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Anheuser-Busch’s dynasty nears a close

Adolphus Busch, the first King of Beers, lived in a brick-and-stone mansion called One Busch Place next to his humming brewery on Pestalozzi Street. He and his wife, Lilly Anheuser Busch, filled their Victorian-era home with tapestries, antiques and their many children. They entertained presidents and stars of the stage.

A cannon blast would announce their return from long trips. On Adolphus Busch’s regular coach rides downtown to Faust’s, the Tony’s restaurant of its day, he would wave robustly to his employees and admirers. He drank fine wine, not beer. But he and his workforce knew how to make good lager.

By the time he died in 1913, their Budweiser had been the nation’s leading beer for more than a decade. Then as now, jobs at the brewery were coveted, hard to get and foolhardy to walk away from.

The mansion came down in 1929, one year after the death of Lilly Busch. On its former site, near the ornate Clydesdales stable, is a lagering cellar. In 1982, One Busch Place became the name of the company’s new nine-story corporate headquarters, a glass-and-brick monument to ambition, workaholism, loyalty and St. Louis’ place in the world.

Today, One Busch Place is home to intense worry over the future as InBev, the voracious international beer company, has sundered Anheuser-Busch Cos. Inc. If A-B’s shareholders agree with the board’s decision to accept InBev’s $52 billion takeover deal, One Busch Place will become a branch office, one that many of its snappily dressed executives and assistants suspect is about to get much smaller. In the brew house and the bottling plant, the Teamster-represented beermakers fear for the longevity of their good wages and benefits.

Even though the Busch family ended up owning only a small percentage of the company’s stock, many employees on Pestalozzi still considered themselves part of a family enterprise. Many longtime workers can trace their jobs to fathers and uncles. Thousands of people who grew up in St. Louis thank those good brewery paychecks for food on the table, warm beds, college educations and vacations to Sea World.

Their friends and neighbors joined in the local pride. They flocked to Busch Stadium, guzzled Bud Light over the wedding mostaccioli and escorted out-of-towners to Grant’s Farm, where the macaw poses like an A-B eagle and the cold tap-beer is free. It seemed like almost everybody had a story about some member of the Busches, the rich and sometimes outrageous first family of St. Louis.

And now InBev Chief Executive Carlos Brito, a man from Brazil, by way of Belgium, will be the new king of beers.

A struggling brewery is bought out, and survives even as others fail

The tale begins in 1860, when soap maker Eberhard Anheuser bought the struggling Bavarian Brewery, one of a cluster of local breweries atop the cool limestone caverns two miles south of downtown on Carondelet Street (now Broadway). The following year, his daughter Elisa, or Lilly, married Adolphus Busch. Both men had been born in Germany’s Rhineland.

Anheuser was intent upon success, but Adolphus Busch was the engine of their fortune. Under his watch, the company introduced pasteurization to bottled beer and invested heavily in railroad cars cooled by manufactured ice. It introduced Budweiser in 1876 and soon was shipping it along St. Louis’ wealth of rail connections. Busch was a sharp businessman and a master salesman. Anheuser-Busch overtook Lemp, the first big local brewery, in the 1880s. By 1901, it was brewing 1 million barrels a year.

Lilly gave birth to 13 children, nine of whom survived to adulthood. She and Adolphus lived as American royalty, traveling in their private railroad car, the Adolphus, and spending time at their three other estates: in Pasadena, Calif., Cooperstown, N.Y., and the Rhineland.

Their oldest surviving son, August A. Busch Sr., took over the company upon his father’s death in Germany in 1913. By then, annual production was 1.5 million barrels.

Busch Sr. lived at the French-style mansion on Grant’s Farm that his father had built for him two years before. In 1917, he built another great landmark, the Bevo Mill, on Gravois Avenue at Delor Street. The company pumped out barrels of beer and made submarine engines in World War I, but it soon faced its own battle for survival: Prohibition, which ended the legal manufacture of alcoholic refreshments in January 1920.

While many breweries closed, Anheuser-Busch limped along, making an alcohol-free brew called Bevo, which flopped, and many tons of highly popular Budweiser Yeast and Budweiser Barley Malt Syrup, two ingredients crucial to home brewing. Years later, August A. Busch Sr.’s son, the blunt-talking August A. "Gussie" Busch Jr., said the company survived as the "biggest bootlegging supply house in the United States." (The quote is from "Under the Influence, the Unauthorized Story of the Anheuser-Busch Dynasty," a book published in 1991 by former Post-Dispatch reporters Peter Hernon and Terry Ganey.)

Syrup-making allowed the Busches to keep much of their workforce, which gave them a jump on the competition when Prohibition ended on April 7, 1933.

"Beer is being served," the gravel-voiced Gussie Busch said over radio microphones and to the happy mob gathered outside the brewery. In that same heady year, the company rolled out its first Clydesdale hitch.

There was no fear of any InBevs. Back then, when the company still was privately held, descendants of Eberhard Anheuser owned all but 4,000 shares of A-B’s outstanding stock.

Racked with illness, August A. Busch Sr. committed suicide in 1934 in his bedroom at Grant’s Farm. Gussie Busch took over the company in 1946 with the death of his older brother, Adolphus Busch III.

To many St. Louisans, Gussie Busch remains the enduring persona of the great beer empire, the old man in a red cowboy hat circling the field at Busch Stadium on a red beer wagon. He was gruff, sometimes crass, and married four times.

He also bought the St. Louis Cardinals in 1953 from Fred Saigh, eventually bringing St. Louis three more World Series championships in his lifetime. And he restored Anheuser-Busch as the nation’s No. 1 brewer.

"Being second isn’t worth anything," he once said.

A workingman’s brew, but with worldwide ambitions

By the late 1940s, Anheuser-Busch had fallen to fourth place among American breweries. It even trailed Stag and Falstaff at home. But in 1951, the company built its second brewery, in Newark, N.J. Two years later, Anheuser-Busch produced a record 6.7 million barrels, in part because of a three-month strike that crippled the steady national sales leader, Joseph Schlitz Brewing Co. But A-B kept growing. Four years later, it passed Schlitz for good.

Newspapers had more to write about than barrels of production. In 1952, Gussie Busch was divorced from his second wife, Elizabeth, the mother of August A. "Auggie" Busch III. He avoided a messy trial by paying a $1 million settlement, plus alimony. And he married Gertrude "Trudy" Buholzer, who was a 22-year-old hostess at a Swiss restaurant when he met her a few years before.

In 1953, Trudy Busch prevailed upon her husband to have a Catholic wedding ceremony, which church officials cleared through a technicality in Busch’s second marriage (his first wife had died). That helped lead to an enduring relationship with the Rev. Paul Reinert, longtime president of St. Louis University — and to the donation that helped build Busch Memorial Center student union.

Busch put his own name on Sportsman’s Park, old home of the Cardinals at North Grand Boulevard and Dodier Street, after baseball’s dons wouldn’t let him name it Budweiser Park. Cardinals broadcaster Harry Caray, former hawker of Griesedieck Bros. beer for Siagh, was busy extolling Busch’ products. In 1955, Caray began talking up the company’s workingman’s brew, Busch Bavarian.

Gussie Busch moved the Cardinals and the name downtown for the second Busch Stadium, which opened in 1966. All stayed right in the world of St. Louis when the company popped for the naming rights of the third Busch Stadium in 2006.

In 1959, Anheuser-Busch opened Busch Gardens in Tampa, Fla. Annual production passed 10 million barrels in 1964. By then, the enemy was Miller Brewing Co. of Milwaukee, maker of Miller High Life, "the champagne of bottled beers." Breweries had been advertising heavily since Adolphus Busch sent a million copies of his Custer’s Last Stand poster to taverns. But when Philip Morris Cos. bought Miller in 1970, it quickly escalated the ad war. The company introduced Miller Lite, the first major-brand light beer, in 1975.

One year earlier, Gussie Busch’s oldest son, Auggie Busch III, had engineered a palace coup.

Busch III had begun early adulthood as a dedicated party animal but slowly turned his energies toward business. He was smart, studied the business intensely, worked long days and demanded the same from his devoted executive corps. Concerned that Miller’s ad campaign had more pizazz, Busch III forced his father’s resignation as chief executive and opened the money tap for advertising.

The Miller-Busch competition was raw, splashed across airwaves in dueling ads and in court with harshly written petitions. Miller charged in a filing that Budweiser’s much ballyhooed beechwood aging was nothing but "dumping chemically treated lumber" into the vats. The Busches scoffed at light beer but soon introduced Natural Light. They got it right in 1982 with Bud Light, now its biggest seller.

They copied and bettered Miller’s emphasis on sports sponsorships and went for the soul of the American beer drinker with the slogan, "For all you do, this Bud’s for you." Another blitz headed for the mountains with "Buschhhhhhh." The appeals worked. Anheuser-Busch churned out 50 million barrels in 1980 — and 87 million by 1992, more than the combined production of its four major competitors.

Anheuser-Busch generally has had good relations with its Teamster-represented employees. The last nationwide strike, which lasted 13 weeks, took place in 1976 during the heavy years of automation. That year, the St. Louis brewery employed about 2,500 union workers, or double what it has now.

August A. Busch III shocked many baseball fans when he put the Cardinals up for sale in 1995 and engineered a friendly deal with a group of wealthy acquaintances. Unlike his father, who had died in 1989, Busch III wasn’t interested in baseball. He saw the team as a drag on the balance sheet.

Busch III was thinking globally. In 1993, the company made its first investment in Grupo Modelo in Mexico, makers of Corona and the company Anheuser-Busch considered trying to buy to stave off InBev. In 1995, it bought majority interest in Wuhan brewery in China.

The next year, Busch III told stockholders, "We will be the world’s beer company."

A wild ride, with less and less control

If the family was fabulously rich, it had more than its share of social challenges, rough edges, tragedies and scandals. Because St. Louis society wouldn’t embrace the German makers of beer, August Busch Sr. built what would become Sunset Country Club in south St. Louis County.

The family’s love of firearms turned deadly in 1976 when Peter Busch, one of the children of Gussie and Trudy Busch, shot and killed his friend, David W. Leeker, in a bedroom at the Grant’s Farm mansion. Peter Busch said the pistol accidentally discharged. He pleaded guilty of manslaughter and received probation.

In 1983, a 22-year-old female friend of August A. Busch IV was killed when he crashed his Corvette outside Tucson, Ariz. He was found six hours later at his home, four miles from the scene. Two years later, Busch IV led St. Louis police on a lengthy high-speed chase in his Mercedes. Pursuing officers shot out one of his tires on Delmar Boulevard and, when they realized whom they had been chasing, installed his spare tire. But they also found a loaded pistol in the Mercedes. He wasn’t charged in Tucson, and he was acquitted of assault in St. Louis.

Before the company began a TV ad campaign featuring Busch IV, it carefully market-tested his reputation. The survey found only the barest blips of memory in St. Louis and Tucson, and nowhere else. Busch IV replaced his father, Busch III, as chief executive in 2006.

Ownership was a different matter. The company went onto the New York Stock Exchange in 1980. Gussie Busch controlled 12.5 percent of the stock, but much of that was freed from trusts upon his death nine years later. By the time InBev came knocking, the company executives and board members owned only 4.5 percent of all shares. Warren Buffett, the stock guru in Omaha, Neb., controlled slightly more than that through his Berkshire Hathaway Inc.

The performance is ’lackluster’ ans the price is right

Anheuser-Busch has kept its crown, holding nearly 50 percent of the U.S. market. But changing tastes among beer drinkers in the past decade have bedeviled its vaunted marketing and distribution systems. Younger drinkers passed up their fathers’ Bud for imports, microbrews, wine, boutique drinks or — gasp — mineral water at taverns. Worldwide production topped 161 million barrels in 2006, but domestic consumption continued to hover at just above 100 million barrels. Helping domestic sales last year were the company’s handling of imports Stella Artois and Beck’s — InBev products, of all ironies. Stock analysts nitpicked as "lackluster" the performance of a company that turned a $2.1 billion profit out of $16.7 billion in sales last year.

The InBev rumors have been circulating around Pestalozzi for at least two years. For most of that time, InBev even has had a small office with its own people across Pestalozzi from One Busch. On June 11, Anheuser-Busch formally confirmed that InBev had offered $65 a share for the company, a deal worth $46.3 billion. In St. Louis, many of A-B’s 6,000 area employees were shaken. Talk radio was hot with denunciations of InBev. But Wall Street was drunk with joy. And with so many shares held worldwide by strangers, the stampede was too much.

Is this Bud yours? Not if the price is right.

Tim O’Neil

St Louis Today - 14 July 2008
 
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