Travels with Barley (22 page)

These moves caused both hand-wringing and a fair amount of hooting among craft brewers (some of whom began to refer to Bud's strategy as microbrewphobia, and to Redhook as Deadhook). But all but the most ardent Bud haters conceded these were perfectly legitimate and inevitable responses from a company that didn't get to be the King of Beers by playing slow-pitch softball. (And, by the way, SABMiller and Coors also have entered the craft beer fray, though with less zeal than Anheuser-Busch.)

However, these measures were but the prelude to an all-out war that Bud declared in 1996 when two things happened. The first was that August III visited Anheuser-Busch's Hawaiian distributorships that year and came away appalled that far too many of his Bud floggers were letting Anheuser-Busch products sit too long in warehouses and store shelves (thereby risking the prospect of them becoming skunked). Worse, from his viewpoint, far too many were carrying rival products—including some successful local craft brews that had sprung up in Hawaii. Out of that came a Bud program called “100% Share of Mind” in which Anheuser-Busch started offering its distributors juicy financial incentives to essentially kick all but Anheuser-Busch products off their beer trucks.

Now, the Bud view was that considering that these distributorships had been built on Bud money and Bud incentives, why the hell should they carry other beers on their back? The counterview was that America's Three-Tier System of beer distribution—beer makers selling to distributors selling in turn to retailers—has been the law since the repeal of Prohibition. It was put in place specifically so that big beer companies
couldn't
own or lock up the distribution channels to the detriment of their competitors. And, under the law, it could be decidedly illegal for Bud to
order
its distributors not to carry other brands.

But offering them incentives to do so? Well, that's another matter. In fact, the Justice Department launched a probe of that practice in 1997 but concluded a year later that there was no reason to intervene. That didn't stop four Northern California microbreweries in 1998 from filing an antitrust lawsuit against Anheuser-Busch in federal court in San Jose, claiming precisely that the program violated antitrust laws because it was coercive to nominally independent distributors and designed to squeeze the little guys out of business.

Anheuser-Busch, as part of its vigorous defense, began subpoenaing owners of other Northern California microbreweries in a bid to show that well-managed craft breweries were still raking in good profits despite the Anheuser-Busch program. The case, according to a spokesman for Anderson Valley Brewing Co., one of the plaintiffs, was settled out of court in 2003; neither Anheuser-Busch nor the plaintiffs would discuss terms of the settlement.

Still, it wasn't lost on people—distributors in particular—that Anheuser-Busch had been accused of playing hardball with franchisees it felt were not carrying the freight. In 1997, the company unilaterally canceled a twenty-nine-year-old Florida distributorship held by the family of the late baseball legend Roger Maris on the grounds that the Marises had ignored customers, repackaged outdated beer, and falsified documents to conceal mismanagement. (Maris had been given the franchise in 1968 by then Anheuser-Busch chairman August A. Busch Jr. when Maris was playing for the St. Louis Cardinals, which the beer company then owned.) The Maris family sued, saying the accusations were false and that Anheuser-Busch wanted to transfer the franchise to friends of the company. A Florida state court jury sided with the Marises in August 2001 and awarded them $50 million in damages; the family then upped the stakes a month later by filing a $1 billion defamation suit against Anheuser-Busch. The company is appealing the $50 million verdict and says there is “no merit” to the defamation matter.

All this legal drama is interesting but it doesn't particularly articulate the moral case that the craft brewers think they have. That case was made when Fred Eckhardt, a Portland, Oregon, elder statesman of the craft brew movement who had also written a seminal book on homebrewing, took up the quill and aimed a sharp public blast at Anheuser-Busch in an essay in
All About Beer
magazine. It was titled “The Budweiser Menace.” Wrote Eckhardt:

Anheuser-Busch would answer this in time but, meanwhile, it had opened a second front aimed mostly against craft beer, filing a complaint with the federal Bureau of Alcohol, Tobacco and Firearms accusing a number of craft brewers of misleading consumers as to the content and nature of their beer. That's because some craft beer makers—Jim Koch's thriving Boston Beer Co., for one, and Pete's Brewing Co., the Palo Alto, California, makers of the popular Pete's Wicked Ale, for another—had opted to contract-brew their beer, using the excess capacity of the growing number of empty lager breweries instead of building breweries from scratch. Bud also went after Miller, too, claiming Miller's Plank Road craft operation was a “phantom brewery” whose Miller affiliation was not adequately acknowledged in its consumer marketing.

But Koch, who had built his Samuel Adams label into a $200-million-a-year business by this time, appeared to be the prime target. No matter that it was well known in the industry that Koch, and Pete's, for that matter, had concocted their own recipes in their own test breweries, bought their own ingredients, and sent their own brewmasters into the contract breweries to oversee such operations. The Bud folk cried foul, noting (correctly) that neither Sam Adams nor Pete's disclosed this contract-brewing information on their bottles. (They do now.) Bud even sent August IV out to spar in the press with Koch after Koch and some of his allies fired back, accusing Anheuser-Busch of petty jealousy over craft brewing's success, trying to use regulation to stifle competition, and failing to make a few disclosures of its own. Koch, for example, argued that there was little difference between what he did and what Anheuser-Busch does, farming its beer operations out to eleven regional breweries instead of making everything in St. Louis, the brewery that most consumers identify with Bud (and not disclosing that information on the bottle). Beyond that, Koch replied, “When competitors malign contract brewing, I say it's the same thing as if Julia Child came over to my house to cook dinner. It may be my kitchen, but it's her dinner.”

A couple of months later, in a question-and-answer session with the trade publication
Brandweek
, August IV and David English, Anheuser-Busch's manager for specialty brands, weighed in again to explain why their actions shouldn't be considered hypocritical:

The answer, from English, the specialty brands manager, was that minuscule or not, the Anheuser-Busch label was on the beer, thus Bud was being “very, very up front.”

But the low point, according to Jim Koch and the craft beer people, came in October 1996, when NBC's
Dateline
picked up the controversy and basically came down on Bud's side. It treated the revelation of Koch's contract-brewing as a scandal worthy of primetime television while, according to a transcript of the broadcast, allowing an Anheuser-Busch marketing executive to fret about “honesty and truth in labeling.” Toward the end of the broadcast, the show's co-host told his viewers that Budweiser's recipe is “the same as it's always been; it just uses modern brewing technology now.”

Eckhardt, in his seminal 1989 book,
The Essentials of Beer Style
, had cited annual German brewing profiles that showed that Budweiser's IBU profile (again, a measure of its hops contents) had been lowered by a third between 1985 and 1987. He waxed indignant: “I was amused by that information. I had always assumed that A-B was a progressive corporation, and that they regularly updated their recipes as well as their methods. Sadly, this isn't the case, I guess. They've made no attempt in over 100 years to save money by using less expensive ingredients… . They've always used the same grain and the same amount of the same hops. Oops, the same hops? The same amount of them? The same bitterness level? Goodness, gracious, I had the crazy idea that A-B had been steadily reducing the hop and bitterness level in Budweiser for quite some time. But I guess that's just my jaded taste buds, and the various analyses I've seen over the years were all prevarications.”

Eckhardt also took aim at Bud's own truth-in-labeling by arguing that a Bud icon—a label assertion that Bud is “Beechwood Aged”—is patently false, since the use of the chips, which are boiled and sanitized to rid them of any flavor, is actually part of a clarifying process that helps free beer of cloudy yeast. “Beechwood aging is not aging at all. It's not done in barrels either, as the word ‘aging' implies from its association with wine in oak casks.” Indeed, he noted that in the past, some brewers have used aluminum chips to clarify beer, “but they've always had the good sense not to label such beer ‘aluminum aged.'”

This brought an icy Anheuser-Busch response, this time from its brewmaster Mitch Steele, who accused Eckhardt of spreading “false information… . We never have claimed that beechwood aging takes place in beechwood barrels. Our beer is aged in stainless steel vessels… . Beechwood aging is a traditional European brewing process.” And “Budweiser is aged, or lagered, with beechwood chips for approximately three weeks, a longer period than used by many brewers.”

Eckhardt shot back: “Whatever else it is, ‘aging' it ain't, even if the beer does stay in chips for three weeks… . Mr. Steele, aging in wood is one thing, clarifying beer (by whatever means including aluminum chips, beechwood or maple chips, and isinglass or egg whites) is another… . We all know that your job would be in jeopardy if any of that beechwood flavor escaped into your Budweiser beer.”

Call it a tempest in a beer mug if you will. But this went on for about a year. Bud actually took out negative print and radio ads in Koch's home territory of Boston; Koch countered with a satirical ad of his own and threatened to run ads questioning the quality of ingredients Anheuser-Busch used in its products. It ended, finally, when Koch's lawyers brought a complaint to the National Advertising Division of the Council of Better Business Bureaus, a mediation group, and the group ruled that in fact the Anheuser-Busch ads contained “contextually inaccurate” statements implying that Boston Beer was deliberately misleading consumers about the origins of its beer. Bud then pulled the ads and the tempest died down.

None of this, unsurprisingly, finds its way into Bethany's well-rehearsed, fast-paced presentation as we make our way around the humongous Bud plant. She first gives us a brief history of the early beginnings of Anheuser-Busch: how Eberhard Anheuser, a German immigrant, came to America in 1843. After settling in Cincinnati, he went on to St. Louis, where he opened a soap- and candle-making company. In 1852, though he had no brewing experience, he invested with partners in a year-old beer-making enterprise called the Bavarian Brewery; in 1860 he bought out his partners and changed the name of the brewery to E. Anheuser & Co. Around that time, twenty-one-year-old Adolphus Busch, who had moved to St. Louis in 1857 via New Orleans and had bought a small interest in a brewing supply company, met Eberhard.

Adolphus, Bethany told us, was “the second youngest of—can you believe it—twenty-two children!” and Eberhard “liked him so much that he introduced him to his daughter… . A year later, they were married. That's how we get our Anheuser-Busch connection.”

It was a good move; within a few months, Adolphus was working for his father-in-law, and a few years later he bought a half-interest in the brewery. During this time, beer was a commodity made and sold locally but, according to Bethany, Adolphus “had a vision of transcending this and creating a national brand that catered to all tastes across the nation.” So, in 1876, “with his good friend Carl Conrad, he invented what lager? There you go: Budweiser!” She added that Adolphus “coined the name Budweiser because it had a slightly Germanic sound and would appeal to German immigrants and Americans alike.”