Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer (46 page)

As described by several people who still see him, the life of August Busch IV these days is not one that many people would choose. Since Adrienne Martin's death, the “guys” don't come to the house anymore. His security detail is gone. All but one or two of his employees have left, either frightened away or fired. Despite what he may tell people, he and his father do not speak. He still talks about August III all the time, however, and lives with the knowledge that he is probably the biggest disappointment of his father's life. As one former A-B executive put it, “All August III ever wanted out of the Fourth was performance, and he never got it.”

After the InBev takeover, August III receded from public view for a time, but more recently he's become actively involved in a number of charitable and political endeavors, including the 2012 general election. He's also been robustly involved in building a new $10 million home at Waldmeister Farm. According to family and friends, he maintains a close relationship with his three other children—Susan, Steven, and Ginny—but rarely speaks about August IV. And no one expects that he will ever tell his version of the story.

As for the Fourth, his few remaining friends say that his “issues” are worse than ever before.

“At this point August has no respect for his family or his employees, and he especially doesn't have any respect for himself,” said one longtime friend, “I think he will die. He is, in effect, dead already. He doesn't care. He has everything in the world, and he doesn't know it.”

Said another long-suffering friend, “I have sat up nights with August so that he wouldn't choke on his own vomit and die. I don't care anymore if he dies. He'd be better off. I just don't want anyone else to die.”

On a hot August day in 1975, Gussie Busch sat in the stone-cool gun room of the big house at Grant's Farm, regaling three
Post-Dispatch
reporters with anecdotes culled from his decades as the patriarch of what
Life
magazine called America's “liveliest, lustiest family dynasty.”

The reporters were preparing a lion-in-winter series of articles about the old man's colorful life and times. Al Fleishman was on hand to help Gussie with his memory and his mouth, making sure he didn't slip up and let on about the recent coup d'état engineered by August III. Trudy came and went, checking to see that everyone was comfortable and joining in the conversation when she felt the need.

The room itself was a museum of American history. On display were Tiffany lamps and Remington sculptures; signed photos of Gussie with Presidents Truman, Johnson, and Kennedy; Cardinals' World Series trophies; engraved antique rifles, including a bolt-action Winchester .30-caliber rifle dating back to the days of the buffalo hunts on the Great Plains; and even a beautiful mounted pair of extinct passenger pigeons in a glass case.

Surrounded by all the mementos, Gussie talked about his “granddaddy” Adolphus, who let him smoke and drink whiskey when he was just a boy, and his “good daddy” August A., who had sacrificed his health in steering the company through Prohibition and the Great Depression. He talked about Grant's Farm and Busch Gardens, about the Clydesdales and the Cardinals, about Curt Flood and Steve Carlton, and about the first time he laid eyes on Trudy in her father's restaurant in Switzerland. He couldn't bring himself to talk about Christina, however. He fell silent when the subject of the tragic accident came up, his face tightened with pain as he stared glassy-eyed at a corner of the room. “It was meant to be,” Trudy said, putting her hand over his as he struggled to regain his composure. “It could have happened a second earlier or later. It was just meant to be. But the experience has made us stronger.”

When he recovered, Gussie acknowledged that his net worth was somewhere in the area of $200 million, and he summed up his seventy-six years of living by saying, “Hell, I'd do it all again.”

The interview was interrupted when twenty-one-year-old Adolphus IV arrived to serve a round of Budweisers in twelve-ounce bottles. Gussie had several beer-drinking rituals he liked to perform for civilians. One was to demonstrate the proper way to pour a beer—down the center of the glass, not the side—and the other was to give a reverential reading of the company's credo on the Budweiser label: “We know of no other beer produced by any other brewer that costs so much to brew and age. Our exclusive beechwood aging process produces a taste, a smoothness, and a drinkability you will find in no other beers.”

This time, however, he dispensed with the usual show. Holding up his half-empty bottle, he kissed it and said, “Gentlemen,
this
is the American dream.”

I
n March 2012, reporters poring over AB InBev's annual 10-K report discovered that CEO Carlos Brito and a group of about forty top executives had qualified for stock option bonuses worth $1.57 billion. Brito's share of the bonus pot—3.2 million shares at $10.52 per share—was worth more than $180 million.

The numbers were stunning. When InBev bought Anheuser-Busch in 2008, a group of seventeen senior A-B executives received more than a billion dollars for their shares. But most of them had amassed the stock over the course of many years with the company, and more than two-thirds of the payout went to three men who'd worked there for decades—August III (forty-eight years, $427.3 million), Patrick Stokes (thirty-nine years, $160.9 million) and August IV (twenty-one years, $91.3 million). Of the new group of stock option recipients, it appeared that only a few had been with A-B prior to the buyout.

Even more stunning, the bonuses were not triggered by increased sales or market share. They were based solely on what the company termed “de-leveraging,” or reducing the debt that InBev had incurred in buying Anheuser-Busch in the first place. The company had reduced its total debt by more than $20 billion since 2008—from $56.6 billion to $34.7 billion—by selling off brewing assets in eastern Europe, Korea, and China and non-core businesses such as A-B's theme park division, and by cutting back the St. Louis division's formerly bloated budgets.

In InBev's home base of Belgium, however, rank-and-file workers claimed the company was hitting its budget targets by skimping on repairs and preventive maintenance, and spokesmen expressed outrage at the size of the executive bonuses. “A worker would take 4,500 years to get the bonus of Brito,” complained one union official. “No one can be worth that,” said a leftist politician, adding, “Companies with the highest bonuses are not necessarily the best run.” Oddly, there was no outcry against the bonuses in St. Louis, which had borne the brunt of the company's reduction in its workforce, losing approximately 2,000 jobs.

After nearly four years in charge of the world's largest brewer, Brito and his executive team had shown they were better at buying companies and slashing budgets than selling beer, at least in the United States, where volume fell by more than 3 percent in 2011. For the first time in more than a decade, the company shipped fewer than 100 million barrels domestically, and AB InBev's U.S. market share dropped to 47 percent. Budweiser sales sank another 4.6 per cent, after declining 7 percent in 2010 and 10 percent in 2008.

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, surpassed 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.”