Those cattle pens are where an undercover worker for the Humane Society of the United States, a private organization, secretly filmed workers last fall forcing sick or injured cows to their feet using forklifts and water hoses. Such downer cows are generally banned from the food supply because they carry higher risks of diseases, including mad-cow disease. The video helped trigger the largest recall of beef in U.S. history last month.

Mr. Mendell “ran a great ship … except for this one fatal flaw” in how he managed the cattle pens, says Cal Faello, former head of a beef-industry trade group, who has spoken with Mr. Mendell a handful of times since the crisis began.

Mr. Mendell, 55 years old, didn’t respond to requests for comment. After failing to show up when invited to appear before a congressional committee last month, he has been subpoenaed to testify Wednesday at a hearing in the U.S. House of Representatives on meat safety. It is unclear if or how he plans to answer questions.

Hallmark/Westland halted operations last month, and it is unclear whether the privately held company will reopen. The Department of Agriculture says there is very little health risk from eating the recalled meat, which totaled 143 million pounds dating to February 2006. No illnesses have been reported.

The plant began slaughtering cattle in 1960, says Donald Hallmark Sr., a 73-year-old former owner. The plant for years was a major buyer of older, spent dairy cows from the many dairy farms in the Inland Valley, about 40 miles east of Los Angeles.

Mr. Mendell established Westland Meat Co. in Commerce, Calif., near Los Angeles, in 1990, and relocated the company to Chino later that decade. The company didn’t slaughter cattle, but bought fresh beef from companies such as Hallmark Meat Packing Co. and churned it into ground beef and other products.

In 1993, Mr. Mendell’s company and other meat suppliers came under scrutiny when four children died and 600 other people were sickened by burgers sold by fast-food chain Jack in the Box Inc. Although the exact source of the E. coli bacteria found in the beef was never determined, Westland was among companies that settled legal claims totaling $58.5 million.

Hallmark drew its own scrutiny in the 1990s. The Inland Valley Humane Society in neighboring Pomona found recurring problems with the plant’s handling of downer cows, which can’t walk or stand on their own, said Brian Sampson, the society’s supervisor of animal services.

Mr. Mendell acquired full control of Mr. Hallmark’s company in 2003, Mr. Hallmark says. One reason was that Westland wanted to become a supplier of fresh beef to the national school-lunch program run by the USDA, and needed a slaughterhouse, says Anthony Magidow, general manager of Hallmark/Westland.

The Hallmark plant had struggled financially for years, Mr. Hallmark says, but when Mr. Mendell took over, he invested heavily in the facility. To qualify for the school-lunch program, the plant had to meet many requirements, including having its financial statements reviewed and submitting a technical explanation about how it controlled germs.

The plant began supplying beef to the school-lunch program in 2003 and quickly became one of its largest suppliers. The USDA named the company its Supplier of the Year for the lunch program for the 2004-05 school year, based on criteria including timely delivery of products and high levels of customer service.

Hallmark/Westland supplied about 27 million pounds of beef for revenue of $39 million to food-nutrition programs, including the school-lunch program, in the year ended Sept. 30, 2007.

Hallmark/Westland also sold beef to companies such as Jack in the Box and the hamburger chain In-N-Out Burger. The company’s sales reached about $100 million annually in recent years and was profitable, Mr. Magidow says.

With Mr. Mendell running Hallmark/Westland, the local Humane Society received far fewer complaints about animal treatment than it did under the previous ownership, says William Harford, the group’s executive director.

Still, in December 2005, the USDA cited the company for noncompliance for being overly aggressive in using electric prods to move cattle, among other violations. The company responded by retraining cattle-pen staff, it said in a statement to the USDA. It also said it would continue to train workers “on the importance of humane handling …and will continue to monitor the corrals.”

But this past October, when the undercover Humane Society worker took a job in the cattle pens, he received no formal training, according to statements he gave to the Chino police. On his first day, he reported to Pablo Salas, a manager who told the new employee not to be cruel to the animals or to use electrical cattle prods.

The undercover worker, who wore a hidden videocamera underneath his shirt during the six weeks he worked at the Hallmark/Westland plant, told Chino police that the plant’s owners rarely came outside to observe activities in the cattle pens. Another worker told police that Mr. Salas only came outside to the cattle pens for 15 to 20 minutes a day. Mr. Salas couldn’t be reached for comment.

The Humane Society worker filmed Daniel Ugarte Navarro, the pen manager, and other workers forcing downer cows to their feet using high-pressure water hoses, forklifts and electrical cattle prods. The video led to the arrest of two workers, including Mr. Navarro, who could face more than five years in prison.

Mr. Navarro couldn’t be reached for comment. In a statement he gave to Chino police before he was arrested, Mr. Navarro said he felt pressure to ensure that 500 cows were slaughtered each day. If he didn’t meet that quota, he said, Mr. Salas would get angry. The company suspended Mr. Salas after the video emerged.

The recall also has pointed a spotlight at the Department of Agriculture, which assigns full-time government inspectors to monitor safety at meat-packing plants. Lawmakers and consumer groups have criticized the department for failing to catch problems at the slaughterhouse. The USDA has suspended three employees pending the outcome of an agency investigation. One of them was the plant’s supervising veterinarian, Gabriel Gurango, who worked on site for 20 years.

Dr. Gurango “did not spend a great deal of time” in the cattle pens because he was responsible for so many other duties, many of them inside the plant, says William G. Hughes, general counsel for the National Association of Federal Veterinarians, who is advising Dr. Gurango. Mr. Hughes contends the USDA didn’t have enough inspectors on hand to monitor food safety at the plant. A USDA spokeswoman says the plant was “fully staffed” with five inspectors.

Dr. Gurango, a 68-year-old USDA veterinarian who oversaw four inspectors at the plant, was in the cattle pens twice daily, at 6:30 a.m. and 12:30 p.m., the undercover Humane Society worker told police. When a government inspector was present, Mr. Navarro would tone down his methods for trying to get cows to stand up, the Humane Society worker told police.

Dr. Gurango didn’t respond to a request for comment. But Mr. Hughes, the attorney for the veterinarians’ trade group, said in an interview that the veterinarian was appalled by the video and was unaware of the activities.

Dr. Gurango made at least three surprise visits daily to the cattle pens to observe animal-handling practices, Mr. Hughes says, adding that Dr. Gurango had to spend a significant amount of time inside the plant each day determining whether meat from the older cows was fit for human consumption.

More distributors are giving up exclusive deals to sell Anheuser Busch beers, to take advantage of the growing craft beer market.

A decade ago, Anheuser-Busch Cos. began dangling financial incentives to get beer distributors to jettison rival brands. The campaign, known as “100 percent Share of Mind,” was a big hit, helping the King of Beers tighten its grip on the U.S. market.

But now, some distributors are finding that selling only Anheuser products might not be smart in the fast-changing alcohol-beverage industry.

In the past year, distributors in Texas, Tennessee and elsewhere have decided to eschew Anheuser’s incentives and begin selling rival beers such as Yuengling Lager, as well as wine and spirits. Recently, R.H. Barringer Co. became the first Anheuser distributor in North Carolina to start selling other brands, acquiring a rival that sells wine and imported beer. Today, about 60 percent of Anheuser’s sales flow through distributors carrying only its brands, down from about 70 percent at its peak.

The shift might help competing alcohol brands gain market share, as distributors divert some of their attention from Anheuser, which accounts for about 48 percent of U.S. beer sales. For consumers, it means greater choice at their local bars and liquor stores. Wall Street analysts say the movement signals a weakening of the St. Louis brewer’s clout in the marketplace, as small-batch “craft” beers and imports, as well as wine and spirits, wrest market share from mass-market brews like Budweiser.

Anheuser’s exclusive distribution system “was a great business model,” but “the consumer environment has changed dramatically,” says Bump Williams, general manager of the beer, wine and spirits practice of market-research firm Information Resources Inc.

In recent years, some of Anheuser’s 560 independent distributors became frustrated as craft brands such as New Belgium Brewing Co.’s Fat Tire Amber Ale surged in popularity and competing distributors snatched them up. Often, the distributors adding such high-margin brews were the same ones that peddled the beers of Anheuser’s top rivals, SABMiller PLC’s Miller Brewing and Molson Coors Brewing Co.

Anheuser wholesalers “are realizing that we have made the competition stronger by basically forfeiting these brands to them,” says Chris Monroe, vice president of D. Canale Beverages Inc., a Memphis, Tenn., distributor that carried only Anheuser products until last fall.

As profit growth eroded, Anheuser distributors began clamoring for the company to acquire brands with higher profit margins and growth rates. The beer titan has responded over the past two years. It reached a deal to import European beers such as Stella Artois and Beck’s from Belgium’s InBev SA. And it has expanded agreements to distribute other companies’ craft brews, spirits, water and other beverages.

Some distributors began hawking rival products several years ago. Others haven’t been able to distribute the InBev products and other new brands from Anheuser because of franchise laws governing beer sales. The laws, which exist in many states, block a distributor from taking over a brand unless the existing distributor agrees to sell it. Ironically, Anheuser distributors often backed the adoption of such laws.

When distributors forgo the incentives Anheuser offers exclusive partners, they are making a bet that they will make up the difference with revenue from the new brands. The incentives include cash payments of two cents a case, access to credit and truck-painting allowances.

Last fall, 11 distributors in Tennessee stopped being exclusive, in part because the state’s franchise law kept them from obtaining the InBev lineup. They all began selling brews made by Pennsylvania’ s D.G. Yuengling & Son Inc., one of the nation’s oldest beer makers, which was entering the Tennessee market.

“We saw a brand with some very strong potential, and we didn’t want that brand to fall into competitive hands in the state,” says Mr. Monroe of D. Canale in Memphis.

The move may be hurting Anheuser. Yuengling established 3.2 percent market share in terms of volume in food stores in Tennessee in the 13 weeks ended Dec. 30, says Information Resources. In the same period, three of Anheuser’s four-top selling brands in the state – Budweiser, Busch and Natural Light – experienced sales declines. Budweiser volume fell 5.4 percent.

“There appears to be some correlation between Yuengling’s entry into Tennessee and the softness in some Anheuser brands,” says Mr. Williams of Information Resources. He says it is common for Yuengling to grab share from Anheuser when it enters new markets.

Dave Peacock, Anheuser’s vice president of marketing, says Yuengling is having a minimal, if any, effect on its Tennessee sales, noting that other brewers experienced similar declines late last year.

Still, Anheuser wasn’t happy with the way it learned of the Tennessee distributors’ decision. “We found out later (in their decision-making process) than we would have liked,” says Mr. Peacock. “When we don’t get early communication, it rubs us wrong.”

Anheuser continues to champion the exclusivity program, believing it gives distributors the best chance to succeed. “We want their efforts and focus aligned with ours,” says August Busch IV, Anheuser’s chief executive. The company is open to talking to its distributors about beer brands it could acquire that would help strengthen their businesses, he says.

Mr. Busch’s father, August Busch III, ran the company when it began the exclusivity program in 1997. The campaign angered Anheuser’s foes, especially craft-beer makers that lost access to some markets. The Justice Department investigated the brewer for possible violations of antitrust law, but eventually dropped the probe. At the time, Anheuser controlled about 45 percent of the beer market, and about 41 percent of its distributors carried only its brands. As more distributors went exclusive, Anheuser’s market share rose to 50 percent, a significant feat.

So far, the biggest Anheuser distributor to end exclusivity is Ben E. Keith Co., of Fort Worth, Texas. The distributor, one of the nation’s largest, sold only Anheuser beers for about 75 years until last spring. It began selling brews like Trumer Pils, as well as wine and energy drinks that also aren’t affiliated with Anheuser. The decision came “after much debate and with the utmost respect” for Anheuser, says Kevin Bartholomew, who runs the company’s beer division.

Bartholomew is among those who believe such a shift ultimately will benefit Anheuser, because individual distributors will have enhanced their long-term business prospects.

Some industry observers are surprised a greater number of distributors haven’t flown the coop. “It really hasn’t been a widespread national jailbreak,” says Harry Schuhmacher, editor of Beer Business Daily, an industry publication. “It will be interesting to see if August continues to hold the party line.”

Some analysts say “jailbreak” may not be far off.

Jim LaRose, a Cleveland-area distributor, says he is among those taking a hard look about whether to remain exclusive. He says his sales growth has flattened. “I have to have an outlook toward what it’s going to take for me to compete in all tiers of the industry,” he says.

The Milwaukee brewer is launching Miller Chill, a 110-calorie beer flavored with lime and salt, throughout the U.S. this summer after a successful test run in Arizona and several other states. Chill is Miller’s answer to the michelada, a drink popular at Mexican beach resorts usually consisting of beer, lime juice and ice in a salt-rimmed glass.

Miller, since 2002 the North American arm of London-based SABMiller PLC, plans to spend more than $30 million this year on television and print advertising for Chill. TV ads in local markets included the slogan, “Se habla Chill?” (“Do you speak Chill?”). Miller is counting on Chill to help it reverse a sales decline in North America and regain market share in the face of brutal competition.

In the U.S., beer giants Miller, Anheuser-Busch Cos. and Molson Coors Brewing Co. are struggling to increase sales of their flagship domestic beers, as beer drinkers increasingly reach for imports and small-batch “craft” brews.

Miller hopes Chill, which it calls a premium light lager, will appeal to light-beer drinkers seeking more flavor. Miller is targeting 21- to 35-year-olds for the new brand, says Randy Ransom, Miller’s chief marketing officer.

Miller isn’t positioning Chill as an alternative to Grupo Modelo SA’s Corona, the popular Mexican import often served with a wedge of lime, Ransom says, stressing that the two beers taste very different.

Michelada ingredients can vary; they sometimes include Worcestershire and hot sauce with a pinch of black pepper. Miller tested more than 20 recipes of Chill. It declines to discuss how the beer is made, citing competitors. The brewer began test- marketing Chill in March in Arizona, as well as California, New Mexico and Florida. The beer did so well that Miller decided after four weeks to launch it nationally – an unusually short trial period in the beer industry.

Anheuser, known for testing new brands, since March has been trying out a beer called Chelada – a combination of Bud or Bud Light with Cadbury Schweppes PLC’s Clamato tomato-juice cocktail – in California and Texas. Keith Levy, Anheuser’s vice president of sales and retail marketing, says the response has been “overwhelming,” particularly in the Latino market. But the company doesn’t have plans for a national launch of Chelada, sold in tall 24-ounce cans.

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