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

Not this time. When the bottlers' strike reached its twenty-third day, Anheuser-Busch announced that it would begin making beer with the help of nonunion “supervisory” personnel. On August's order, the St. Louis facility transferred eight hundred office workers, accountants, and other salaried personnel to beer production and began brewing and bottling Budweiser, Busch, and Michelob for shipment.

August was especially eager to keep his St. Louis wholesalers supplied because Miller was taking advantage of the strike to flood the city with its product. One Milwaukee trucking company alone was bringing three 40,000-pound loads of Miller beer into St. Louis every day.

The Teamsters International in Chicago was stunned at August's audacity. The union's chief negotiator said it was the first time in more than eighty years that a brewer had attempted to make beer in the midst of a strike.

“This is nothing but scab beer,” fumed Art Barhorst, the business manager for Local 1187, who claimed the brewery was forcing office workers, “including typists,” to help break the strike by “threatening them with firing.” A spokesman for the brewery countered that the employees were happy to be making the additional money that came from working twelve-hour shifts. In all, nearly three thousand salaried employees nationwide joined in the effort to keep the beer flowing.

Violence flared as strikers attempted to prevent trucks from leaving the plant and distributorships. A security guard fired a shot at strikers after an explosion blew a hole in a door at Lohr Distributing, the main A-B wholesaler in the city of St. Louis. The wife of Lohr's sales manager received a threatening phone call telling her, “We have your husband prisoner now.” At Grey Eagle Distributing in St. Louis County, a fully loaded beer truck was overturned. Windows were broken at a liquor store. More than twenty strikers were arrested in the various incidents.

Art Barhorst defended the lawbreakers with some overblown rhetoric that seemed borrowed from the epic management-labor battles of the early 1900s. “When a man sees his job being jeopardized and his family going hungry, he reacts in other-than-normal manner,” he said. “Any violence at the Anheuser-Busch plant is a direct result of the company's actions to destroy our union, and they must bear the weight of responsibility.”

Despite the incidents, Anheuser-Busch managed to maintain 62 percent of normal production with its salaried employees, which prompted Robert Lewis to unleash an angry broadside at the Teamster leadership. “Teamsters International has brought on a situation that organized labor in various industries will have to live with from now on,” he said in a lengthy interview with the
Post-Dispatch
that produced the front-page banner headline “Beer Strike May Have Broad Labor Impact.”

“This strike has proved that unions no longer can effectively close down management,” Lewis said. “Anheuser-Busch is producing beer as if the situation is normal, and because of that this strike may be an encouragement, an incentive, to management in other industries to take on organized labor. We feel at this point the strike has been lost.”

And so it had. On June 4 the bottlers returned to work, having agreed to almost the same contract offer they'd walked away from at the end of February. The strike had lasted ninety-five days, making it by far the longest in A-B's history. It had cost the company a 4 percent drop in market share and an estimated $30 million in net profit. But August considered it an important victory, both for the company and himself.

“The union pushed us to the cliff,” he said. “They wanted written into the contract that they would have the right to approve or disapprove any changes in production before we could implement them. They would manage our production, not us. It was a test of me. It was the first time they had to deal with me on the front line.”

He showed his gratitude to the salaried workers who'd become temporary brewers and bottlers by giving them $1,000 bonuses, in the form of twenty-two shares of A-B stock and $356 in cash. This of course angered the union employees, who regarded it as an in-your-face payment to scab labor. It didn't help matters when, a few weeks later, August sent a letter to shareholders, executives, and administrative (nonunion) personnel, announcing that the company was forming a political action committee. Called AB-PAC, it would offer “you and me an effective, practical way to join forces and pool our financial support in a concerted effort to elect qualified candidates who will be willing to listen to the industry's point of view and support it.”

While AB-PAC would be noncompulsory and nonpartisan, he made it clear that its “qualified candidates” were not likely to be union-loving Democrats:

“For years, labor and other special interests groups have been deeply involved in the electoral process by endorsing candidates and providing them with substantial financial support. American business has, however, been severely limited in the extent to which it could take part in this process. The result has been a gradual but constant erosion of the free enterprise system, a system we believe to be the basis for the future well being of this country and its citizens.”

The unions took the announcement as a shot across the bow, signaling that A-B would be taking an even harder line in the years ahead. A company spokesman hurried to dispel that notion, saying August's statement had nothing to do with the strike and that labor was only mentioned “out of respect for the effective way some labor organizations have taken part in the political process.”

August recognized that he had continuing problems with his labor force. “A strike leaves scars,” he told shareholders at the company's annual meeting. “The attitudes of people are understandably affected by the tensions and ill will generated by picket lines and the operations of plants. It is important that these attitudes be replaced with feelings of mutual respect.”

He began a concerted effort to bind up the wounds, launching a series of meetings at every brewery, inviting salaried and hourly employees and their spouses to hear executives present a comprehensive review of the state of the company and the brewing industry, and explain in detail A-B's financial and marketing strategies. He tapped Denny Long to help drive the effort, figuring that Long's working-class bona fides would play better with the rank and file than his own ruling-class résumé. “You are one of them,” he said.

Long quickly saw that the union workers didn't consider themselves part of the company. During an employee meeting in Houston, a group of union workers still unhappy with the recent settlement stood together in the back of the large auditorium rather than sit with the nonunion workers. They weren't hostile, just wary, uncomfortable. So Long stepped away from the podium, and with the microphone in his hand walked to the back of the room and stood among them.

“Tell us what you need,” he said.

“To be recognized,” one bottler replied.

“Give me an example,” said Long.

After a pause, another bottler said, “We need a place to play team softball.”

Long knew they were testing him with a minor annoyance, but he turned to the plant manager and said, “Give them a field.” Afterward, he said to August, “We have to get them working for us, and to do that we need a common enemy.”

As it happened, there was one handy. Since 1972, Miller's annual output had gone from 5 million barrels to 18 million. The brewery had upped its production by 5 million barrels in the last year alone, the largest single-year increase in the history of the industry, and seemed certain to take over the No. 2 position behind A-B in the coming year. Funded by the deep pockets of Philip Morris, Miller was committed to a billion-dollar expansion program that included building a monster brewery in North Carolina capable of pumping out 10 million barrels a year. The company claimed its overall capacity would reach 40 million barrels a year by 1980. In Denny Long's view, “They were coming at us like a fast-moving freight train.”

Which is why he thought Miller could be the unifying factor A-B needed. They just had to drive home the point to the union members: it wasn't management or their salaried coworkers that threatened their livelihood; it was Miller Brewing. “Let's not fight among ourselves,” he urged at the employee meetings. “Let's fight them.”

Long came up with the idea of distributing T-shirts to all St. Louis plant employees, emblazoned with the declaration “I Am a Miller Killer.” The white shirts with bright red lettering were so popular that workers in other plants began clamoring for them. Back in the days before August tapped him to be his assistant, Long had run what was known as the company's Standards Department, a group of young time-and-motion specialists that conducted studies aimed at making plants more efficient and productive. At the time, they were regarded suspiciously as management “tools,” looking to reduce costs by eliminating jobs. Now, in the new “Miller Killer” environment, the standards people were seen in a new light, perceived as team members, partnered with the plants' industrial engineers in the battle against their common enemy, Miller.

The Miller Killers increased productivity by 20 percent nationwide, with minimal capital expenditures. August seized on the theme of teamwork as the hallmark of the new Anheuser-Busch. Under his father, the company often had been characterized as a “family,” but never as a team. Like an overbearing parent, Gussie led by edict—“Because I said so, goddammit”—and August had seen the dysfunction that resulted. So
teamwork
became his favorite word, and a spontaneous display of esprit de corps could melt his normally frosty demeanor and make him go almost misty-eyed. (A psychologist might say this was connected to his being a loner as a kid and never participating in team sports.)

While Anheuser-Busch management was distracted by the strike, the American media fell in love with Miller Brewing. Business reporters were drawn to the story of the company's spectacular growth and its clever jock-filled TV commercials, and they invariably succumbed to the quotable Irish charm of Miller's CEO, John Murphy, whom the company PR department pitched as “the man who took Miller High Life from the champagne bucket to the lunch pail without spilling a drop.” Murphy relished the spotlight, dropping bons mots such as, “Every Irishman dreams of going to heaven and running a brewery.” He seemed to revel in taunting Anheuser-Busch and its prickly new boss, showing reporters the voodoo doll named August that he kept in his office and the foot rug under his desk displaying the A & Eagle logo. “Ours is a simple objective,” he told
Newsweek
. “It's to be No. 1.” He hinted that he had a specific date in mind when it would happen, but he just couldn't reveal it yet.

Naturally, reporters repeated Murphy's gibes to August, who was unable to resist the bait, responding testily (and memorably) to a
Business Week
reporter, “Tell Miller to come right along, but tell them to bring lots of money.”

August didn't fully realize how tough the fight with Miller was going to be until he focused his attention on A-B's marketing effort. For the most part, the company had been doing the same thing for years—pitting its long-established brand (Budweiser) against another long-established brand (first Pabst, then Schlitz), with a familiar message (natural ingredients equal quality) aimed at a familiar customer (the monolithic male beer drinker). The formula had worked well enough to keep Anheuser-Busch in first place for twenty straight years.

But a lot had changed since Gussie's time. The latest research showed that 30 percent of beer drinkers actually consumed 80 percent of the beer. They were generally twenty-one- to thirty-four-year-old males, mostly blue collar, but including a growing number of college students. Unlike their forebears, they didn't down the bulk of their beer in bars; they bought it in liquor and grocery stores and consumed it at home at the rate of 10 million six-packs a night, usually while watching some sort of sports program on television. Their taste in beer varied according to their ethnicity. And, as the success of Miller Lite proved, they were not so brand-loyal that they wouldn't try a new product, even something as sissy-sounding as a “low calorie” beer.

Given the research, A-B's best marketing strategy going forward seemed a no-brainer: create ad campaigns that targeted those “heavy male users” and air them during nationally televised sporting events. So August convened a meeting of all the marketing executives on a Saturday morning in Denny Long's office. He wanted to know what sporting events A-B was sponsoring, and what else was available. The marketing guys sheepishly explained that the sponsorship rights to all the major network sporting events—the World Series, the Super Bowl, Monday Night Football, the College Football Game of the Week, the NBA playoffs, the Stanley Cup, Wimbledon, the Moscow Summer Olympics, the Indy 500—had been bought up by other brewers, including, um, Miller. The A-B marketing department had evaluated the cost of those sponsorships and decided they were too expensive.

August was astounded, and furious. He ordered the marketing people to contact each of the approximately 950 A-B wholesalers in the country and have them fill out a form that listed every sporting event that took place in their market, noting which ones were already sponsored and by whom, and which ones were still available at what price. He wanted all the information sent to St. Louis within a week.

The results of the frantic fact-gathering were presented during a four-day conference at the Quality Inn in Fort Magruder, Virginia, a few miles from the Busch Gardens resort in Williamsburg. In the hotel's ballroom, banquet tables were arranged in a square with August and Denny Long seated at the head table that transversed the front of the room. At each seat there was a note tablet emblazoned with a logo of an eagle swooping down on its prey with talons exposed, and the slogan “A Sense of Urgency.” Next to each tablet was a baseball cap with the letters “ASU” stitched above the brim. The caps and the attacking eagle, which were Long's idea, gave the proceedings a military feel, as if they were about to embark on a dangerous mission. In a way, they were.