Dethroning the King (6 page)

Goldman's bankers jetted back to New York that night to start slogging away in preparation for Anheuser's board meeting, but most of the rest of the group met again on Thursday to finish the cost-slashing effort. By the end of their two-day sprint, they were closing in on $1 billion in pledged improvements, many of which would be in place by the end of the following year. Nearly one-third of that total would come through job cuts of 10 to 15 percent of the company's workforce. They hoped many of those cuts would come from early retirement and attrition, but with America's job market worsening every month, that many voluntary departures didn't seem likely. The company also agreed to raise beer prices and drastically reduce spending on machinery and other expensive improvements.

“Why hadn't we done this sooner?” the executives wondered, kicking themselves but also cursing the myopia and delusion that had always hamstrung their company. By waiting until InBev forced the company's hand, they knew they might have lost the ability to decide their own fate.

Anheuser's hubris and naïveté had led to its fall from grace, and it provided an apt comparison to the broader state of America at the time. After years spent downplaying or ignoring developments in other parts of the world, assuming that its supremacy was a constant, America's political and financial dominance were also at risk.

“I'll tell you what it represented,” said one Anheuser advisor. “It represented everything that had gone wrong with American business in the last twenty or thirty years. I think these guys felt that the sun rose and fell in St. Louis. They were so dominant there that they totally missed what was going on in the world around them.”

By the end of that day, everything already seemed to have spun out of control. Anheuser's share price jumped another 7 percent once the company had confirmed receipt of the bid, and investors started licking their chops and making wagers on whether Anheuser could fight off InBev. Everyone who had been huddled that morning in the soccer park's conference room had just become richer. But they didn't feel like celebrating.

“It was weird,” one member of the strategy committee said, reflecting on the gut-wrenching day. “It was kind of like when you go to the doctor and you think you have cancer. But when the doctor finally tells you, you're still not prepared for it.”

—Former executive William Finnie

 

 

 

N
icknames and caricatures have stuck with the Busch family's ruling men over time. August Anheuser Busch Jr., known as “Gussie,” or “Junior,” was the ebullient, beloved showman who charmed the masses into giving him a free pass for having 11 children with 4 different wives. August III, who was called “Augie” or—behind his back—“Three Sticks,” was the calculating, inwardly drawn, power-hungry son who, after years spent waiting for his father to relinquish control, could bide his time no longer and took destiny into his own hands. And August IV,
his
son, who was usually referred to as “The Fourth,” was the fifth-generation playboy who struggled to shed the cloak of his hard-partying past and who, despite being nicer and better-liked than his father, never matched his talent or met with his approval. In keeping with that tradition, it didn't take long for Anheuser's own Wall Street advisors to coin a pair of nicknames for The Third and The Fourth: “Crazy” and “Lazy,” respectively.

August III won the genetic lottery on June 16, 1937, the day he was born into the wealthy Busch family of St. Louis and, as Gussie's eldest son, tagged with the first name “August.” The name alone didn't secure him a seat on the company's throne. The monikers “August” and “Adolphus” were treasured family heirlooms, and they were sprinkled liberally among the offspring of gravel-voiced Gussie, who served as Anheuser-Busch's revered president and “second mayor” of St. Louis for 29 years. The Third's half-brother Adolphus, although he was nearly 15 years younger, could certainly have taken a shot at the company's top spot. Instead, Adolphus opted against binding himself for life to the all-consuming family business, leaving his more ambitious older brother free to scale Anheuser's ladder unimpeded.

Still, The Third's climb to the top was rocky and isolating. His steely, hard-charging demeanor was distasteful to those at Anheuser-Busch who preferred Gussie's sunnier brand of exuberance. Both men were singularly driven to succeed and to ensure that Anheuser-Busch remained the most powerful brewer in America. Rather than having that as the commonality that drew them together, however, their shared motivation was what ripped them apart.

Gussie, whose outsized personality made up for his slight stature, was a schmoozer and a charmer, a friend to U.S. presidents, and a face on the cover of
Time
magazine. Born in St. Louis on March 28, 1899, he was a barrel-chested soldier who loved cutthroat games of gin rummy, Winston cigarettes, and Silver Bullet martinis. Gussie's temper, though, could sour in a flash. The family he sired was disjointed and competitive. And both the start and end of his tenure as head of Anheuser-Busch were marred by sadness and controversy.

He started out in 1922 as a ninth-grade dropout at the brewery founded by his grandfather Adolphus, sweeping floors and cleaning vats. He rose quickly through the ranks and became president in 1946 when his older brother, Adolphus III, died prematurely after taking the reins from their father, who shot himself in the stomach to end a struggle with illness just two months after the 1933 repeal of America's Prohibition laws.

Gussie's talent as a consummate promoter proved evident well before he became president. The company's iconic Clydesdale horses were his idea: When Prohibition was repealed, he rustled up a team of the draft horses—which used to pull beer wagons in the family's native Germany—to haul the first post-ban case of Budweiser down Pennsylvania Avenue to the White House for delivery to President Franklin D. Roosevelt. Gussie's equally charismatic grandfather had once distributed pocketknives to work associates in lieu of business cards, and as he traveled the country 70 years later, Gussie passed out pocketknives of his own. When he left his own knife with one beer distributor or another, they would carefully place it in a glass display case or show it off to friends, demonstrating how a look through a peephole in the handle revealed a portrait of founder Adolphus.

“We used to give out replicas of Gussie's old knife,” said John “Jack” Purnell, a longtime Anheuser-Busch executive who was hired when Gussie was chief. “Gussie could charm you—he could charm anybody. He had a natural flair for publicity.”

With that flair, Gussie brought Budweiser, the company's flagship beer, to the country's thirsty, teeming masses. Adolphus had started to dream of selling beer across America not long after he founded the company, but Gussie had the foresight to build a brewery in Newark, New Jersey, on the country's east coast. The move was risky and expensive, but it boosted Anheuser-Busch's production, made it easier to ship beer around the country, and provided a platform for growth in the company's share of the U.S. market. By the time Gussie was forced out in 1975, Anheuser-Busch was the largest brewer in the world.

Gussie was best known, however, for his instinctive ability to connect with people. Anheuser-Busch's slogan, “Making Friends Is our Business,” was very much his business. Eschewing planes and buses for his luxurious, Budweiser-stocked private railroad car, he peddled beer and visited distributors at whistle-stop trips around the country. To pep up purveyors in 1954, he invited 11,000 wholesalers, retailers, and barkeeps out to his imposing home, where he and his third wife, Gertrude, shook hands with a thousand guests each night for 11 straight nights. “When midnight came,” he told
Time
, “my hand would be so swollen I couldn't move my fingers.” He spent up to two hours on each of those nights soaking his hand in Epsom salts. All the pain was worth it—sales of Budweiser in St. Louis skyrocketed 400 percent after the event.

Gussie also branched into family entertainment in 1959 by opening the Busch Gardens theme park in Tampa, Florida, on the belief that well-run parks could broaden Anheuser-Busch's appeal. He, like previous generations of Busches, had always had a passion for animals. Grant's Farm, the compound where he and other Busch family members lived at various points in time, housed a menagerie of 1,000 animals on its 281 acres. He was an avid horseman, but Gussie also had some Dr. Doolittle-esque proclivities—the type that only extreme wealth can satisfy. He owned a camel and an elephant named Tessie, and took particular pride in his trio of chimpanzees, which he often dressed in cowboy attire. Adalbert “Adie” von Gontard, his cousin, dressed his own chimps in dinner jackets and had them sit at the table during cocktail parties, drinking Budweiser.

Gussie's most high-profile diversification effort, however, was convincing Anheuser-Busch to buy the St. Louis Cardinals baseball team when the team's owner was sentenced to jail for tax evasion in 1953. He won plaudits as a hometown hero for keeping the Cardinals in St. Louis, but the purchase was hardly altruistic—owning the Cardinals yielded a wealth of opportunities to promote Anheuser-Busch and its beer. He quickly rechristened their ball field Busch Stadium, and for decades afterward hauled a red beer wagon around the field with a team of Clydesdales to celebrate home games. “What was amazing was the reaction in the bleachers, where these guys making six or seven dollars an hour would rush to buy beer to toast ‘Gussie' the billionaire,” said Tom Schlafly, a rival St. Louis beer maker, in an interview with the local paper. “If Diana was the People's Princess, he was the People's King.”

While Gussie Busch was ahead of his time in understanding mass marketing and promotion, the true architect of Anheuser-Busch's utter domination in America was his son August III, a mercurial, intimidating, detail-obsessed man whose ice-blue eyes turned even the smoothest Wall Street bankers into Jell—O. The Third, like the male Busch heirs before him, had been fed five drops of Budweiser beer just hours after his birth. Putting bloodlines aside, however, he wasn't your typical glad-handing Busch beer baron. He avoided crowds and public appearances whenever possible and preferred to spend his few moments of free time either secluded on his 250-acre farm near St. Louis or hovering above the masses in his Bell helicopter. People liked to joke that he kept the helicopter's rotor blades spinning outside while he ducked quickly into social functions. The Third appeared uncomfortable when he was forced to appear as a figurehead at ceremonial events and Cardinals games. And even in smaller, work-related settings, he often sequestered himself behind a phalanx of security guards or underlings to avoid being drawn into small talk.

“He was just cut from a different cloth, and was very private,” said one person who worked for the company for decades. “In public, he was very, very impressive, but always all business. You never got behind the façade. He did have a lot of responsibility, a lot of which he took on himself. But he kind of thrived on that. He was just all business, all the time.”

That hadn't always been the case. The Third's youthful antics suggested he might not develop into CEO material. He spent his teens and early 20s jetting around on adventuresome whims to ski and deep-sea fish, and seemed to spend more time on such diversions than on formal education, which was never assigned a high priority within the Busch family. He attended the University of Arizona for two years in the early 1960s but never graduated, earning a brewmaster certificate instead from the Siebel Institute of Technology, a brewing school in Chicago. Understanding the world of business, at least as it was lived outside his beer-subsidized life, didn't rank high on The Third's list at the time.

That all changed with shocking rapidity once he reached his mid-20s. A few years after his start at the company's bottom rung, August III flipped an internal switch so abruptly that it made personal reinvention look easy. He threw himself with vigor into a rigid self-tutoring program and covered every aspect of Anheuser-Busch's business, from marketing down to systems operations.

Such conversions became a habit for male Busch heirs over the years: Gussie's youth had been a wild one, and The Fourth would later handily improve upon his father's and grandfather's playboy reputations. “Up through their mid-20s they're just wilder than hell, whether it's fast cars, fast women or, with August III, fast planes. They're out of control,” said William Finnie, a former executive who worked for the company for 26 years, in reference to the Busch men. “Then, sometime in their late 20s, they take all of that energy and find out that business is just as much fun as this other stuff. So they throw all of their energy into the company with incredible results.”

August III's self-propelled reformation in the mid-1960s was by far the family's sharpest, and it proved to be an early indication of the sheer force of his will and his competitive drive. From that point on, it was all work. Edward Vogel, who had been a company vice president at that time, said The Third had an “inferiority complex” because of his spotty academic record. Yet August III quickly began to prove that his sponge-like brain and unrelenting work ethic more than offset his lack of formal education. If anything, he became too hard-nosed and assertive for many of his colleagues' tastes.