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
Adolphus Busch was a charismatic, multilingual, and very ambitious German immigrant who arrived in St Louis in
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
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.
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.
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.
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.
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
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.
Most troubling to A-B, Miller’s wildly successful
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.
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.
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
Michelob (also named for a Czech brewing center) is a so-called “ultrapremium” brand that was first brewed in
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
A-B also produces lower-price beers, most important the “popular price” Busch and Busch Light products. Launched in
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.
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.
At the time of the