Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer Part 21

"Two point three million, sir."

"What?"

"Two point three million," Brooks repeated, launching into a detailed description of all the animatronics, robotics, and hydraulics that would be required to bring the amphibians to life. August listened intently and jotted notes. Brooks explained that the cost also included $1.2 million for the first airing of the commercial.

"Where's it going to run?" August asked.

"In position 1-A during the Super Bowl," Brooks said. "That's the first thirty-second commercial break after the first possession in the first quarter. It will be the first commercial anyone sees."

"You believe in this?" August asked.

"Yes, sir, I do."

"You willing to stake your job on it?"

"I am."

August III broke into a broad smile and said, "Well, then go get 'em, Brooksie."

As it turned out, D'Arcy didn't get the chance to execute the "Frogs" concept. On November 13, 1994, August III, Pat Stokes, Bob Lachky, and Mike Brooks were visiting the A-B plant in Baldwinsville, New York, when Lachky got a call from D'Arcy's Jim Palumbo, telling him that someone in the agency's New York office had made a deal to buy media (print advertising s.p.a.ce and TV commercial time) for Miller Brewing. Palumbo apologized and said he had not been consulted.

On the corporate jet during the flight home to St. Louis, August sat with the others and said calmly, "Gentlemen, I'm going to teach you a business lesson. This corporation has spent millions and millions of dollars with D'Arcy Advertising over a seventy-nine-year period of time. They have done some great things for this company. But after they were bought [by New York-based Benton & Bowles in 1986] we became very unimportant to them. They have now made a business decision to support our biggest compet.i.tor, and they did it without even telling us. That is disrespectful.

"So they made their choice, and now we are going to make ours. We will no longer conduct business with that company. When we are on the ground, I want you get hold of the head of PR, and have a statement prepared. And get [D'Arcy managing director] Charlie Claggett out to our hangar at Spirit of St. Louis Airport for a meeting at eight a.m. tomorrow. I will tell him this relationship is over and why. Are there any questions?"

There were plenty, but the three executives were too stunned to ask them. The big question in their minds was what would become of D'Arcy's St. Louis office, which depended on A-B for 80 percent of its business, nearly $150 million a year. Losing that could cost as many as a hundred people their jobs, some of them, like Palumbo and Choate, good friends of theirs. Lives were about to be upended, careers derailed, houses sold, and families relocated. In the St. Louis business community, this was a calamity.

It had been a long time coming. August III had been harboring resentment toward D'Arcy since 1983, when the agency ousted his cousin James Orthwein as chairman, forcing him to retire at age fifty-nine in a manner that August considered disrespectful. Orthwein had gone on to become owner of the New England Patriots and was one of the largest individual owners of A-B stock, with more than a million shares, so he was hardly hurting. But August III had not forgotten how D'Arcy had once treated a member of his family. And now it was payback time.

"Get me Jimmy Orthwein on the phone," he called up to the c.o.c.kpit. A few minutes later, the pilot said, "We have Mr. Orthwein on the line, sir." August was grinning like a schoolboy as he took the call. "Jimmy, I've got some good news for you. It's retribution day. Can I land my machine [helicopter] in your yard? Great. See you this afternoon."

On January 29, 1995, quarterback Steve Young threw a record six touchdown pa.s.ses to lead his San Francisco 49ers to a 4926 victory over the San Diego Chargers in Super Bowl XXIX. But the real winning team that day may have been the Budweiser Frogs, who outscored even the legendary Spuds MacKenzie in USA Today's weekly Ad Track poll, which measured the popularity and effectiveness of ad campaigns. Ad Track rated "Frogs" No. 1 for three months running, with more than 50 percent of poll respondents saying they recalled the commercial and liked it "a lot." Advertising Age reported that the frogs had tripled the awareness of Budweiser among the target group of twenty-one- to thirty-year-olds. The advertising industry honored the agency that produced the commercial, DDB Needham of Chicago, with a handful of Clio Awards (the ad industry's version of the Oscars) as well as the Silver Lion award at the Cannes International Festival of Creativity.

The "Frogs" campaign sp.a.w.ned the even more popular "Louie the Lizard" campaign, which began with a thirty-second commercial in which a green-with-envy chameleon complained to his pal Frank:

"I can't believe they went with the frogs. Our audition was flawless. We did the look. We did the tongue thing. It was great."

"Louie," Frank cut in. "Frogs sell beer. That's it, man, the number one rule of marketing."

"The Budweiser Lizards," Louie continued, in his heavy Brooklyn patois. "We coulda been huge ... those frogs are going to pay."

Subsequent thirty-second spots revealed Louie to be a wiseguy wannabe who hires a ferret hit man to whack the frogs, in the process delivering such memorable lines as "Eventually, every frog has to croak" and "Never hire a ferret to do a weasel's job."

"Louie the Lizard" topped USA Today's Ad Track and won six Clios and another Silver Lion award in Cannes. Together the frogs and lizards pulled Budweiser out of its slump and reinvigorated the brand's image among contemporary adults, who responded to the campaign's ironic humor and the sophisticated extended spoof of show business, the Mafia, and beer advertising itself. Suddenly, Anheuser-Busch wasn't just the world's largest brewer, it was also the hippest. The mood inside the company was euphoric.

"Our ads were on the lips of virtually every adult contemporary consumer," said a former A-B sales executive. "Which made it a lot easier when our sales guys walked into Krogers, or Ralphs or Albertsons. They'd bring a VCR along on the call and pop in a tape and play the commercials, and the retail people thought they were hysterical. The retailers would show the commercials at their senior management meetings. The momentum behind our brands was huge."

It wasn't only Budweiser. In December 1994, Bud Light finally surpa.s.sed Miller Lite in sales, giving A-B the No. 1 and No. 2 selling beers in the world.

At the height of the "Louie the Lizard" campaign, August IV received another promotion, to vice president of marketing, a position that had been vacant since Mike Roarty retired in 1990.

The myth-making machinery at Fleischman-Hillard immediately shifted into high gear to a.s.sure that he got the credit for the company's recent success. In the press release announcing his promotion, the PR agency wrote, "Throughout his brand management tenure, Busch has been noted for creating innovative advertising and marketing strategies. The most recent successes include the popular 'Frogs.'"

For a full telling of the story, Fleishman-Hillard turned to a trusted reporter, Fortune magazine's Patricia Sellers, who had visited Waldmeister and written the long and laudatory profile of August in 1987 following the A-B kickback scandal and Denny Long's resignation.

August III did nothing without a strategy behind it. When he sat down with Sellers for a 7:00 a.m. interview in his aircraft hangar at Spirit of St. Louis Airport, he had several specific messages he wanted to deliver to the financial community. Sellers delivered one of them right at the top of the article, reporting that "the chairman finds this an opportune morning to disclose publicly, for the first time, a big piece of news. 'I'll be retired by 65. At that point, this is a younger person's game.'"

He didn't say the Fourth would succeed him; he got his oldest daughter, Susan, to say it for him. "If my brother continues to perform as he has, it's 100% certain he'll have the job," Sellers quoted her as saying. In a separate interview conducted in his "all-black bachelor padstyle office," the Fourth sent out a cringe-worthy thank-you to his father, revealing to Sellers that he kept five letters in an inside pocket of his briefcase. "Five notes of compliment from the Chief over ten years of full-time employment here," he said. "They're few and far between. But I cherish them. As demanding and challenging as he is, the moments of victory and his acknowledgement of my success mean so much to me." Asked if his father knew of the letters in the briefcase, the Fourth said no. "But he will now." It was almost as if the two men were using the reporter to conduct a conversation they weren't comfortable having face-to-face.

August III couldn't help but be pleased with the Fortune article, which described his son as "the hotshot vice president of marketing" who had "toned down his wild ways," and "recharged Anheuser-Busch" by "pumping up beer sales to record levels." Sellers reported that the Fourth's colleagues and clients "praised him as a team player, a consensus builder, and a terrific idea man" (without quoting a single person saying any such thing) and stated (without attribution) that it had been the Fourth's idea "to take Budweiser off its pedestal and move it onto ... the toadstool."

"The chairman thought his son was nuts two years ago when he saw the monosyllabic frogs who croak 'Bud ... weis ... er,'" Sellers wrote. "The Fourth, who can be as unrelenting as his father, insisted the frogs would make Bud hip. He poured on research, and August III gave in."

Seller's account of the campaign's provenance would be repeated as gospel in numerous publications over the next fifteen years, including the 2011 book Dethroning the King, which said that the Fourth pitched the concept to his father "behind closed doors," with no one else present, and that the two men had argued about it, but the Fourth prevailed. "That story is an absolute falsehood," Mike Brooks said recently. "August IV was a member of the management team that supported the Frogs campaign. The agency created the work, and we bought it. He did not create the work or present it."

August III likely was relieved that the Fortune magazine article touched only lightly on the Fourth's run-ins with the law more than a decade earlier, with Sellers reporting that he was "still haunted by the tragedy" of the Tucson crash, in which "his pa.s.senger, a waitress from another bar, flew through the sunroof and died."

"They couldn't prove blame," she quoted the Fourth as saying. "I had a bad head injury. I don't remember that part of my life."

His father hoped everyone else would soon forget it as well, especially the business community, at whom the article was aimed. He was really talking to them when he said to Sellers, with finality, "His past isn't an issue anymore."

He was dead wrong about that.

19

"WAY, WAY, WAY BEYOND TIGER WOODS"

After a forty-three-year marriage characterized by exhilarating triumphs, heated disagreements, and bitter disappointments, St. Louis's most beloved couple, the Redbirds and "the Brewery," broke up. In the spring of 1996, Anheuser-Busch sold the Cardinals.

In a way, it wasn't surprising. August III's heart was never really in the relationship, and he'd threatened to walk away a number of times. The issue was always the same-money. Even in the Cardinals' best years, when they won championships and sold more tickets than most other teams, their profits were piddling compared to those of the beer company. The team lost $12 million in 1994, the company claimed, and came in fourth in their division in 1995, with a losing percentage of .434. For August, it just wasn't working. As a spokesman for the company put it, "We have concluded that this is no longer a compatible fit."

Still, August handled the split with grace. He didn't just sell out to the highest bidder; he personally solicited prospective buyers, making sure the team would remain in St. Louis. (He expected that Gussie would roll over in his grave, but he didn't want to risk the old man clawing his way out of the coffin.) He chose a group of local businessmen and set the price for the team and the stadium and parking at $150 million. The sale was the topic of public discourse for weeks, but there was no backlash against the company because the citizens were a.s.sured that almost everything would remain the same for them-from Busch Stadium with its Clydesdale-drawn beer wagon and giant A & Eagle scoreboard to the brewery's sponsorship of the Cardinals' TV and radio broadcasts to the familiar voices of announcers Jack Buck and former Cardinal right fielder Mike Shannon talking about Bud and Bud Light in between the play-by-play. The fans were told, in effect, that Mom and Dad still loved one another, they just wouldn't be sleeping in the same bed anymore.

Extensive media coverage of the Cardinals sale helped to obscure the news that August simultaneously unloaded two other struggling subsidiaries. After fourteen years of losses, he spun off A-B's Campbell Taggart baking operation into a separate publicly traded company in a stock-swap deal with shareholders. Unable to find a buyer for Eagle Snacks, he shut down the operation and let go all of its 150 employees. (Frito-Lay eventually purchased four of the five Eagle Snacks plants, and Procter & Gamble acquired the trademark and brand name.)

August's grand plan for turning A-B into a fully diversified package-goods company in the style of Procter & Gamble-a strategy inspired by his grandfather's successful diversification of the company during Prohibition-had proved a dismal failure. But he was not one to dwell on failure, especially his own, and he often preached that mistakes were the greatest teacher. He pivoted to a plan that might well have been inspired by the letter his great-grandfather Adolphus wrote to his son (August's grandfather) ninety years before, reminding him that the family's welfare depended "solely on the success of our brewery." August updated the sentiment to a punchier slogan, "Beer is why we are here," and announced to shareholders in the spring of 1996 that his goal was to capture 60 percent of the domestic beer market by the year 2005. He then took to the task with the energy and determination of a man half his age.

He carried a Dictaphone wherever he went, recording an endless stream of questions, critiques, and complaints that his secretaries transcribed and forwarded to the targeted executives in the form of e-mails and interoffice memos marked "from AAB3 executape" and usually accompanied by a demand for an immediate response. He called his executives at all hours, even on Sundays and holidays. "My beeper once went off on Christmas morning when I was opening presents with my kids," sighed a longtime executive. "I knew he'd probably sent out the query to six other people, too, and you didn't want to be the last to respond."

There was no corner of the business that escaped his attention. He traveled to Idaho's remote Teton Valley every summer to personally inspect the hops and barley crops that were destined for his beer, hopping from farm to farm in his helicopter. He conducted similar examinations of his suppliers' rice fields in Arkansas and Mississippi. And when the annual shipments of European hops arrived by train at Pestalozzi Street, he dug right in, rolling the buds in his hands and holding them up to his nose to inhale the bouquet. "He understood the relationship between the ingredients and the processing," said a former employee. "His father didn't even have that sort of technical command of the business."

Mike Brooks recalled accompanying August on an inspection tour of the company's marketing presence at the Indianapolis 500 one year. After checking out the ad signage and meeting the Budweiser racing team owner and driver, August was headed back to his helicopter when he spotted a large trashcan overflowing with empty beer bottles. Brooks watched in astonishment as the boss whipped out his Dictaphone and began fishing out Bud and Bud Light empties, reading the date codes aloud so someone could check to see if the beer being sold at Indy was fresh. "That's how focused he was on quality," Brooks said.