zionist leaders visited the construction site and talked with managers, and a number of Zionist figures, including Weizmann, were present at the high-profile opening.^[90] After the start of its production, the company sent its samples to international expositions and world’s fairs in Europe and the United States. For example, it won a prize for its products at the Exposition Internationale des Arts et Techniques dans la Vie Moderne in Paris in 1937.^[91] Later, the company used it to bolster its prestige at home as an award-winning enterprise. The company further promoted its products with the help of internationally-known Jewish celebrities. The visit of Paul Muni, an Austro-Hungarian-born Jewish actor in the United States, and his wife exemplified this type of promotion. Company managers greeted and gave such people a tour of the factories to improve the company’s reputation and public credibility.^[92]

After the volatile atmosphere in the midst of the Great Revolt of 1936-1939 depressed domestic demand, the company sought to find a lasting solution to the demand problem.^[93] It produced a diversity of goods and tailored its messages to different types of customers. From the perspectives of its managers, the first ideal customer was German Jews. The company manufactured malt beer “by well-tried German formulas” as an additional product to lager beer, both of which had the same brewing method.^[94] As it introduced the company’s beer, an article in The Palestine Post wrote that “immigrants from Germany must admit that Palestine is striving to give them all the comforts of home.” The article resembled the Eagle beer to Löwenbräu and Pilsner with which German immigrants were “so intimate.”^[95] Company managers decided to produce a dark beer of the Munich type in 1937.^[96] With the new black beer, they hoped to offset losses and reemploy some of the dismissed workers in 1937.^[97] The production of different varieties demonstrated the attempts of the company to respond to domestic demand.

As with immigrants, the preferences and practices of consumption by the military were significant in creating the conditions for the widespread production of beer. As the lager was consumed by Central European Jewish migrants, ale was preferred by British personnel and troops.^[98] In 1939, taking the great role of military troops in the country, the company decided to produce two types of English beer, Ale and Stout, in addition to the already existing products of the company (Pilsen, Munich, Malt Beer). Fritz Hirschbruch, who was the General Manager of the company, went to England for a business trip to make the required arrangements.^[99] The company highlighted its shipments of beer to the military in mass media. One classified ad wrote that “there’s nothing like a bottle of Eagle beer after a route march; a day in the hills; and on all festive occasions.”^[100] Since securing enough beer for the troops was deemed essential during the war, the company began to produce crown beer for Australian troops stationed in Palestine. It further crafted a marketing strategy that engaged with the military on a regular basis and invited groups of soldiers to visit the company’s breweries.^[101]

The company adapted public diplomacy strategies to grow and keep its civilian customer base as well. After an increase in the price of beer by 3 mils, it apologized to the public for these increases via media outlets:

“Beer is a popular drink and should therefore be cheap. However, to our regret, we have been compelled to increase the price of all types of our beer. [...] We are confident that the public will accept this change as it was brought about by circumstances beyond our control. As soon as conditions improve, it will be our first task to reduce our prices again in 1940.”^[102]

The company interacted with customers through a variety of channels to increase the brand’s visibility. It kept its name in the public realm by publicizing its wartime activities. For example, the company gave “Eagle,” the company’s emblem, shields to football teams and donated cups to the annual Open Tennis Tournament of Tel Aviv.^[103] As thousands of Jews served in the British army during the war, the Palestine Brewery Ltd. contributed to welfare funds that were focused on bettering the living conditions of Jewish soldiers.^[104] The company’s policy to promote its contribution to the war effort closely resembled the Western practices of public relations.^[105]

Business survival strategies and tactics helped the Palestine Brewery Ltd. meet ongoing internal and external challenges. Despite the limited government support, high prices of raw materials, political turmoil, and initial losses, managers saved their company from extinction. All these efforts came to fruition as the company became a lynchpin of the Palestinian economy and one of the most internationally recognized enterprises in Palestine. Particularly Jewish consumers preferred its products. Its name became synonymous with industrial brewing and the Zionist colonization in this country both in local and foreign accounts. Cafes, restaurants and pubs began to advertise the company’s product as part of their menus to attract customers, being costless promoters of the brand.^[106] Indeed, people saw Eagle beer as a popular, valuable commodity that could be used as a bribe.^[107]

6 Conclusion and Outlook

Although the years in which the Palestine Brewery Ltd. and its subsidiary companies emerged and developed were packed with political conflicts and fraught with uncertainties, they were able to have a bigger share in the market and played a key role in the promotion of local beer industries over time. Thinking more broadly about what knowledge was being transferred, one can see advertising and brewing technology. The most successful part of this transfer of knowledge was arguably the production of more attractive products, i.e. European-style beers, for consumers as these companies offered a range of products suited to different tastes. For example, they targeted colonial officials and military forces with English-style beer and appealed to Jews from Central Europe, who wanted the familiar beers and tastes of German-style beer. In addition to settlers bringing their European tastes with them, the taste for beer gradually spread among locals, which illustrated a transfer of demand as well.

Although the company and media accounts made extensive use of a rhetoric that underscored a distinctive Palestinian identity and forged an emotional, nationalist connection with its customer, the composition of shareholders was at odds with this nationalist assertion because the company started out as a joint venture between local and foreign entrepreneurs, with the latter dominating administration. Furthermore, it produced solely European-style beer with European technical guidance mostly for recent European immigrants and British armed forces instead of the Old Yishuv and the country’s Arab majority. Despite this discrepancy between rhetoric and reality, managers successfully branded their company as a national, Palestinian enterprise both at home and abroad.

A comparison between the experience of Palestinian brewers and those in the rest of the Middle East demonstrates that the growth of beer industries was a regional phenomenon. For example, the war years saw the growing maturity of Egyptian beer production and the establishment of a brewery in Iraq after the war.^[108] Likewise, the Turkish state established a beer factory that was based on Western experiences. Experts from Austria contributed to the formation and operation of the factory. The government brought machines and raw materials from European countries.^[109] Production methods were localized over time. The factory remained a leading producer in the market and a symbol of Turkish modernity. Yet, unlike the Turkish case, Palestinian breweries were private enterprises. Although the self-interested attitude of the British had initially served as an impediment to their development, they were remarkably successful at dominating local markets. Thus, the case of Palestine was similar to politically independent states in the region and better than other politically dependent countries.

The Palestine Brewery Ltd. emerged from World War II as a potent economic actor and maintained its competitive position in the national market. The postwar years saw the revival of global beer industries thanks to the support of the governments.^[110] The company continued to rely on local technology and bought mechanical equipment from Sadan Ltd., which was an emerging company of machine works and foundry in Tel Aviv.^[111] At the same time, Gaston Dreyfus reconnected with his former networks in Europe and launched his business again in France at the war’s end. He came to Palestine from Paris in 1947 to assess the possibility of creating a maltery that would produce locally-made malt for Palestinian and foreign breweries.^[112]

The end of the war also initiated important changes in the geography of shareholders. An ever-growing number of people from Europe, the United States, and South America joined the company.^[113] Furthermore, some of the shareholders who had resided in the Middle East migrated to the West.^[114] The company was able to sustain its upscaled production by pooling the resources of various entrepreneurs on an even larger scale. As the company exhibited signs of vitality, it did not neglect its relations with the public. As with the war years, company managers made efforts to boost its reputation among the potential customers for example by donating an elephant to a zoo.^[115]

In addition to these factors, the strategic alliance between the company and the government accounted for the financial success of the company even after the war. The biggest customers of the Palestine Brewery Ltd. were still the armed forces in the country. Accordingly, beer production continued to surpass prewar levels, totaling 18,027,900 liters in 1946 and 19,500,000 liters in 1947 against 2,017,000 liters (rounded) in 1939. The post-war recovery of the Palestinian economy was crucial to enabling the company to open to foreign markets and exporting a higher amount of beer.^[116] Although new companies, such as Tabor Jerusalem Brewery and Malt Factory Limited, challenged the dominance of the Palestine Brewery Ltd., it remained an integral part of national big business.^[117] By the time the state of Israel was formed, the company had a very successful business, and its reputation as a brewery had spread far and wide.