Review: The royal beer family

Review: The royal beer family

Beer can go flat, and the same fate can befall family dynasties that build corporate giants like St. Louis-based Anheuser-Busch.

The Busch clan dynasty got its start in the 1860s, when German immigrant Adolphus Busch married Lilly Anheuser and eventually went to work for her father's beer business, E. Anheuser & Co. Rechristened Anheuser-Busch in 1879, Busch built a business that soon dominated local breweries and began to expand.

Adolphus Busch begat August Busch, who saved the company during Prohibition by shifting to nonalcoholic products. August Sr. begat August Busch Jr., an autocratic visionary who made the company a giant and bought the St. Louis Cardinals.

August Jr. begat August III, who forced his father out in a boardroom coup d'etat, made the business even more successful and sold the Cardinals. August III begat August IV, a spoiled kid who worked his way up the corporate ladder to the top job in 2006 and promptly lost the whole company two years later to Belgium-based InBev.

St. Louis and the thousands of employees who worked under the old regime will never be the same. That's just part of a fascinating story told in William Knoedelseder's "Bitter Brew: The Rise and Fall of Anheuser Busch and America's King of Beers."

The theme is familiar: Earlier generations build a corporate giant lost by later generations. Blame is heaped on August IV, the heir apparent who was unprepared and unfit by virtue of his recreational pastimes.

But there is so much more here: heroes, villains and delicious family scandal. Those who grew up in the shadow of the Cardinals, the brewery and this unofficial royal family will savor every paragraph.

August A. Busch Jr., the man who saved and integrated the Cardinals for St. Louis when he bought the franchise in 1953, comes across as an unlikely hero.

Although not a baseball fan, August Jr. loved St. Louis and knew that St. Louisans loved both the Cardinals and beer. Using one business to promote another, August Jr. believed generating goodwill generated good business.

"We're in the business of making friends," he often said.

The Cardinals paid an immediate dividend. While the team finished third in 1953, A-B regained the top spot in beer sales, turning out 6.7 million barrels, 1.5 million more than No. 2 Schlitz.

August Jr. also created the beloved Clydesdales as his company's corporate symbol and loaned them out for public appearances at no charge. He created Busch Garden theme parks, Grant's farm and ordered brewery tours, all of which provided free snacks for the kids and free beer for the adults.

He followed the Cardinals during baseball season while fishing, drinking, gambling and womanizing in the offseason. He was married four times and had a gravelly voice, a domineering manner and a firm grip — in his prime — on the beer business.

"Hello, I'm August Busch Jr., and I'd like to buy you a Budweiser," he said a million times to bar patrons during his endless promotional ventures.

One just can't help but like the old buzzard. On special occasions, he would climb onto the Clydesdales' wagon, take the reins in hand and circle the field at Busch Stadium while Cardinal fans roared their approval.

He wasn't always peaches and cream. In a fit of pique over a contract dispute, Busch infuriated Cardinals fans by trading Hall of Fame pitcher Steve Carlton, a move that cost the team multiple pennants. He also lost touch with his industry, operating on instinct when August III thought a more businesslike MBA style was necessary.

August III organized a boardroom coup and kicked the old man out in May 1975, leaving him only the Cardinals to play with. The company told the public that August Jr. had voluntarily stepped down, and the blatant lie survived for years.

A-B was a different place under August III: more businesslike and meaner. August III ruled by fear. But he knew the beer business, and A-B sold more beer, made more money and generated an ever-higher stock price.

August III also laid the groundwork for oncoming disaster. He missed the strategic possibilities and dangers of the worldwide market. A-B sold beer abroad, and foreign companies sold beer here. Consolidation was inevitable, but August III would only consider the possibilities before backing away.

Then came August IV, who bore a boatload of bad habits and personal baggage.

"I've never, ever had a father-son relationship. It's always been purely business," August IV said of August III.

While craving dad's approval, August IV acted in ways that generated widespread derision.

There are many stories. But August IV's May 2008 appearance before the National Beer Wholesalers Convention in Washington, D.C., demonstrated the problem. The beer business had grown stagnant, and there was talk that A-B was ripe for a takeover. People whose livelihoods depended on A-B were waiting to hear from August IV about how he would stem the tide.

But August IV was late — 20 minutes became 30, and 30 became 40 before August IV took the podium. In an intoxicated state, he droned on for several embarrassing minutes before one of his many sycophants led him off the stage. Obviously, A-B was in trouble.

The end came quickly. InBev wanted A-B and offered $70 a share ($52 billion). Big investors like Warren Buffett wanted to take the money and run, and the sale went through in November 2008.

The new owners started selling company assets, laying off longtime employees, cutting contributions to local charities and counting every nickel. Tempted to get rid of the Clydesdales, they compromised by ending the free-lending policy and charging $2,000 an appearance.

But the penny-pinching only went so far. In 2012, Anheuser-Busch InBev's annual report revealed that the new company's 40 top executives had given themselves stock options worth $1.57 billion. Options worth $180 million went to CEO Carlos Brito.

The bonuses weren't based on sales, profits and market share. They were based on what's called "de-leveraging," reducing the company debt run up by the purchase price through asset sales and cost cutting. Like a stale Budweiser, the news didn't go down smoothly in St. Louis. But there is nothing to be done because the old family business was under new management.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or at 351-5369.

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