Dethroning the King (11 page)

It was a painful pill for The Third to swallow. Long was his protégé, frequent traveling partner, and closest business confidante, and he had been one of the architects of the company's golden era versus Miller in the 1980s. He had been Anheuser-Busch's “inspirational leader,” said one former executive, the perfect complement to detail-obsessed August. The Third's determination to cut away Anheuser's cancer superseded his ties to his friend. “Augie does not forgive,” said one former executive.

Life at Anheuser-Busch changed noticeably after that, and largely for the worse. The Third had seized control of 38 percent of the U.S. beer market, but he suddenly found himself lacking a CEO for his all-important brewery division and sporting a headless sales staff. To fill the gap, he announced that he would assume Long's former duties and act as president of the beer subsidiary.

Wall Street analysts expected him to quickly identify a new brewing head, and several names were circulated. Instead, August III told investors that he would hold both jobs for at least two years. He proceeded to do that and more. Nearly three years later, with The Third still pulling double duty, the
St. Louis Post-Dispatch
ran a column that read like a “Help Wanted” advertisement for Long's former position.

“He wasn't going to promote anyone into any position of importance within the company because he really, frankly, didn't trust anyone,” said one strategy committee member. “That was a turning point. The minute he lost confidence in the people around him, it became a very difficult place to work. I could tell how much distrust there was of people in general because of the sting the company had endured, and Mr. Busch in particular.”

That distrust only fueled The Third's unwillingness to delegate authority or to allow his views to be challenged. He was looking to circle the wagons and consolidate power, not to hand it to someone else.

“I had a client who used to say, ‘Great men have great weaknesses,'” said Charlie Claggett. “I think there's a lot of truth in that. I guess that was August. One of his weaknesses was his strength also—his lack of trust. You had to prove yourself every day or else you weren't with him.”

One former employee compared August III to Prussian king Frederick the Great, who had a difficult childhood under a brutish father and tended to confide in his beloved Italian greyhounds. “He talked to his pet dogs, but he had so much confidence in his own ability that he didn't need to talk to other people. He would just tell them what to do.”

“You were not going to loosen up August III,” said a former ad agency head. “He was a very narrow persona. He was constrained emotionally and intellectually. He mustered all of the resources and talents he had and was laser-focused on selling beer. And he learned how to do that really well.”

—Roy Bostock, former ad agency head

 

 

 

P
eople don't just drink beer. They drink the brand that lies behind the beer. And while many image-defining brands are expensive, like Mercedes or Gucci, even the very best beer is still an affordable luxury—a way for the common man to make a statement without breaking the bank. When someone walks into a bar and steps up to the counter to order a beer, the brand he shouts out says something about him as a person. August Busch III recognized that, and he exploited it.

“If you think about beer, in your own personal circle there are probably people who drink a different beer when they're in a bar than they do at home, when nobody sees them,” said one former Anheuser executive. “There's a badge associated with the bottle you're holding in your hand when you're out in public or with your friends, and it's important. That didn't happen by accident. It happened because beer companies poured a tremendous amount of money into developing the image of their brands.”

Anheuser-Busch didn't become the world's most famous brewer based on the superior quality of its products. Many beer connoisseurs disregard Budweiser for being “fizzy,” “yellow,” and “bland.” It took a century and a half of exceedingly careful cultivation to turn arguably mediocre Budweiser into the King of Beers. Thanks to the billions of dollars in advertising spending that helped foment the cult of Budweiser, Americans love not only Anheuser-Busch beer, but beer in general. The mere sound of a pop-top aluminum can cracking open evokes memories of summer vacations, backyard barbecues, and thrilling sports victories. Beer is part of America's cultural fabric. And that's where The Third's brilliance was the most evident.

“He clearly knew that advertising was the brand,” said Roy Bostock. “And therefore, as CEO, he was involved in the advertising up to his eyeballs. A lot of CEOs more often than not say the advertising is someone else's responsibility. Not August. He knew the criticality of advertising to the brands. Budweiser was created by the advertising.”

And that was what InBev wanted to buy—all of the stress and sweat and tears through which Anheuser-Busch magically turned its middle-of-the-road beers into a patriotic movement. Budweiser, Brito liked to say, is “America in a bottle.” And it doesn't just trump other beers, like Miller or Coors; it stacks up well against some of the world's most recognizable brands, period. Valuing a brand is an art rather than a science, but it was Anheuser-Busch's brands, not its brick-and-mortar breweries or bottling lines, that accounted for a huge chunk of the value of InBev's $46.3 billion bid.

Budweiser ranked as the 16th most valuable brand in the world in 2010, according to BrandFinance, which put Bud ahead of McDonald's, Disney, and Apple. The value of the Budweiser brand in dollars? In May 2008, just before InBev made its bid, it was pegged at $17.2 billion, nearly 40 percent of the price of InBev's offer.

Gussie's Clydesdales and whistle-stop train tours hinted at Anheuser-Busch's eventual marketing prowess, but it was The Third who ultimately launched Budweiser's image into the stratosphere.

“Before August became CEO, the marketing department was really kind of Animal House,” said one former executive, referring to the fraternity house environment depicted in the John Belushi movie. “It was fucking nuts.” August III harnessed that raw energy and directed it into ads that targeted the right types of consumers. He understood that advertising needed to be one of Anheuser-Busch's most important products. It ultimately became even more critical to the company's success, some would argue, than the beer itself. During his tenure, Anheuser-Busch was able to take the vice of drinking alcohol—which had been banned in America just a few decades earlier, and turn it into something that conjured up happy images and drew people together.

The Third had no formal schooling in marketing, but it didn't take a master's degree to know who he needed to hunt—and how. With laser-like focus on its key consumers, the company consistently peddled two types of campaigns: “quality” ads that showed beer pouring out of a tap and Clydesdales tromping through powdery fields of snow; and the funny, irreverent ads aimed at younger drinkers.

August's big push into marketing started almost as soon as he hit the ground as CEO in the late seventies. Miller's growth rate was topping Anheuser-Busch's, Miller Lite was a smashing success, and the “Miller Time” ad campaign, which celebrated the camaraderie of blue-collar men, was a huge hit. John Murphy, Miller's president, had a voodoo doll that he named August and kept a rug decorated with Anheuser's “A&Eagle” logo under the desk in his office, where he would ceremoniously clean his shoes every morning. Miller's top executives asserted that they'd soon be number one, which infuriated The Third. “I'll never forget the look on his face,” William K. Coors, chairman of fellow rival Adolph Coors, told
Business Week
at the time. “He said, ‘Over my dead body.' And he meant every word of it.”

August III sensed that advertising was the missing ingredient he needed to beat Miller and to push Anheuser's market share to 50 percent. When the Teamsters strike finally ended, he came on like a hurricane, firing staffers and making a critical move to install Mike Roarty as director of marketing. Roarty, an affable Irishman with a famously clever wit, was so instrumental during his 41 years at Anheuser-Busch that one of the three flags that often waved in front of the company's headquarters was Ireland's. “The American public doesn't want to hear about Germany,” Roarty joked, slamming the Busch family's ethnic heritage.

Roarty was the comedic counterpoint to The Third's “straight man”—the very public face of Anheuser-Busch during the late 1970s and 1980s. He and The Third both had healthy egos, but that's where the similarities stopped. Roarty was a well-liked showman and creative genius who had a constant glint in his eye and was maddeningly late for meetings. “Michael is much more humorous than I am,” Busch said. “He's a better speaker. I'm more direct, have a shorter fuse.” But Roarty and August III clicked when it came to peddling beer, and the pair had a healthy respect for each other. Roarty used to keep a three-foot-high stuffed Clydesdale toy in his memorabilia-filled office and found it tough to keep a straight face each time The Third walked in and perched on it, sidesaddle, while trying to make a point. “He recognized the importance of network television and sports programming, of great creative and so forth, and he led it,” Roy Bostock said. “And he had an ability to work with August III, which not everyone could do.”

The first in Anheuser-Busch's string of advertising megahits came in 1979, when a team from ad agency D'Arcy presented The Third with a handful of pitches. By this time, The Third was hiring several agencies at a time and pitting them against each other to see who could come up with the best creative work. It wasn't cheap, but it produced some brilliant campaigns. One of D'Arcy's slogan ideas that year, the work of Charlie Claggett, was “This Bud's for You.” The Third keyed in on it right away, and that tagline soon became one of Anheuser's most famous and heavily used salutes to the American worker.

“August picked it out of four campaign ideas, said, ‘That's the advertising we want,'” said Jack Purnell. “And it turned out to be a bigger and better one-up to Miller's ‘Miller Time.' We saluted every worker you could think of over the next seven or eight years. We had salutes to umpires, we had salutes to all kinds of white collar and blue collar workers, salutes to female workers, you name it.”

The Third wasn't much of a professional sports fan. His rare appearances at Cardinals' games tended to be uncomfortable for all involved. Still, he recognized the importance of sports media and spent astronomical sums to sponsor a vast assortment of sporting events, from World Cup soccer, NASCAR, and professional football's Super Bowl all the way down to small-town softball leagues. By 1985, Anheuser-Busch was the largest sports sponsor in the United States. A decade later, Anheuser started introducing team color-specific beer bottles and “fan cans” for Major League Baseball, the National Football League, and eventually even college sports, which got it into hot water over whether it was targeting underage drinkers. The company's utter saturation of the market prompted fans to inextricably associate Budweiser with sports. If you attended a sporting event, watched one on television, or listened to one on the radio, it was nearly impossible to get away from Anheuser-Busch.

“They wrote the book on sports marketing,” said Charlie Claggett. “It was putting a Budweiser sign in every stadium in every town and devising local programs and promotions. I think it means a lot to people to have Budweiser as a sponsor. They covered every base, from the big national spots on the Super Bowl that reached millions of people to sponsoring whatever neighborhood they could get into.” The company consistently topped its own ad spending records: In 1989, it spent $5 million on a series of six 30-second spots during the Super Bowl—twice as much as it had the year before—and the number kept going up from there.