The Prince of Beers (3 page)

Anheuser-Busch was the best antidote to the city's inferiority complex. It employed thousands of people in jobs prized by both blue- and white-collar workers. The Busches rewarded loyalty and long hours with above-market salaries. But the company's local influence went far beyond its economic impact. People around the world knew The King of Beers, the Clydesdales, the red wagons. Along with the Gateway Arch, the Anheuser-Busch brewery is the city's top tourist attraction. A mile south of downtown, the brewery is an attractive campus of red-brick buildings. It could pass for a retro apartment complex if not for the smell of roasted malt that hangs deliciously in the air. Hundreds of thousands of people visit each year to see the Clydesdales, walk past the giant fermenting tanks and bottling lines, and sample a beer or two.

Of course, other cities have their own hometown champions, some larger than A-B. Atlanta will always be known for Coke, Cincinnati for Procter & Gamble. But Anheuser-Busch was a family as well as a company. The Busches played a unique role in St. Louis. The city and its suburbs have long suffered from an identity crisis. Geographically, St. Louis is located at the boundary of the Midwest and the South. But it's still only a two-hour flight from New York. It has an excellent private university, Washington U. Some of its wealthier citizens fancy themselves as transplanted Boston Brahmins, sending their children to Ivy League schools, summering on Cape Cod.

Not the Busches. They had no interest in the East Coast's effete pleasures. They faced south and west. They hunted ducks at a Missouri farm known as the Shooting Grounds and bigger game at a ranch maintained by Anheuser-Busch in Montana. They loved NASCAR and nitro-fueled drag racers. On summer weekends, they flew their helicopters and planes to the Lake of the Ozarks, the drinkin', fishin', and misbehavin' capital of the red states. They had messy divorces and nephews older than their uncles. Their genealogy looked like the Saudi royal family tree, with Adolphus Busch playing King Abdul-Aziz. Gussie, who ran A-B from 1946 to 1975, was a profane, skirt-chasing tyrant with eleven children by four wives. As one of those fancier Missourians told me, the Busches were Appalachia with a few billion dollars.

The family's messes might not have played in the leafy, wealthy precincts around Forest Park, but lots of folks in St. Louis didn't mind a bit. If anything, the problems humanized the Busches. Gussie in particular had been adored — someone told me that his unofficial title had been "King of the Peasants." Further, while the Busches weren't quick to give away their own fortunes, the brewery's corporate largesse was legendary. St. Louis churches, charities, and civic groups all counted on A-B.

The ultimate example of the relationship between company and town is a zoo called Grant's Farm, which Anheuser-Busch operates on a Busch family-owned estate in the western St. Louis suburbs. Aside from a $12 per vehicle parking charge, the zoo is free — the best bargain in town. Like the brewery, Grant's Farm even offers free beer. To make sure that everyone understands who's responsible, signs around Grant's Farm — even now — feature the slogan, "From our family to yours."

* * *

Sep. 27, 2006.

The day had finally come. All those years shaking hands with distributors, giving speeches at wholesaler conventions. All those years learning the business so he didn't sound like an idiot when the Wall Street guys asked their questions. He'd even gotten married. They'd all wanted him to get married, prove that he'd put his partying days behind. He'd never been able to pull the trigger. In 1990, he and Judy had been engaged. They'd even set a wedding date. A few years later, his girlfriend Sage had moved from California to be with him. "Sage Busch," he'd joked. But Judy and Sage had both come and gone.

He'd done it now, though. A few weeks before, he'd married Kathryn Thatcher, a pretty, deeply private 25-year-old blonde from central Vermont with a marketing degree from Boston College. She was quiet and reserved, not like most of his girls. Sure, he hadn't entirely committed to her, not exactly. He doubted one woman would ever be enough for him. But he'd made Kate his wife, lawfully wedded her in the eyes of God, the state of Missouri, and, most importantly, the board of directors.

In return they'd given him the company that he loved. And something more: They'd given him the chance to prove himself once and for all to The Chief. "

August Busch IV, chief executive of The Anheuser-Busch Cos., St. Louis, Missouri.

Had a ring, didn't it?

* * *

A-B had faced a clear crisis when The Third kicked out his father in 1975. When he handed power to his son a generation later, the company's problems were less obvious but just as real. Anheuser's business in the United States topped out in 2002. The company had driven its weaker competitors to the brink of extinction and gobbled their market share. The major breweries that remained, Coors and Miller, were powerful enough to stop A-B from gaining further sales at their expense. Anheuser found itself capped at about 50 percent of the American beer market.

Meanwhile, Busch III focused so heavily on the fight for market share that he failed to react to broader changes working against his company. Even as the United States population grew, beer consumption was flat. The real growth in the American alcohol market was happening at the high end, especially in hard liquor, which had huge profit margins. With its powerful relationships with distributors, Anheuser might have been a natural partner for a big distilled spirits company. But the company never moved into the liquor business. Nor — aside from buying half of the Mexican beer company Grupo Modelo — did Busch III invest in major international expansion.

As the years passed, industry analysts debated why Busch didn't act. The explanation appeared to be a combination of financial — A-B feared overpaying for foreign breweries — and personal. Busch III's obsession with security and need to micromanage left him uncomfortable doing business too far from St. Louis. Whatever his reasons, his strategy left A-B low on growth prospects by 2002, when he officially passed the company's reins to Patrick Stokes, his most trusted lieutenant. Over the next four years, Anheuser's American market share and profits slipped.

By 2006, Anheuser-Busch clearly needed new blood at the top, executives who would reconsider its strategy. Maybe it needed to push into energy drinks and bottled water. Maybe it should bid for a wine or spirits company, or make an international acquisition. Those choices would have hurt Anheuser's short-term profits, but a respected chief executive might have convinced the company's shareholders they would pay off in the long run.

Instead, the board of directors gave the job to The Fourth, who had mostly been confined to the marketing department during his twenty-one years at A-B. He'd had hits and misses along the way; in the early 1990s, he'd overseen the launch of Bud Dry, whose slogan, "Why Ask Why? Try Bud Dry," was not exactly genius. Anheuser eventually dropped Bud Dry, but the failure didn't stop Busch's ascent. Later he encouraged his father to approve the three frogs "Bud-Weis-Er" campaign, which analysts considered a success. He'd also spent years cultivating A-B's relationships with wholesalers and distributors, which in plain English meant hanging out and partying with them — whether at the Lake of the Ozarks, off the coast of Florida, or at a ranch in Montana. An important skill, sure, but Busch IV had little experience in finance, manufacturing, or the international markets crucial to the company's future. He had been a heavy drinker for two decades. He rarely had less than three drinks a day, and often he had many more. Analysts and journalists questioned whether he was up to the task. He was caught in a Catch-22. He had to overhaul Anheuser to succeed. But until he succeeded he wouldn't have the necessary credibility to make a dramatic overhaul. Making matters worse, his dad stayed on Anheuser's board and kept meddling. In 2008, The Fourth told The Wall Street Journal that he had considered buying an energy drinks company but that his father opposed the deal, which went nowhere. The Third even tried to stop his son from picking his own executives.

So Anheuser spun its wheels through 2007 and the first half of 2008. Then the Brazilians at InBev called.

The Fourth promised he wouldn't sell, but he had little choice. By 2008, the Busches owned less than 5 percent of the company that bore their name. After a lost decade, shareholders were in no mood to listen to more promises of better times ahead. Anheuser tried to rally politicians against the takeover, but its argument that beer was a strategically vital product that had to remain American-owned went nowhere.

To keep A-B independent, Busch IV had only one option, buying the half of Groupo Modelo it didn't own already. Anheuser didn't have enough cash on hand to buy Modelo, so it would have to issue billions of dollars of bonds to do the deal. The debt would interfere with InBev's plans to issue its own new debt to buy out A-B's shareholders. Essentially, by messing up its own good credit, Anheuser could stop the InBev takeover.

Julie Macintosh, a reporter for the Financial Times, chronicled the fight in her engrossing 2011 book Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon. Among other tidbits, Macintosh reported that investment bankers involved in the deal christened Busch III "Crazy" and IV "Lazy," because The Fourth so often seemed disconnected at crucial meetings. What outsiders didn't know was that by the spring of 2008, the stress of trying to run A-B had left Busch IV prone to panic attacks. To try to stay calm, he was taking heavy doses of the prescription anti-anxiety medication Xanax, a strongly addictive and often abused drug that can cause listlessness, slurred speech, and confused thinking.

Even so, Busch IV badly wanted to keep Anheuser independent. By Saturday, July 5, the company had agreed to buy Modelo. On Independence Day weekend, Anheuser-Busch looked like it might escape InBev and remain a standalone company.

Then August Busch III stepped in. On July 7, at an airplane hangar owned by A-B at the Spirit of St. Louis Airport, the Anheuser board met to talk about the Modelo deal. The Third came out against it. He questioned whether Anheuser's management team — including his son, of course — had considered the risks of taking so much new debt. He wondered whether the two companies could mesh, whether the deal would ultimately work. By the end of the meeting, the board had basically rejected the deal. InBev was the only alternative.

Six days later, on July 13, Anheuser announced that it was selling itself to InBev for $52 billion in cash. The name of the new company was Anheuser-Busch InBev, but that fig leaf didn't hide the fact that the Brazilians were in charge. August Busch IV was the only A-B board member to join the new company's board. One hundred forty-seven years after Adolphus Busch married Lilly Anheuser and began the Busch dynasty, Anheuser-Busch was no more.

The Third's influence on the Anheuser-Busch board cannot be overstated. If he had wanted the Modelo deal, it is hard to imagine the other directors saying no. The $52 billion question is why he went the other way, why he ultimately took A-B away from his son less than two years after giving him the top job. In the epilogue of Dethroning The King, Macintosh wrote:

Did The Third recognize that the company's days as an independent brewer were limited, and engineer things so that it would be sold on his son's watch rather than his? August III began supporting The Fourth's CEO candidacy once Anheuser's glory days ended, he blocked his son's efforts to resurrect the company… and then, once Anheuser was firmly established as a takeover target, he steered it towards InBev. He had hundreds of millions of dollars personally at stake.

Maybe Busch III hoped his son had the chops to run A-B but realized too late that The Fourth wasn't up to the task. Maybe — like more than one chief executive — he simply couldn't envision anyone else, not even his son, running the company he'd dominated for so long. Only Busch III knows what drove him. And he isn't telling.

But what is beyond doubt is the effect that selling Anheuser-Busch had on The Fourth. He'd always been prone to drinking and partying. Now he had $100 million, no job, and the burden of being held responsible for dismantling his family's legacy and losing a St. Louis icon. "I am proud to accept this challenge that carries a great deal of personal meaning for me," he had said when he took the job in September 2006. He was proud no more. He fell swift and hard.

* * *

Sunday, Feb. 7, 2010.

Cocaine.

The man with a thousand toys didn't have much to do, didn't have anything to do, if he was being perfectly honest. Even Kate had bailed, divorced his sorry ass, not that he could blame her. She'd walked in on him with another woman, and all his pleading couldn't change her mind.

So: here a bump, there a bump, everywhere a bumpbumpbump. Gram a day at least. Or more. He had a hard time keeping track, because he'd do a few lines, feel pretty good. Then he'd start getting edgy, the coke crawls, and the stuff would look like the poison it was, and he'd toss what he had left. But then a couple hours later he'd want more, want it bad. He'd have to call his dealer and hook up again. It was a damned stupid way to do drugs, inefficient. The money didn't matter at this point, but still. His three main expenses these days were coke, guns, and cars. He kept buying cars, he wasn't even sure why, an Audi for $160,000, a Mercedes that set him back $350K. He could hardly keep track of them all. Guns too, he'd always loved them, but his obsession had maybe gotten unhealthy. Several times lately he'd fired them in the house. Once he'd accidentally pulled the trigger on a rifle, a .308, the shot so loud that he could barely hear for a week. Worst of all his friends were in the next room. He could have killed them.

Unhealthy. Yeah. If he stepped back, looked at the situation, considered it, he could see the coke had stopped being fun a while ago. And not just the coke. The benzos and the oxy and the booze too. His family was yapping at him about it, his mom, his sister, his buddy Steve. He'd been losing weight. Plus he kept having flashbacks to the time the cops chased him through St. Louis all those years ago, like they were waiting for him, getting ready to beat on him. He knew the idea didn't make any sense, but it was plaguing him. So yeah, probably time to take it easy.