Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer (14 page)

At Wharton, August also met a professor named Russell Ackoff, who ran the school's Management and Behavioral Science Institute. “Management science was an area of study that was catching fire,” Weinberg said. “Ackoff was a brilliant guy and a superb salesman, and he saw in August a willingness to take chances and look at complicated problems differently.”

August saw in Ackoff a father figure with an intellect and education he envied. Theirs quickly became a mentor-protégé relationship. August was particularly taken with Ackoff's concept of “preactive” corporate management. Unlike inactive management, which ignored change in favor of tradition, and reactive management, which responded quickly to change when it occurred, Ackoff's preactive management sought through research and analysis to predict change and prepare for it. That's exactly what August wanted at Anheuser-Busch. But because Ackoff didn't want to leave academia for the beer business, August agreed instead to endow his institute, paying the university $200,000 to $300,000 a year for Ackoff's students to conduct computer-modeling studies of the company's advertising, marketing, and distribution practices. “The various analyses had to be done in order for us to know if we were looking at something new or were just playing the same old game with new names,” Weinberg explained.

Gussie and Dick Meyer rolled their eyes at the thought of computer-assisted planning, but they decided to give August his head as long as his little project didn't become too expensive or disruptive.

“Gussie had no interest in what we were doing,” said Weinberg. “I think I kind of bamboozled him in the beginning. And, yes, I think there was an element of indulgence in his attitude.”

Gussie might have been more concerned if he'd heard Weinberg's presentation, “The Philosophy of Planning,” at the Super Market Institute in Chicago six months after he joined Anheuser-Busch: “Traditionally, getting smart is an evolutionary process. You have to wait for one level of management to die and a new level of management to come in. But now there is a means for changing quickly.”

One of the planning department's first major projects was an analysis of A-B's production capacity versus the demand for its product. The result was a model that called for the construction of new plants strategically located to minimize freight costs. Gussie had been the first American brewer to build a plant outside his company's home city. But after boldly launching operations in Newark, Los Angeles, and Tampa in the 1950s, he'd grown cautious. A new plant was now a $100 million proposition. He worried about moving too fast, committing too many resources. The previous plants had been financed largely out of revenue. He didn't want to incur a big debt to the banks; his father and grandfather always tried to avoid that. But with both Dick Meyer and the board uncharacteristically supporting the planning department's model, he reluctantly agreed to build three new plants—in Houston; Columbus, Ohio; and Jacksonville, Florida. Of course, once he'd signed on to the plan, you would have thought it was his idea in the first place. At the groundbreaking ceremony for the Columbus plant, he hopped on a plow pulled by a team of eight Clydesdales and actually broke the first ground himself.

August pressed for even more expansion. In May 1969, during a state-of-the-company presentation to a gathering of financial analysts at Chase Park Plaza, he predicted that Anheuser-Busch would sell 21 million barrels that year, but the company suffered from an “efficiency problem due to its production capacity”—it still could not produce enough beer to meet demand. His proposed solution was to build more plants, beginning with one in Merrimack, New Hampshire, and another in Williamsburg, Virginia. Again, Gussie went along.

Two weeks later, on May 27, all seven operating Anheuser-Busch plants were shut down by a Teamsters strike. It began as a local action in Houston, where peaceful picketing had been going on for four weeks while management negotiated with the union over a number of issues, including the length of a new contract. A-B was seeking a three-year agreement similar to the one the Teamsters had signed with the Schlitz plant in Longview, Texas, but the union would agree to only one year. August had been acting as A-B's point man in the negotiations, with the approval of his father and Dick Meyer. As a former member of the Teamster-affiliated Brewers and Maltsters Local No. 6 in St. Louis, he believed his father gave up too much to the unions over the years in exchange for labor peace. So he was determined to take a tougher stand this time, and maybe show everyone there was a new sheriff in town. Unbeknownst to him, however, Gussie was playing good cop behind his back, indicating to Local 6 leaders that he thought his son was being needlessly hard-nosed. “Gussie just wanted everyone to love him,” said Denny Long. “Everything August was asking for was correct. It was what we needed to grow, and Gussie knew that and backed it.”

The Houston strike went national when the company—in the person of August—sought to have nonunion supervisors cross the picket line to make yeast brews prior to a settlement, arguing that it was necessary because yeast cultures had to be made several weeks in advance if the plant was to go into full production immediately after a settlement. The union responded by pulling its personnel from refrigeration and power departments, putting thousands of barrels of already produced beer at risk of spoilage. Then, in a calculated show of strength, the union dispatched pickets overnight to every Anheuser-Busch plant. More than 1,500 massed at the Pestalozzi Street facility, where Robert Lewis, the volatile business manager of Local 6, tore into August, saying he “lacked basic human understanding.” In a statement to reporters, Lewis accused August of instituting a policy of worker harassment and abuse at the Houston and Jacksonville plants that had forced the labor action: “Foremen have been standing over [workers] like overseers, requiring them to obtain permission to even go to the bathroom,” he said, adding that several workers were even denied treatment in the dispensary after they suffered burns from caustic fluid used in cleaning. “There has been a complete change of policy and attitude on the part of the company, and unless young Busch's activities are curbed there will be nothing left of this great company. He is directly responsible for the conditions that led to this strike.”

Lewis even claimed that August had caused three of A-B's top managers to quit—the labor relations managers at the Houston and Newark plants, and the company's vice president of marketing, Harold Vogel. (Vogel later confirmed that he had resigned rather than report to August because, he said, “He instills fear and thinks it is respect.”)

As the number of pickets grew to 2,000, preventing members of the plant's twenty-one other craft unions from entering the complex, the company enlisted the aid of the police department, which dispatched fifty patrol cars and officers armed with riot guns and nightsticks to protect the plant and the nonunion supervisors inside. August and some of his planning team used the dark-paneled boardroom on the third floor as a kind of control center. From there, they could peer through the blinds and monitor the movement of various union leaders as they walked back and forth in front of the Brew House. Listening to all the vitriol directed at August, they half expected to hear someone in the crowd holler, “Send out young Busch and we'll let the rest of you go.”

With nearly 5,000 employees shut out in St. Louis, and more than 30,000 workers idled nationwide, Gussie and Dick Meyer quickly moved to settle the strike on terms that August considered far too lenient. Furious, he reportedly stomped into Gussie's office and handed him a letter of resignation. Gussie looked at it and said, “I'll give you another chance because you are a Busch, but if you ever do anything like this again, I'll see that the
Post-Dispatch
has your resignation letter within five minutes.” Robert Lewis later boasted to reporters that Gussie told August, in his presence, “You are going to get along with Bob Lewis or you'll never become CEO of this company.” On the third floor, Gussie's boys got a kick out of seeing “the kid” get a comeuppance.

August came away from the episode feeling he'd been sandbagged by his father, and more convinced than ever that Gussie's leadership, or lack thereof, was jeopardizing the company's future. He was troubled that his father didn't think it a big deal when cigarette manufacturer Philip Morris announced in June 1969 that it had purchased 53 percent of Miller Brewing Company. Miller had never been a threat. The eighth-ranked brewery, it had a 4 percent market share compared to A-B's 16 percent. But Philip Morris was a $1.14 billion company, bigger than A-B, with a record of building strong brands through sustained TV advertising. Marlboro was its Budweiser. August and Bob Weinberg thought Anheuser-Busch needed to develop a plan for dealing with Miller in the future. Gussie remained fixated on Schlitz, his archenemy of the past.

August had another family problem to deal in 1969: his marriage to Susie was on the rocks. Both of them would say later that the offending party was his work and the frequent absences it caused. For Susie, the transition from a bustling social life in Beverly Hills to the comparatively isolated rural setting of Waldmeister had been “overwhelming,” leaving her feeling lonely and without friends when he was on the road. August eventually purchased an in-town home for them in Ladue, but he continued traveling extensively and liked to spend weekends at Waldmeister whenever he could. “I realized in about the fifth year that it just was not going to work,” Susie told a local gossip columnist years later. “We tried for another year, but it just didn't get any better.”

According to a former A-B executive who socialized with the couple, August's absences were not just physical but emotional as well. “She was the All-American girl who would brighten the mood in the room, and then he would knock it down. He treated her as if she were one of his possessions, as he treated us all.”

The first public sign of trouble may have been an incident that occurred on May 9, 1968. According to newspaper reports, Susie was driving home around 11:30 p.m. after dropping off “a friend” with whom she'd spent the evening. On a straight stretch of Ladue Road just a few blocks from the Busch residence, she lost control of her car, ran off the road, took out a couple of small trees, and ended up in a ditch. She was treated at the hospital for facial cuts and bruises and then released, with no ticket issued or charges filed.

Not long after, a rumor began making the rounds in Anheuser-Busch social circles that Susie was having an affair with Harry Caray. It was a jaw-dropping, juicy tidbit that practically demanded retelling. Aside from the age difference (she was twenty-nine, and he was fifty-one) and the fact that both were married, Caray was the longtime voice of the Cardinals and one of her father-in-law's best buddies. That he and Susie would be an item seemed weirdly incestuous. The pair could not have been less discreet when they were seen dining together at St. Louis's only four-star restaurant, Tony's, just a few blocks from Busch Stadium, visibly under the influence and so physically affectionate that owner Vince Bommarito had to instruct his whispering waitstaff to stop staring at them. But it was hard not to. The sight of the florid, cartoon-faced sportscaster cavorting with the stunning young wife of August Busch III was not something a working-class St. Louisan ever expected to see, or would likely forget.

(To this day, Susie denies the affair ever happened. “We were a friendship item, but not a romance item by any means,” she told the
Post-Dispatch
in her only interview on the subject. Caray, too, denied the affair rumors over the years, though less consistently than Susie, hinting on one occasion that it might have happened and admitting on another that he was flattered that people thought he was capable of attracting her.)

August moved out of the Ladue house and took an apartment on Lindell Boulevard across the street from the St. Louis Cathedral, but he said nothing to his colleagues about his marital situation. If he felt bad, he didn't show it, not even to Denny Long, who was pressed into service as his near nightly dinner companion in the Tenderloin Room at the Chase during the first few months of the separation. When the divorce came later that year, it was quick, clean, and quiet, with the newspapers devoting only a few terse lines to the fact that the couple had agreed to joint custody and no alimony (although Susie later revealed that August supported her “in the style to which I was accustomed”). August thus managed to spare his children, August IV and Susan, the embarrassment he had endured over his parents' prolonged and messy split.

Gussie was glad the episode had not developed into a public scandal, but he still had to decide what to do about Harry. They were not only good friends, with a shared affection for booze, broads, and gin rummy, but also business partners, bound together by Caray's contract with the ball club and the brewery. Gussie could hardly condemn Harry on moral grounds—he'd been there and done that many times himself. And Caray was immensely popular among Cardinals fans and had become nationally recognized for his signature on-air catchphrases—“Hol-eeee cow!” and “It might be, it could be, it is—a home run!” In the public's mind, Caray was as much a part of the Cardinals/Budweiser family as Gussie, if not more. He'd been the Redbirds' most vocal booster for twenty-five years, since before Gussie bought the team. There had been a huge outpouring of public support for Caray when, a few weeks after the '68 World Series, he was struck by a car and nearly killed while crossing the street late one night, suffering two broken legs, a broken shoulder, and damaged lungs. Gussie responded by flying him aboard a company plane to the Anheuser-Busch beach compound in St. Petersburg, where he received round-the-clock nursing care during several months of recuperation and rehabilitation.