The Oxford Companion to Beer definition of

Anheuser-Busch,

Anheuser-Busch, the legendary American brewing company whose roots go back to 1852, ceased to exist as an independent entity when it was acquired in a hostile takeover in 2008 by the Belgian brewing giant, InBev. See inbev. The new company is named Anheuser-Busch InBev and is headquartered in Leuven, Belgium. It is currently the largest brewery group in the world, with annual sales at the time of the merger of US $36.4 billion, approximately 25% of the global beer market. The former A-B now operates as Anheuser-Busch Companies, Inc, based in St Louis, Missouri.

History

Adolphus Busch was a charismatic, multilingual, and very ambitious German immigrant who arrived in St Louis in 1857 at the age of 18. After 2 years as a salesman for a brewery supplies company, he started his own company in 1859. This put him in close contact with St Louis’ brewing industry.

About that time, Eberhard Anheuser, a successful local soap manufacturer, had taken control of the failing Bavarian Brewery. In the course of his sales calls, Busch became friendly with Anheuser and also with his attractive young daughter, Lilly. When he married her in 1861, he joined the family and later bought into the business as well, which in 1879 was renamed the Anheuser-Busch Brewing Association. When Anheuser died in 1880, Adolphus Busch became president. At the time, the brewery was producing about 4,680 hl per year (4,000 barrels). In the next 41 years, Busch managed to turn it into one of the world’s largest breweries and became the grandest beer baron of the era.

Busch was one of the first entrepreneurs to envision and create a national brand in the United States, a task made doubly difficult by the extremely perishable nature of the product. Like all business visionaries, Busch was swift to adopt the emerging technologies of the day and supported the developments of those he thought could be useful to his plan.

Busch was one of many Germans with brewing connections to arrive in the United States in the mid-19th century. Prior to this time, very little beer had been consumed in the country (approximately 4 l [1 US gal] per capita in 1800), and vast swaths of the nation—especially the South—were nearly devoid of beer. Because of climate, soil, and difficult transportation, spirits were a cheaper and more practical drink in the early United States than beer. That all changed with the push into the nation’s fertile heartland and the arrival of beer-loving German immigrants like Adolphus Busch beginning in the 1830s.

Etching of Anheuser-Busch malt houses in St. Louis, c. 1850. pike microbrewery museum, seattle, wa

Armed with a formidable personality and a ferocious work ethic, Busch was able to build a highly sophisticated brewing operation along with a sales and distribution network that covered much of the country.

Adolphus Busch was instrumental in the development of refrigerated railcars around 1874, even before they were adopted by the emerging meat-packing industry in Chicago. He created an extensive network of ice depots in the South and West from which to refill the rail cars. With mechanized bottling and the pasteurization process developed by Louis Pasteur in the 1860s, Busch’s beer could arrive in good condition to any major market. See pasteur, louis. Adolphus Busch made a great show of shipping a Budweiser beer to Europe and back and challenging anyone to tell the difference from a fresh beer that had never traveled at all. By 1901 A-B had reached 1.17 million hl in sales (1 million barrels) and was shipping beer around the globe.

The oncoming storm of Prohibition was swirling ferociously by the end of the 19th century and accelerated into the 20th as anti-German sentiment built in the run-up to World War I. See prohibition. Like many breweries, Anheuser-Busch showed a lax attitude about the crime and low moral standards that plagued many of the saloons it owned, and this fueled the antisaloon movement. In 1919, the Volstead Act became law, despite Busch’s strident lobbying at the highest levels of government, and Prohibition began.

Prohibition closed many breweries and was enormously disruptive to all the rest, but A-B had enormous resources and many non-beer business interests to help it survive: diesel engines, corn syrup, ice cream, and even a railroad. As with most brewers, A-B marketed a near beer (Bevo) and sold huge quantities of malt syrup and yeast, more than a little of which ended up in the glasses of American homebrewers. See near beer. Assuming control of the brewery upon Adolphus’ death in 1913, August Busch Sr guided the company through the difficult times of Prohibition and kept the brewery relatively strong compared with its competitors. In 1934, worn out and gravely ill, August Sr took his own life. Adolphus Busch III took control.

The decade that followed was a time of rebuilding. The drinking public had been profoundly changed by Prohibition. Spirits-based cocktails gained a modern stylishness; beer was increasingly seen as old-fashioned and, worse, fattening. The old saloon system had been disrupted, but nothing legitimate had taken its place. World War II was a further interruption and brought more changes to the drinking public. Beer consumption would not reach pre-Prohibition levels until the 1970s. In 1946, Adolphus Busch III died, and the hard-charging August II, known as “Gussie,” took over the business.

The 1950s and 1960s were a period of slow growth and enormous price competition. Budweiser outsold its rival Schlitz in 1957 and became the number one beer brand in the United States. Most of America’s regional breweries went out of business by the early 1970s, leaving fewer than 100 operating breweries in the United States. The spectacular implosion of the huge Schlitz brand in the late 1970s resulting from bad technology and poor public relations allowed A-B to snap up a good portion of the Schlitz market share, but despite this, A-B itself was not in the best of health.

Profits were slipping and under August II Anheuser-Busch was in the grip of an increasingly inflexible and unfocused leader. Although Busch had installed Richard Meyer as president in 1971, Busch retained the CEO title and kept a tight grip on the reins. The company was badly in need of more modern management and marketing techniques. In 1974, August III was named president and began plotting a palace coup, ousting his father and taking over the company the following year. His father never forgave the betrayal. August III assembled a team of MBAs and modern marketing specialists, and, spurred on by the aggressive marketing tactics of competitors, especially Miller, the young Busch invested in media advertising and sports sponsorships at levels that had never been seen in the beer business. At its peak in 2007, A-B spent $1.36 billion in marketing, about one-third of which was media advertising.

Miller Brewing Company emerged as A-B’s archrival, and the competition got very personal. See sabmiller. Miller president John Murphy allegedly kept a voodoo doll named “August” in his office. Battles were fought in court, in the media, and at the Federal Trade Commission over ingredients, beechwood chips, too-heavy light beer, and alleged deceptive advertising of the German brand Löwenbrau contract-brewed by Miller for the US market.

Most troubling to A-B, Miller’s wildly successful 1975 launch of Miller Lite had taken the beer world by storm. A-B was unprepared and reluctant to take their flagship Budweiser brand in that direction, feeling that the light fad would quickly burn itself out. It was not until 1982 that they launched Budweiser Light, later shortened to Bud Light. With the company’s full attention and huge amounts of money, Bud Light finally surpassed Miller Lite in 1997. The downside was that much of the growth of Bud Light came at the expense of the company’s flagship, Budweiser, and in 2004 Bud Light overtook its namesake.

In 2006, August Busch IV was named President and CEO, succeeding Patrick Stokes who had run the company since 2002, the first non-family CEO. Busch IV continued until 2008, just prior to the InBev acquisition, and still maintains a seat on the board of directors. Dave Peacock is the current Anheuser-Busch Companies, Inc, President and CEO, reporting to Luiz Fernando Edmond, Zone President for Anheuser-Busch InBev’s North American zone.

Controversies

Adolphus Busch appeared as an honest enough man by the standards of 19th-century industrial barons, but there are documented records of his attempts to fix prices in a gentlemen’s agreement with Pabst and perhaps others, and his relish in crushing competitors was legendary.

As early as the 1930s, the company was charged with unfair trade practices, mostly related to free merchandise given to retailers, a practice regulated or prohibited in most states. Accusations, indictments, and settlements occurred over the decades. In 1977, the company admitted to $2.6 million in “questionable payments,” paying the government a $750,000 settlement and promising to end the practice.

In the late 1980s A-B was criticized for advertising that seemed to promote beer to underage drinkers, most notoriously using the character of “Party Animal” Spuds McKenzie, a small but pugnacious dog. The pup was retired, but concerns over youth drinking still surface from time to time, especially over flavored malt beverages, whose soda pop flavors seem custom-tailored for the young drinker. The company launched a responsible consumption campaign, “Know When to Say When,” in 1985.

In 1996, troubled by the success of Boston Beer Company’s Sam Adams brand, A-B launched a series of attack ads, questioning its Boston heritage, and unsuccessfully tried to stir up labeling regulators along similar lines. Boston Beer fought back and eventually prevailed, but the fracas damaged Sam Adams’ sales for several years.

In 1998, A-B issued a mandate to its distributors called “100% Share of Mind,” which pressed for the ejection—often at fire sale prices—of non-A-B brands in a wholesaler’s portfolio, the idea being that without such distractions distributors could give the A-B brands their full attention. Brewers have applied similar pressures to distributors for decades, but this proved to be a very contentious and unpopular program. With thin profit margins and mainstream brands declining, A-B’s leverage with wholesalers is not what it used to be, and the policy is no longer in effect.

As with any family dynasty, the Buschs have had their fair share of scandals and deep, dark secrets over the years. In 1991, Avon Books published Under the Influence, an unauthorized book by Peter Hernon and Terry Ganey about the family and its role in the company, with 5 decades of intimate family matters laid out for the world to see. It quickly became a best-seller.

Brands

Prior to Prohibition, A-B made a wide range of beers of different colors, strengths, and price points, including Anheuser-Busch Standard, Original Budweiser, Pale Lager, Exquisite, Old Burgundy, and Faust. Most are long forgotten now, despite the occasional attempt to revive brands like Faust.

The flagship product is Budweiser, named for a Bohemian brewing town called Cěské Budějovice. Budweiser was one of the first of the type of pale, dry beers brewed with a proportion of adjuncts—in this case, rice—which thins out the body and tames the high protein inherent in many North American barleys.

Bud Light is an important brand extension, having overtaken Budweiser in sales in 2004. It has been extended into a constellation of flanking brands such as Chelada (made with Clamato, a clam-flavored tomato juice drink), Bud Light Lime, and Bud Light Golden Wheat. Budweiser American Ale was released in 2008, attempting to capture some craft beer credentials for the core brand.

Michelob (also named for a Czech brewing center) is a so-called “ultrapremium” brand that was first brewed in 1901 as a draught-only beer aimed at better restaurants and clubs. In 1961 it was first bottled in a distinctive tapered bottle. Although Michelob has generated worthwhile sales for A-B, it has never been a huge seller, failing to compete well against imported brands like Heineken in the US market.

Michelob also serves as a platform for the company’s more “experimental” beers—Michelob Light preceded Bud Light by 4 years. Today, Michelob is the name on a line of “craft-like” beers that includes Amber Bock, Pumpkin Spice, and other seasonals and also headlines the upscale light beer, Michelob Ultra. A Belgian-style Witbier called Shock Top is part of the group, but without the Michelob name attached to it. Although successful in some markets, these products do not appear to have caught on with consumers interested in more characterful genuine craft beers from independent producers.

Bud Select was introduced on Superbowl Sunday in 2005. The original marketing position was a bit unclear, although later efforts did hint that the product was lower in carbohydrates and calories than regular Bud. Now it is the standard-bearer of lightness, with Budweiser Select 55.

A-B also produces lower-price beers, most important the “popular price” Busch and Busch Light products. Launched in 1955 as Busch Bavarian, the name was shortened to Busch in 1979. Another low-priced product, Natural Light, was introduced in 1977.

Over the years, A-B has introduced dry, ice, low-carbohydrate, and other more specialized products, some of them brewed and packaged to resemble Miller products, reportedly in the hopes of stealing share from their rival. In the past decade A-B has flirted with flavored malt beverage products also known as “alco-pops,” with sales results that were perhaps not worth the controversy. A-B produces a malt liquor, King Cobra, but has never had a big share of the category. See flavored malt beverage.

A Very Big Business

In the United States, A-B owns 12 breweries: St Louis; Newark, New Jersey; Los Angeles; Houston; Columbus, Ohio; Jacksonville, Florida; Merrimack, New Hampshire; Williamsburg, Virginia; Fairfield, California; Baldwinsville, New York; Fort Collins, Colorado; and Cartersville, Georgia. A-B’s brands make up 48.5% of the US market (2008), just under 120 million hl (100 million barrels).

A-B has significant interests outside the United States. Budweiser/Bud is a strong and growing brand in the British Isles, China, Brazil, and elsewhere. Additionally, A-B functions as a distribution partner for a number of brands imported into the US market.

A-B also holds some equity in the craft beer market. In April 2010, A-B acquired 100% ownership of Chicago’s Goose Island Brewing. A-B also owns 25% of Red Hook Ale Brewery, as well as 40% of Craft Brewers Alliance (formerly Widmer Brothers Brewing), which owns 100% of Kona Brewing Co and 49% of Coastal Brewing (Old Dominion and Fordham brands). Most of the high-profile craft breweries have been approached with talk of an equity proposition by A-B, and A-B InBev’s involvement in the craft sector will likely grow over time.

A-B also has domestic and international partnerships with other brewers. It owns 50% of Mexico’s Grupo Modelo (famous for the Corona brand) and, until recently, 7% of the Chinese brewer, Tsingdao, which has since been sold.

In addition to the breweries, A-B invested in significant vertical integration and at the time of the merger owned eight barley elevators, five aluminum can plants, three malt plants, three seed facilities, two hop farms, two rice mills, two bottle plants, a railcar company, and a railroad, along with assorted other related business like recycling ventures.

In 1959, A-B formed Busch Entertainment Corporation to manage several Busch Gardens attractions, which had grown out of the family’s fondness for showy gardens and fantasy farms. In 1989, A-B purchased the Sea World parks, eventually becoming the fifth largest amusement park operator in the world. After the InBev merger, the division was sold to The Blackstone Group.

Postmerger

At the time of the 2008 merger, the company was anticipating US $1.5 billion in postmerger “synergies.” To come up with those efficiencies, the new management cut some 1,600 positions in St Louis as of the beginning of 2010. As is typical for acquisitions of this type, costs are being cut. Office sizes, employee pensions and insurance, corporate jets, smart phones, accounts payable, advertising expenditures, and many other areas have been targeted to take advantage of postmerger efficiencies and pay off the enormous debt incurred by the takeover.

See also anheuser, eberhard, budweiser, and busch, august iv.

<p>Bibliography</p>

Hernon, Peter, and Ganey, Terry. Under the influence: The unauthorized story of the Anheuser-Busch dynasty. New York: Simon & Schuster, 1991.

Ogle, Maureen. Ambitious brew. Orlando, FL: Harcourt, 2006.

Plavchan, Ron. A history of Anheuser-Busch, 1852–1933. New York: Ayer, 1975.

Randy Mosher