William Knoedelseder - Bitter Brew: The Rise and Fall of Anheuser-Busch and Americas Kings of Beer

Dedicated to my sisters

Mary, Ann, Kate, and Martha

who have helped make me the man I am.

For their aid and encouragement, I would like to acknowledge the following:

My agent for life, Alice Martell, who has been my dear friend and champion for nearly thirty years.

My most excellent editor at HarperCollins, Hollis Heimbouch, who should start a brewery with a name like that;

Adolphus IV, Billy, and Trudy Busch, and Lotsie Busch Webster, and Lotsie Herman Holtonmembers of a great American family who shared their story on the record;

Gary Sgouros, who shared his memories of Gussies last days at Grants Farm;

Former Anheuser-Busch executives Denny Long, Andy Steinhubl, and my brother-in-law Mike Brooks, who helped make a great American company what it was;

Former Pima County deputy sheriff Ron Benson and former St. Louis Police detective Nick Fredericksen, who did their jobs;

All the dozens of other people who contributed to this narrative but prefer to remain anonymous;

Glenn Jamboretz, PR consultant par excellence, who helped every time I called (and sometimes when I didnt);

Pat Crane, Nancy Cason, John Crotty, and Suzanne Ottoold St. Louis friends who did likewise;

Michael London, John Sayles, Barbara Wall, Kevin Beggs, and all the good people at Lionsgate Television, who believed in this book even before it was finished.

John Mettler, Deborah Rybak, Jeff Kwatinetz, Bill and Nancy Cason, and Dennis McDougalmembers of my finance committee, who made it possible for me to eat regularly and sleep under a roof during the writing process.

Father John Rechtien, Don Crinklaw, and, especially, Irv Letofskywho set me on the road to a writing career years ago and inspire me to this day;

Dennis McDougal, a fellow traveler on that road who deigns to talk to me every morning;

Matthew, Colin, and Halle Knoedelseder, my three astonishing, creative children, who keep me young at heart and hopeful about the future.

In the grand ballroom of the Hyatt at Capitol Hill in Washington, D.C., on the afternoon of May 13, 2008, several hundred Anheuser-Busch distributors sat in rows of uncomfortable chairs, restlessly awaiting the arrival of August Busch IV, the forty-three-year-old president and CEO of Anheuser-Busch, Inc., Americas premier brewery.

The Fourth, as he was commonly called in the industry, was twenty minutes late, and no one from the company had appeared with an explanation for the delay.

The distributors were among 1,200 beer professionals from around the world attending the eighteenth annual National Beer Wholesalers Association/Brewers Legislative Conference. This years three-day event coincided with the seventy-fifth anniversary of the repeal of Prohibition, and Anheuser-Busch had taken the opportunity to schedule a separate meeting with its distributors, the independent operators whoby a law passed in Prohibitions wakeserve as the middlemen between the brewery and retailers.

There was much to talk about. Beer sales were on the decline globally, and the industry was weathering a period of rapid consolidation that threatened A-Bs century-long dominance. In the past few years, Milwaukees Miller Brewing had merged with London-based South African Breweries to form SABMiller; Canadas Molson had merged with Colorado-based Adolph Coors to form Molson Coors, which then merged its U.S. operations with SABMiller to form Miller Coors; and Belgiums Interbrew SA had merged with Brazils AmBev to create InBev, which had knocked A-B out of its perennial position as the worlds largest brewer. A-B was still the most profitable brewer, with its brands accounting for about 50 percent of beer sales in the United States, the worlds most lucrative market. But the companys drop to No. 2 in volume, coupled with the fact that its stock price had remained flat for nearly five years, or roughly the period that August IV had been in charge of the brewing division, was fueling speculation that the aggressively acquisitive InBev was eyeing A-B as a possible takeover target. Busch had dismissed the talk of a takeover during a meeting with distributors in Chicago the week before, drawing a standing ovation when he declared, Not on my watch.

The Fourth was actually the sixth Busch to head the St. Louisbased brewery, a responsibility handed down from father to firstborn son since his great-great-grandfather Adolphus founded the company in the wake of the Civil War. With the exception of the Fourths great-uncle, Adolphus III, each of his predecessors had left an indelible imprint, not just on the company but on American commerce as well. Over the course of five generations theyd taken a tiny, bankrupt brewery that made bad-tasting beer on the banks of the Mississippi River and transformed it into a colossus that pumped out more than 100 million barrels a year. They had steered the company through two world wars, Prohibition, and the Great Depression, building their signature lager, Budweiser, into the best selling beer on the planet, making Anheuser-Busch, in the words of the Fourths father, August A. Busch III, the worlds beer company.

Thanks to their beer, the Busch family had tasted all that America ever promised the immigrant class from which they sprangwealth almost beyond comprehension, political power that provided access to presidents, and a lifestyle rivaling that of historys most extravagant royals. Along with that, of course, came a king-size portion of heartbreak, scandal, tragedy, and untimely death. But they had endured. Nearly all the other German immigrant brewers whod built their businesses by hand, branded their factories with their family namesSchlitz, Miller, Pabst, Blatz, Schaefer, Coors, Lemp, Stroh, Hamm, Griesedieckand turned America into a beer-loving nation were gone, their paternalistic empires swallowed up by foreign-based conglomerations of amalgamations with soulless names like InBev. Of the brewing giants that boomed after Prohibition and fought fierce and sometimes desperate battles for market share in the last half of the twentieth century, only Anheuser-Busch remained as a freestanding, independent company, still operated by the family that founded it.

So a lot was riding on the shoulders of August Anheuser Busch IV as the audience at the Hyatt waited for him to make his appearance. His watch had come at a portentous time for the company, bridging a glorious past and a perilous future. His vision going forward could determine the fate of the distributors families, and the families of thousands of A-B employees and suppliers.

Thirty minutes into the wait, one of the Fourths trusted lieutenants, vice president of marketing David Peacock, materialized at the podium and apologized for the tardiness. He explained vaguely that the company plane had had trouble landing at the airport and promised, August will be here shortly. He then added that Busch was taking medication for a sinus infection. The audience registered a collective Huh? at the seeming non sequitur, and it quickly became apparent that Peacock was vamping for time.

Another ten minutes passed before Busch finally entered the room from stage left, surrounded by his ever-present phalanx of inner-circle executives, the entourage, as they were called inside the company. Tanned and perfectly coiffed, wearing his trademark open-neck dress shirt, slacks, and cowboy boots, he stepped up to the microphone and, barely acknowledging the audience, launched into his prepared remarks. Casual about rehearsing for his public speaking engagements, Busch was known for sometimes going off script, losing focus and relying on his good looks and charm to get him through. Most often he had not even looked at the speech before reading it in the teleprompter. Once, in an appearance before the Beer Institute in Boca Raton, Florida, he was supposed to say, When our forefathers arrived on these shores, one of the first things they did was to erect a beer house. What came out of his mouth instead was, When our forefathers arrived on these shores with erections He laughed off the arguably Freudian flub (Did I really say that?), and many in the audience laughed along with him, but his twenty-seven-year-old wife, Kate, sitting next to him on the dais, dropped her forehead to the table in embarrassment.