Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer Part 29

In July 2012, the company announced that it was buying the remaining 48 percent of Mexico's Modelo brewery for $20.1 billion, or about $5 billion more than the price August IV and his team had negotiated in 2008. The combined companies are expected to yield annual sales of $47 billion, employ 150,000 workers in twenty-four countries, and annually produce as many as 350 million barrels of nearly 300 beers. In an interview about the merger, Carlos Brito referred to the company as a "portfolio of brands."

Also in July 2012, AB InBev revealed that it would be among the first tenants in St. Louis's long-gestating Ballpark Village commercial development adjacent to Busch Stadium. The company has licensed the Budweiser name to a planned industrial-size restaurant featuring "authentic German-inspired cuisine" and a rooftop beer garden with 100 beers on tap. (The dependably irreverent Riverfront Times suggested that the company name the restaurant Gussie's instead of Budweiser, and dress the waitresses in skimpy lederhosen outfits).

It is AB Inbev's stated goal to build Budweiser into "the first truly global beer brand," but on Brito's watch, the company's flagship brand has fallen to third place in the United States, surpa.s.sed by Coors Light. Bud Light remained the best-selling beer in the United States, and therefore the world, but there are clear signs that the new guys don't have a handle on the American psyche the way previous management had. They spent $30 million on five commercials during the 2012 Super Bowl broadcast, but only one of them-the arguably unclever "Here Weego," which featured a dog of the same name who runs to fetch a Bud Light whenever he's called-made USA Today's Ad Meter Top 10. Two commercials for Bud Light Platinum, the company's new higher-alcohol (6 percent) brand aimed at contemporary adults, ranked in the bottom 10 of the 56 commercials that aired.

In the early days of the takeover, there were rumors that the Brazilian budget cutters were going to do away with the Clydesdales. It seemed only logical, since austerity and carefully bred 2,000-pound show horses don't seem to go together. But the Clydesdales have remained an integral part of the company's promotion effort. There have been changes, however. In 2008, ABI moved the bulk of the 250-head breeding operation out of St. Louis to a farm in Boonville, Missouri, about 140 miles from the circular stable at the brewery, where only a few horses remain on display for the tours. In 2010, the company ended its seventy-six-year practice of providing teams of Clydesdales to public events for free, and began charging $2,000 per day for public appearances. And on New Year's Day 2012, for the first time in fifty-eight years, the Clydesdales were a no-show in the Pasadena Rose Bowl Parade. The company informed parade organizers a month earlier that it preferred to invest "in other types of sponsorships and events that reach a higher concentration of beer drinkers ... and where [we] can more directly discuss the Budweiser brand."

The Rose Bowl decision did not sit well with the citizens of St. Louis, because it was the city's float that the Clydesdales pulled in the nationally televised parade for all those years. Chalk up another loss, one more blow to civic pride.

The Clydesdales made an appearance during the 2011 World Series, when the Cardinals won their eleventh world championship. At the start of game 2, they clopped along a downtown street and into the newest Busch Stadium (opened in 2006), where they circled the warning track to the cheers of the crowd. But the cheers weren't as loud as they were when Gussie rode shotgun and brought the fans to their feet with his exuberant wave, back when the ball club and the brewery had a personal connection. Some in the 2011 crowd might have recalled the time in the early 1980s when the driver got the team going a little too fast on a turn and the wagon went up on two wheels and nearly toppled the old man off his perch. That was the day, according to company lore, that August III ordered an end to the century-old practice of letting union workers drink free beer on the job, because it turned out that the driver, a Teamster, had downed a few too many Buds before he climbed aboard the red beer wagon.

Colorful stories like that no longer flow from the brewery. A recent Post-Dispatch article described a new corporate culture in which "very good financial engineers" emphasize making money as much as they do making beer, and top executives measure the company's performance against such packaged-goods firms as Procter and Gamble and Unilever, "companies that sell soap and toothpaste." The newspaper quoted one former A-B executive as saying the new leadership was "forcing a choice between cutting costs and investing in people and brands."

One 2010 cost cut seems particularly coldhearted in light of the recent "de-leveraging" bonuses: the company reduced by 80 percent its annual donation to a local charity devoted to helping children with mental and physical difficulties, cutting the contribution from $150,000 to $30,000. In defending the action, the company released a statement saying it was part of a new philosophy of "giving larger grants to fewer organizations, which can mean some organizations receive reduced support." The statement went so far as to tout the company's new motto, the one meant to replace the apparently outdated "Making friends is our business."

"This is all part of our dream to be the 'Best Beer Company in a Better World.'"

Whatever the tortured explanation, the move surely didn't make anyone proud to work at the company. And former executives say that is exactly what has been lost in the transition from Anheuser-Busch to AB InBev.

"There was just something about Anheuser-Busch," said eighty-three-year-old Andy Steinhubl, the man who wrote and perfected the recipe for what would become the world's best-selling beer, Bud Light. "It was a feeling that seeped into you when you worked there. I remember when I retired, Jack McDonough, who'd left A-B to run Miller, called and said he wanted me to come work for him, to run the brewing department. But I said no, because it would have made me feel like a traitor."

"There was a magic there that all of us felt, and it's not something you get over," said seventy-five-year-old Denny Long, sitting in his dark wood-paneled office at Sam's Steakhouse, the elegant, old school restaurant he now owns on Gravis Road in South St. Louis. "For years after I left the company, I would be headed out of the house to work and I would say to my wife, 'I'm going to the brewery,' and then catch myself. It's been twenty-five years and I still miss it."

Some of the magic of the Busch beer dynasty can still be seen just across the street from Long's restaurant. On a recent spring afternoon before the opening of the tour season, the sun-dappled 281 acres of Grant's Farm offered a glimpse of what life must have been like during the seventy-plus years that August A. and Gussie were the lords of the manor. Up at the big house, in the second-floor bedroom where both of them died, Adolphus's barber chair still gleamed in the center of the marble bathroom, and Gussie's bright-red Cardinals-Budweiser sport coats hung neatly in the closet, right above his collection of idiosyncratic cowboy boots. A lone visitor's footsteps echoed across the empty courtyard of the Bauernhof, a structure that boggles the modern American mind-a fortress barn with room enough to seat 1,000 dinner guests.

The estate is still owned jointly by the six surviving children who grew up there-Adolphus IV, Beatrice, Peter, Trudy, Billy, and Andrew. Now that the brewery has been sold, it's the one thing that binds them together, however uneasily. The company operates the public portion of the farm under the terms of a lease that doesn't cover the expenses, according to the family, and there is disagreement among the six about what to do when the lease comes up for renewal in 2013. In the meantime, the public tours of the Bauernhof, deer park, and animal compounds go on, while a small staff of longtime Busch family employees maintains the mansion and cottage as if Gussie and Trudy still lived there.

The big house was the scene of a family reunion of sorts in July 2010, when Billy Busch hosted a tasting of the first offerings from the William K. Busch Brewing Company, which he launched with the millions he made when InBev paid him seventy dollars a share for the stock his father left him. His mother, Trudy, was there-her first visit to the house since 1978-along with his oldest brother, Adolphus IV, and members of the von Gontard and Anheuser clans.

St. Louis's newest beer company was officially introduced to the city on the evening of November 6, 2011, during a combined press conference and coming-out party at the World's Fair Pavilion in Forest Park, the site of the city's grandest achievement 107 years before. Dressed in a sport coat and slacks, Billy addressed the public for the first time in his life, telling the crowd of about 500 beer distributors, retailers, local reporters, and civic leaders that, unlike any other American lagers, his two brands, Kraftig (German for "strong") and Kraftig Light, are brewed in adherence to the ancient German Purity Law, or Reinheitsgebot. Enacted in Bavaria in 1516, the law decreed that beer be brewed using only four natural ingredients: barley malt, hops, yeast, and water.

Billy also pledged that his company would operate in the civic-minded tradition handed down by his forebears.

"My family was in the beer business for 150 years and was an employer in this city and a supporter of the community for all that time, and now we are not involved, and that didn't seem right," Billy said.

"I am very fortunate to have been the recipient of a lot of wealth because of my family's success in the beer business, and I am willing to put my money at risk to build a company that will create jobs in St. Louis and allow the profits to stay in this city and this country as opposed to a foreign country."

Kraftig and Kraftig Light went on sale in the St. Louis region in October 2011 and quickly captured a measurable share of the market, even managing to gain entry to Busch Stadium, where only a handful of nonAB InBev brands are sold. In July 2012, Adolphus IV bought a 49 percent interest in the Salmon River Brewery, a craft beer maker in Idaho.

On a recent Sat.u.r.day afternoon, fifty-one-year-old Billy was seen going about the business of making friends during a product tasting at a large, upscale grocery store in West St. Louis County, where he spent an afternoon working the aisles with the energy and enthusiasm reminiscent of his father in his prime. Introducing himself to a woman whose eyes lit up in recognition at the sound of his name, he asked what brand of beer she drank.

"Oh, I really don't drink beer," she replied, apologetically.

"How about your husband? What does he drink?"

Fl.u.s.tered by the unexpected close encounter with a Busch, she couldn't remember her husband's brand. "Why don't we call and ask him?" Billy suggested. And so they did, with Billy doing the talking.

"Hi, this is Billy Busch and I'm here at the grocery store with your wife and she's trying to remember what brand of beer you drink."

"Budweiser Select," the man said. Billy smiled.

A few minutes later, the woman left the store with a good story to tell and a six-pack of a brand-new beer brewed by a member of the Busch family.

Apparently, Gussie's American dream hasn't died.

NOTES

The pagination of this electronic edition does not match the edition from which it was created. To locate a specific pa.s.sage, please use your e-book reader's search tools.

This book is based largely on several hundred hours of interviews with members of the Busch family, their friends and employees, former executives of Anheuser-Busch, brewing industry experts, and former local and federal law enforcement officers. The bulk of the historical background is drawn from the archives of the St. Louis Post-Dispatch and the St. Louis Globe-Democrat, the longtime newspapers of record regarding Anheuser-Busch and the Busch family, and from the Henry Tobias Brewers and Maltsters Collection, located at the Western Historical Ma.n.u.scripts Collection at the University of MissouriSt. Louis. The author also relied on court doc.u.ments, the reporting of the New York Times, the Los Angeles Times, the Wall Street Journal, the Chicago Tribune, Business Week, Fortune, Forbes, Newsweek, the a.s.sociated Press, the Riverfront Times, and the books Making Friends Is Our Business, by Roland Krebs and Percy J. Orthwein; Under the Influence, by former Post-Dispatch reporters Peter Hernon and Terry Ganey; October 1964, by David Halberstam; and Dethroning the King, by former Financial Times reporter Julie MacIntosh.

PROLOGUE: "AUGUST IS NOT FEELING WELL"

18 Confidential interviews by author.

CHAPTER 1: "BEER IS BACK!"

9 A crowd began gathering: "The Day the Beer Flowed Again," St. Louis Globe-Democrat, April 2, 1983.

10 Inside the iron gates: St. Louis Post-Dispatch Sunday Magazine, April 3, 1983, 9.

10 On the bottling plant floor: Roland Krebs and Percy J. Orthwein, Making Friends Is Our Business: 100 Years of Anheuser-Busch (St. Louis: Anheuser-Busch, 1953).

11 Eager to reestablish: "Reinforcements from Abroad," St. Louis Post-Dispatch, December 27, 1969.

12 And now, finally: St. Louis Post-Dispatch Sunday Magazine, April 3, 1983.

12 "April seventh is here": Anheuser-Busch archival recording.

13 Back at Kyum Brothers Cafe: "The Day the Beer Flowed Again," St. Louis Globe-Democrat, April 2, 1983

13 At 2:30 a.m: St. Louis Post-Dispatch Sunday Magazine, April 3, 1983.

13 By breakfast time: "King of Bottled Beer," Fortune, July 1932, 44.

14 "Beer is Back!": Krebs and Orthwein, Making Friends Is Our Business, 17275.

15 "Teutonic tide": "Irish and German Immigration," Independence Hall a.s.sociation, ushistory.org/us/25f.asp.

15 "A sudden and almost unexpected wave": Mary Jane Quinn, "Local Union #6: Brewing, Malting and General Labor Department," master's thesis, University of Missouri, 1947.