Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer Read online

  DEDICATION

  Dedicated to my sisters—

  Mary, Ann, Kate, and Martha—

  who have helped make me the man I am.

  ACKNOWLEDGMENTS

  For their aid and encouragement, I would like to acknowledge the following:

  • My agent for life, Alice Martell, who has been my dear friend and champion for nearly thirty years.

  • My most excellent editor at HarperCollins, Hollis Heimbouch, who should start a brewery with a name like that;

  • Adolphus IV, Billy, and Trudy Busch, and Lotsie Busch Webster, and Lotsie Herman Holton—members of a great American family who shared their story on the record;

  • Gary Sgouros, who shared his memories of Gussie’s last days at Grant’s Farm;

  • Former Anheuser-Busch executives Denny Long, Andy Steinhubl, and my brother-in-law Mike Brooks, who helped make a great American company what it was;

  • Former Pima County deputy sheriff Ron Benson and former St. Louis Police detective Nick Fredericksen, who did their jobs;

  • All the dozens of other people who contributed to this narrative but prefer to remain anonymous;

  • Glenn Jamboretz, PR consultant par excellence, who helped every time I called (and sometimes when I didn’t);

  • Pat Crane, Nancy Cason, John Crotty, and Suzanne Otto—old St. Louis friends who did likewise;

  • Michael London, John Sayles, Barbara Wall, Kevin Beggs, and all the good people at Lionsgate Television, who believed in this book even before it was finished.

  • John Mettler, Deborah Rybak, Jeff Kwatinetz, Bill and Nancy Cason, and Dennis McDougal—members of my finance committee, who made it possible for me to eat regularly and sleep under a roof during the writing process.

  • Father John Rechtien, Don Crinklaw, and, especially, Irv Letofsky—who set me on the road to a writing career years ago and inspire me to this day;

  • Dennis McDougal, a fellow traveler on that road who deigns to talk to me every morning;

  • Matthew, Colin, and Halle Knoedelseder, my three astonishing, creative children, who keep me young at heart and hopeful about the future.

  CONTENTS

  DEDICATION

  ACKNOWLEDGMENTS

  BUSCH FAMILY TREE

  PROLOGUE: “AUGUST IS NOT FEELING WELL”

  1 “BEER IS BACK!”

  2 THE ALPHA BUSCH

  3 “BEING SECOND ISN’T WORTH SHIT”

  4 “THE MAN WHO SAVED THE CARDINALS”

  5 THE MAGICAL BEER KINGDOM

  6 THE PRUSSIAN LIEUTENANT

  7 THE OLD MAN AND THE KID

  8 GUSSIE’S LAST STAND

  9 CHOOSING SIDES

  10 CAMELOT’S END

  11 “WE ARE AT WAR”

  12 REBIRTHING BUD

  13 “TELL ME I’M A HORSE’S ASS”

  14 WARNING SIGN

  15 “DO YOU KNOW WHO I AM?”

  16 “I PROBABLY FEEL WORSE ABOUT THIS THAN YOU DO”

  17 “HEY, PAL, YOU GOT A QUARTER?”

  18 HERE COMES THE SON

  19 “WAY, WAY, WAY BEYOND TIGER WOODS”

  20 “A BAD APPLE AT THE TOP”

  21 THE LAST WATCH

  22 “THEY DIDN’T JUST DROP OUT OF THE SKY”

  EPILOGUE: AN AMERICAN DREAM

  NOTES

  INDEX

  PHOTOGRAPHIC INSERT

  ABOUT THE AUTHOR

  CREDITS

  COPYRIGHT

  ABOUT THE PUBLISHER

  FOOTNOTES

  BUSCH FAMILY TREE

  PROLOGUE

  “AUGUST IS NOT FEELING WELL”

  In the grand ballroom of the Hyatt at Capitol Hill in Washington, D.C., on the afternoon of May 13, 2008, several hundred Anheuser-Busch distributors sat in rows of uncomfortable chairs, restlessly awaiting the arrival of August Busch IV, the forty-three-year-old president and CEO of Anheuser-Busch, Inc., America’s premier brewery.

  “The Fourth,” as he was commonly called in the industry, was twenty minutes late, and no one from the company had appeared with an explanation for the delay.

  The distributors were among 1,200 beer professionals from around the world attending the eighteenth annual National Beer Wholesalers Association/Brewers Legislative Conference. This year’s three-day event coincided with the seventy-fifth anniversary of the repeal of Prohibition, and Anheuser-Busch had taken the opportunity to schedule a separate meeting with its distributors, the independent operators who—by a law passed in Prohibition’s wake—serve as the middlemen between the brewery and retailers.

  There was much to talk about. Beer sales were on the decline globally, and the industry was weathering a period of rapid consolidation that threatened A-B’s century-long dominance. In the past few years, Milwaukee’s Miller Brewing had merged with London-based South African Breweries to form SABMiller; Canada’s Molson had merged with Colorado-based Adolph Coors to form Molson Coors, which then merged its U.S. operations with SABMiller to form Miller Coors; and Belgium’s Interbrew SA had merged with Brazil’s AmBev to create InBev, which had knocked A-B out of its perennial position as the world’s largest brewer. A-B was still the most profitable brewer, with its brands accounting for about 50 percent of beer sales in the United States, the world’s most lucrative market. But the company’s drop to No. 2 in volume, coupled with the fact that its stock price had remained flat for nearly five years, or roughly the period that August IV had been in charge of the brewing division, was fueling speculation that the aggressively acquisitive InBev was eyeing A-B as a possible takeover target. Busch had dismissed the talk of a takeover during a meeting with distributors in Chicago the week before, drawing a standing ovation when he declared, “Not on my watch.”

  The Fourth was actually the sixth Busch to head the St. Louis–based brewery, a responsibility handed down from father to firstborn son since his great-great-grandfather Adolphus founded the company in the wake of the Civil War. With the exception of the Fourth’s great-uncle, Adolphus III, each of his predecessors had left an indelible imprint, not just on the company but on American commerce as well. Over the course of five generations they’d taken a tiny, bankrupt brewery that made bad-tasting beer on the banks of the Mississippi River and transformed it into a colossus that pumped out more than 100 million barrels a year. They had steered the company through two world wars, Prohibition, and the Great Depression, building their signature lager, Budweiser, into the best selling beer on the planet, making Anheuser-Busch, in the words of the Fourth’s father, August A. Busch III, “the world’s beer company.”

  Thanks to their beer, the Busch family had tasted all that America ever promised the immigrant class from which they sprang—wealth almost beyond comprehension, political power that provided access to presidents, and a lifestyle rivaling that of history’s most extravagant royals. Along with that, of course, came a king-size portion of heartbreak, scandal, tragedy, and untimely death. But they had endured. Nearly all the other German immigrant brewers who’d built their businesses by hand, branded their factories with their family names—Schlitz, Miller, Pabst, Blatz, Schaefer, Coors, Lemp, Stroh, Hamm, Griesedieck—and turned America into a beer-loving nation were gone, their paternalistic empires swallowed up by foreign-based conglomerations of amalgamations with soulless names like InBev. Of the brewing giants that boomed after Prohibition and fought fierce and sometimes desperate battles for market share in the last half of the twentieth century, only Anheuser-Busch remained as a freestanding, independent company, still operated b
y the family that founded it.

  So a lot was riding on the shoulders of August Anheuser Busch IV as the audience at the Hyatt waited for him to make his appearance. His “watch” had come at a portentous time for the company, bridging a glorious past and a perilous future. His vision going forward could determine the fate of the distributors’ families, and the families of thousands of A-B employees and suppliers.

  Thirty minutes into the wait, one of the Fourth’s trusted lieutenants, vice president of marketing David Peacock, materialized at the podium and apologized for the “tardiness.” He explained vaguely that the company plane had had trouble landing at the airport and promised, “August will be here shortly.” He then added that Busch was “taking medication for a sinus infection.” The audience registered a collective “Huh?” at the seeming non sequitur, and it quickly became apparent that Peacock was vamping for time.

  Another ten minutes passed before Busch finally entered the room from stage left, surrounded by his ever-present phalanx of inner-circle executives, “the entourage,” as they were called inside the company. Tanned and perfectly coiffed, wearing his trademark open-neck dress shirt, slacks, and cowboy boots, he stepped up to the microphone and, barely acknowledging the audience, launched into his prepared remarks. Casual about rehearsing for his public speaking engagements, Busch was known for sometimes going off script, losing focus and relying on his good looks and charm to get him through. Most often he had not even looked at the speech before reading it in the teleprompter. Once, in an appearance before the Beer Institute in Boca Raton, Florida, he was supposed to say, “When our forefathers arrived on these shores, one of the first things they did was to erect a beer house.” What came out of his mouth instead was, “When our forefathers arrived on these shores with erections …” He laughed off the arguably Freudian flub (“Did I really say that?”), and many in the audience laughed along with him, but his twenty-seven-year-old wife, Kate, sitting next to him on the dais, dropped her forehead to the table in embarrassment.

  There was no laughter on this day. From the outset, it was clear that something was wrong. As Busch attempted to address the effect of the slowing economy on the beer business, he slurred words and stumbled over phrases. At first, some in the audience thought he was having trouble with the teleprompter, but it soon seemed that the Fourth was seriously impaired, and not from overindulging in an A-B product or taking some mystery sinus medicine. No, this appeared to be a deep state of stoned. Unmindful of the rising murmur and the concerned looks on the faces in the crowd, he plowed on for several excruciating minutes, speaking in a kind of slow-mo monotone. Finally, mercifully, David Peacock intervened. He leaned in to the microphone and said, “Obviously, August is not feeling well.” He then took Busch by the arm and led him off the stage. Busch went docilely, stumbling once before he disappeared from view.

  The meeting was over, but the audience remained seated, stunned, absorbing the impact of a quintessential “holy shit” moment. It wasn’t so much that Busch was bombed. His reputation as a party animal stretched back to his college days, when a Chappaquiddick-type incident left a twenty-two-year-old cocktail waitress lying dead in a roadside ditch next to Busch’s overturned Corvette and Busch, who had walked away from the scene, telling police investigators hours later that he couldn’t remember what happened or who was driving his car. His father had extricated him from that jam and a number of others over the years, and A-B security men had cleaned up countless lesser messes that “the Third” was never told about. In a way, bad-boy behavior was expected of the Fourth. He was a Busch, after all, a member of a family in which hard drinking, fast driving, womanizing, and gunplay were part of the male curriculum. Both his father and his grandfather, the legendary beer baron August A. (“Gussie”) Busch Jr., had hard-earned reputations as hell-raisers in their youth.

  But the incident at the Hyatt was different; it crossed a line that hadn’t been crossed before. All of the Fourth’s previous escapades could be dismissed as after-hours personal indiscretions. But this occurred on the job, in the course of his daily duties as chief executive of the publicly traded, $19 billion-a-year Fortune 500 company, and in full view of the entire industry. That’s what really shocked the audience at the Hyatt. There had always been questions inside the company about the Fourth’s fitness for the top job, and when August III prevailed upon the board to name his son CEO in 2006, the widespread assumption was that the elder Busch had made sure there were loyal retainers in place among management and the board of directors who would protect August IV and the company from just this sort of thing. But all the king’s horses and all the king’s men hadn’t been able to prevent the debacle. Clearly, the wheels had come off the beer wagon.

  Word of the Fourth’s performance poured out of the Hyatt ballroom and into the bar, and flowed down the escalator to the main reception room. Within minutes it was the talk of the NBWA conference. Cell phones flashed the information back to A-B home base at 1 Busch Place in St. Louis, where it was treated as a potential PR disaster.

  It proved to be worse than that. The Fourth’s personal problems, which for years had been denied, ignored, or covered up by those around him, were about to have worldwide repercussions. Three and a half weeks later, on June 11, InBev, a four-year-old company based in Belgium but controlled by a trio of Brazilian billionaires, made an unsolicited and utterly unwelcome bid to acquire Anheuser-Busch for $46.5 billion. When the dust settled on what became the largest cash acquisition in history, America had lost one of its most beloved companies, and more than a thousand A-B employees in St. Louis had lost their jobs.

  The Fourth and his father were among the executives who made fortunes in the deal—they walked away with nearly half a billion dollars between them—but their long-rocky relationship was by then irrevocably broken. They no longer spoke to each other.

  Untethered from both family expectations and company responsibilities for the first time in his life, August IV quickly descended into an abyss. According to friends, family members, and court documents, when the police came for him in February 2010, America’s last king of beer was holed up in his mansion, grievously addicted to drugs, gripped by paranoia, beset by hallucinations, and armed with hundreds of high-powered weapons, including several .50-caliber machine guns.

  “It’s like the final scene in Scarface,” sighed one Busch family member, slipping almost unconsciously into an imitation of Al Pacino as doomed drug kingpin Tony Montana: “‘Say hello to my little friend.’”

  1

  “BEER IS BACK!”

  A crowd began gathering at the brewery gates in the early evening of April 7, 1933, milling around near the intersection of Broadway and Pestalozzi Streets on the south side of the city near the river. As the hands of the lighted clock on the Gothic Brew House tower approached midnight, the number of people swelled to an estimated 35,000, standing shoulder to shoulder for blocks around, growing increasingly boisterous in anticipation: America’s thirteen-year prohibition against the sale of beer was about to end.

  “Happy days are here again, the skies above are clear again,” they roared out in a raucous chorus, “Let us sing a song of cheer again.”

  Similar scenes played out in smaller scale all around town. Over at Kyum Brothers Café at Ninth and Pine, patrons sang Irving Berlin’s teetotaler’s lament “The Near Future”—“How dry I am …”—while hundreds of customers at the German House restaurant joined in an old Deutschland drinking song, “Was Wilst du Haben?” (What will you have?).

  Inside the iron gates of the giant brewery complex, 300 trucks pressed up to the loading dock, while 1,200 more lined up bumper-to-bumper on the street outside, ready to take their place. From within the plant the rumble of machinery signaled that the long-hibernating giant was now fully awake, as seemingly endless columns of brown Budweiser bottles, with their famous red-and-white labels, clattered along snaking conveyor belts to be packed in wooden crates proudly stamped, “Property of Anheuser-Busch, St.
Louis Mo.”

  On the bottling plant floor, brewery president August A. Busch Sr. and his two sons, Adolphus III and August Jr., posed for photographers as they packed a twenty-four-count crate destined for President Franklin D. Roosevelt, who’d swept into office in November on the promise of a “new deal” for America that included the repeal of the Eighteenth Amendment, which banned the manufacture and sale of alcoholic beverages in the United States.

  Full repeal would not come for eight more months because it required another constitutional amendment and thus needed ratification by the legislatures in thirty-six (three-fourths) of the forty-eight states. But FDR had already made good on his campaign promise to the nation’s brewers. On March 4, nine days after his inauguration, he asked Congress to immediately modify the so-called Volstead Act, which had set the maximum legal alcoholic content of beverages at .05 percent, to allow the sale of beer with a 3.2 percent alcohol. “I deem action at this time to be of highest importance,” he said. Both the House and the Senate quickly complied, setting April 8 as the date when the sale of beer could resume.

  The Busches had been preparing for this moment ever since the election, spending more than $7 million to refit and modernize their plant, purchase supplies, and gather the ingredients for the brewing process, notably the expensive Bohemian hops they considered crucial to the character of Budweiser, which had been the No. 1 selling beer in the world when America’s state lawmakers shut off the tap.

  Eager to reestablish their brand as the “King of Beers,” the company’s board of directors had authorized August Jr., the superintendent of the brewery, to buy several teams of Clydesdale draft horses “for advertising purposes.” Gussie, as he was called, purchased sixteen of the massive 2,000-pound animals for $21,000 at the Kansas City stockyards. He also found two wooden wagons from back in the days when the company employed eight hundred teams of horses to deliver its beer, and set about having them restored to the exacting standards of his late grandfather, brewery founder Adolphus Busch, who liked to conduct weekly inspections from a viewing stand, with his son August at his side as all the drivers passed in parade, hoping to win the $25 prize for the best-kept team and wagon.