Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer (33 page)

A team of about ten of them had been in the desert resort town for two weeks, spreading goodwill and free beer among the thousands of “contemporary adults” who were taking a breather from their educational pursuits, when they were told that the heir apparent was flying in to check out the festivities. “He was in training at the time,” one member of the team recalled later. “The word was that Three Sticks (August III) was grooming him, and he was on the straight and narrow.”

Spring break was serious business because A-B drew 17 percent of its sales from the twenty-one-to-thirty-year-old segment of the population, or the so-called Generation X. Historically, twenty-one-to-thirty-year-olds consumed the most beer, an average of 45 gallons a year per person, compared to 36 gallons for those in the thirty-to-forty age range and 20 gallons in the forty-to-sixty-year-old segment.

Six months worth of planning and preparation had gone into A-B's promotional events in Palm Springs and other college-break hotspots around the country. News that the CEO's son was coming to town for the weekend and wanted to be included in “evening calls” to key accounts only added to the stress on the marketing team and the local distributor, as they now had to prepare for the Fourth's arrival. It fell to the distributor to round up a handful of “models” from Los Angeles—all long-legged and large-breasted but with an array of skin and hair colors—to serve as the Fourth's personal retinue of Bud Girls during his visit. The marketing team got the impression this was a standing order among distributors whenever the Fourth hit town. “Your responsibility was to help him have a good time.”

The Fourth checked into the Villas at the Oasis, where the A-B team was staying, but for reasons that soon became clear, his quarters were located apart from the others, on the far side of the property. On Saturday night, the marketing team made a call at Pompeii, the largest-volume club in the area. They worked the crowded room for several hours, buying rounds, handing out promotional items, shaking hands, and making friends. To the inebriated patrons, it was a giant party; to the marketing team, it was a job, more enjoyable than other jobs perhaps, but still grueling in its own way.

Midway through their most important call of the week, however, “all of a sudden we were told that the Fourth wanted us to leave,” one team member recounted later. “The distributor came to us and said, ‘Gather all your personnel and go. He wants you out of here.' It was all because he was partying and didn't want us to see what he was doing.”

The Fourth apparently took the party back to his private villa later that night. The next day, the place was trashed, the Fourth and the models were gone, and the A-B distributor was settling up with Oasis management over the damages.

Bud Dry was a success out of the gate, selling 3.2 million barrels in its first nine months. The company boasted that the new brand accounted for 3.4 percent of sales and had “the best start of any beer since Bud Light in 1982.”

Fleishman-Hillard hyped the Fourth's role in the launch, telling the media that he had “helped develop the company's dry brewing method” and heroically promoted the brand by piloting Bud Dry's forty-foot Skater catamaran in six offshore races “at speeds of up to 140 miles an hour” until his father insisted he quit because of the danger. The latter revelation led reporters to describe him as “daring” and “risk-loving.” The PR firm also put it out that the Fourth flew planes and helicopters, rose at 5:00 a.m., jogged daily, worked out twice a day, held black belts in aikido, tae kwon do, and hapkido “for security reasons,” rode a Harley, owned two manly dogs—a German shepherd and a rottweiler—and wore cowboy boots to work. It was as if they had cast him in his own beer commercial: the most interesting contemporary adult male in the world.

Despite its fast start, Bud Dry sales dropped off in 1991, and the brand, like dry beer in general, ultimately proved a disappointment. But that didn't affect the Fourth's trajectory at the company. In July 1991 he was named brand director for Budweiser, prompting the
Fortune
magazine headline “King of Beer Taps Crown Prince.” It was a big promotion that coincided with the first decline in Budweiser sales in fifteen years. The drop was sizable, nearly 6 percent, and the company blamed the doubling of the federal excise tax on beer—to $18 a barrel—that occurred in January 1991, and the economic recession, which caused beer drinkers to switch to cheaper brands. But A-B's research showed it was more than that: the company's flagship brand, which produced nearly 40 percent of its sales and half of its $1.7 billion in operating profits, was falling out of favor with contemporary adult drinkers, the Fourth's peers, who were turning to upstart American microbrew brands such as Samuel Adams and imports like Corona Extra, which had experienced a tenfold increase in sales on the strength of its TV commercials showing sexy young couples relaxing on a tropical beach.

The research threw a scare into A-B's aging management, causing fifty-four-year-old August III to admit, “I've lost the ability to understand the 21- to 30-year-olds the way I used to.” Again, the Fourth seemed perfectly cast. “He was young and they thought he could relate to that group,” said a former marketing staffer. “He was one of them; they figured he could feel the pulse.” Still, inside the company and out, the question hung in the air: was this twenty-six-year-old with less than two years of managerial experience and lingering personal “issues” up to the task? There were some clear signs that he wasn't.

In early media interviews about his promotions, the Fourth came across as defensive and even self-pitying. An article in the
Chicago Tribune
quoted him as saying, “Everybody thinks, ‘it must be easy to be you,' but it's probably the hardest thing in the world to be me, and to work under the pressure you have to be under. You have to do three times as good as the next guy to be considered to be doing the same job as he does.”

He hit on the hard-to-be-me theme again in an interview with
Fortune
magazine, saying, “You don't know how different it is walking in these shoes, versus what people perceive it to be. People think, ‘Here's a guy who's got it all—the Busch name, the best job in the world' [but]; it's a very different reality.”

He was alluding to what it was like to work for his father. “There's not a day in the week where he doesn't ask me a question or give me a hard time about something,” he told
Business Week
magazine.

The
Business Week
interview was intended to highlight their supposedly close working relationship, but the resultant article failed to conceal the tension between them. “When asked about the [Tucson] accident, the father clenches his fists and lightly pounds a table,” the magazine reported, quoting the son as saying, “It was tough for a while … that's all I want to say.” The Fourth acknowledged that he would like “to step into my father's shoes someday,” and his father told the reporter that someday would not be soon. “You're looking at a guy who's 54 years old,” he said. “I intend to be around here a long time.” He appeared to be quoting Gussie verbatim when he added, “There is no guarantee that August [IV] has a direct line of succession in this corporation.”

In the saga of Busch fathers and sons, history was repeating itself, and in remarkable detail. The Fourth's coming of age mirrored that of August III. His parents, too, had split up when he was five, and from then on he lived primarily with his mother and visited his father on weekends, when his father wasn't traveling. His bonding with August III had occurred in duck blinds on the farm and during day trips to the brewery, where “Little August” was allowed to sit in on executive meetings. When the Fourth was a teenager, his father remarried and started a new family, which included another son, Steven, with whom he spent more time and developed a closer relationship, just as Gussie had done with Adolphus IV.

In the Busch family, it seemed as if the firstborn son was offered in sacrifice to the company. The Fourth knew from the age of cognizance that he was expected to become CEO one day. He had no choice in the matter; doing something else with his life was not an option. He also knew he would only become CEO if and when his father judged him worthy. The job was his to lose, every day. The scrutiny was unrelenting, the criticism constant.

At the office, the Fourth's interaction with his father also followed the pattern established by August III and Gussie, with the son struggling to prove himself and the father only grudgingly acknowledging his effort. As a result, the Fourth regarded “the Chief” with an equal measure of hero worship and resentment. He had pictures of the two of them in happy poses all over his office and home, yet he told people, “I never had a father-son relationship, ever; it was purely business,” echoing his father's comment about Gussie years before: “I never had a daddy.”

The Fourth constantly sought paternal approval but rarely received it to his satisfaction. Even when he emulated his dad by wearing boots at work, he fell short of expectations. He showed up for a meeting with A-B's California wholesalers at the Los Angeles brewery one afternoon sporting a pair of pointy-toed lizard-skin cowboy boots, and his father immediately bawled him out in front of a subordinate. “When the fuck are you going to learn to dress like a business person?” he barked. The Fourth pointed to his father's feet and said, “Well, what do you call those?” August III looked down at his hand-tooled Lucchese dress boots with tastefully rounded toes and said, “
These
are aristocrat boots.” Pointing at his son's feet, he declared, “
Those
are shit-kickers.”

Such scenes were not uncommon. But even as August III focused his laserlike attention, sharp tongue, and short temper on his son, he continued to reward him with plum promotions that few in the company felt he deserved. In 1993, after less than two years as Budweiser brand director, the Fourth was elevated to senior director of the Budweiser family of brands—Budweiser, Bud Light, Bud Dry, and Bud Ice Draft, a new higher-alcohol brand aimed at the adult contemporary segment. In February 1994 he was named vice president and director of all A-B brands (including Michelob, Busch, and imported brands) and became part of his father's so-called strategy committee, the inner circle of about a dozen top executives.

The promotions weren't tied to any obvious accomplishments on his part, since the company experienced comparatively anemic growth in those years (an increase of only 200,000 barrels in 1993) and Budweiser continued to lose market share (another 0.5 percent in 1993). But the Fourth exhibited a talent for managing up. Having inherited a bright and experienced team of brand managers and sales executives, he used them adroitly, letting them know from the start that a big part of their jobs was to make him look good to his father and the board of directors. If they did that, then he would take care of them, and they all would rise in the company together. “We'll either be famous or fired,” he told them. It was a strategy his father would have approved, and it paid off.

In late summer 1994, one of August's team, the new Budweiser brand director Mike Brooks, sent a memo to two top executives at D'Arcy Advertising, Jim Palumbo and Mark Choate, telling them that A-B wanted a new campaign for Bud, one that would “contemporize” the brand and make it more appealing to the twenty-one- to thirty-year-old segment. He asked them to give the assignment out to creative teams in all D'Arcy's offices—New York, Detroit, and Los Angeles, in addition to St. Louis—and present their best work within a month. Thirty days later, Choate, Palumbo, and a handful of D'Arcy creative types presented Brooks with dozens of campaign ideas in a session that lasted several hours. Brooks was struck by one concept in particular from a young creative team in St. Louis, Dave Swaine and Michael Smith. Presented on an “art card,” a twelve-by-sixteen-inch piece of white foam board, it was a four-panel drawing of frogs sitting on lily pads with a Budweiser sign in the background. The card was augmented by a thirty-second cassette recording of frogs croaking, “Bud … bud … weis … bud … weis … bud … weis … bud … weis … er.”

It was beautifully simple and so totally off-the-wall that Brooks couldn't help laughing at the absurdity. Of all the things he was shown, “Frogs” stood out.

The next day, Brooks, Choate, and Palumbo presented “Frogs” and two or three other concepts to Brooks's boss, Bob Lachky, the senior director of Budweiser brands, and Lachky's boss, August IV. Both men agreed that “Frogs” was fall-down funny and the best of the lot. They instructed Brooks to take it up the line to Patrick Stokes, the president of the brewing division. One of August III's original stable of MBAs, Stokes had run the Campbell Taggart baking operation before August III put him in Denny Long's old job in 1990. He was seen as a competent, if colorless, placeholder until the Fourth was judged ready to assume the presidency. Inside the company, Stokes was jokingly called “the Tommy Newsom of the beer business,” a reference to the buttoned-up, perpetually brown-suited backup bandleader on
The Tonight Show
, who host Johnny Carson delighted in introducing as “the man from bland” and “Mr. Excitement.” Brooks was surprised when Stokes, too, laughed at “Frogs” and said he would support the concept as an ad campaign for Budweiser.

That left only August III to convince. The four executives would have been hard pressed at that moment to say exactly why they thought “Frogs” would help sell Budweiser to twenty-five-year-olds. It was certainly a unique concept; they'd never seen anything like it before. It wasn't anyone's father's idea of a Budweiser commercial. There would be no Dalmatians riding on red beer wagons, no Clydesdales galloping slo-mo through the snow, no blue-collar worker tossing back a cold one at the end of a long day, no jiggling Bud Girls on the beach, no beer really, no classic “pour shot” with a punchy voiceover tagline talking about taste or quality or tradition, none of the things that August III liked in a Bud commercial. But they all sensed that if the concept were properly executed, then people would not only remember it, they'd likely never forget it.