A Tall Order For The Prince Of Beers
As the lights dimmed in the Orlando Civic Center's huge auditori um, thousands of Anheuser-Busch wholesalers and salespeople settled happily into their seats and waited for the bimbos to appear. Anheuser-Busch's monolithic Budweiser brand was slipping in sales for the third year running, and the giant brewer had promised a 20% hike in ad spending -- meaning Americans could expect to see $250 million worth of Budweiser marketing support in 1992. In the beer business, more money usually means more babes in bikinis. And that was fine with the roomful of graying wholesalers assembled for their annual October sales bash.
But when the video started, the only woman on the screen was a gussied-up grandmother wielding an electric guitar. The next spot had no women at all, just a weird old Hawaiian guy confounding a group of futuristic young surfers -- and the conventioneers -- by saying "groovy." This was no way to sell beer, the wholesalers thought with dismay. Recalls George Couch, president of an A-B distributorship in Watsonville, Calif.: "Those ads were met with all the enthusiasm of a cold shower."
Leaning against the podium when the lights came up was August Busch, nattily turned out with slicked-back hair and a sharp-toed pair of cowboy boots. The resemblance was uncanny, but this wasn't August A. Busch III, chairman of Anheuser-Busch Companies Inc. The man trying to explain that the trendy new ads were designed to lure back young drinkers was the chairman's 27-year-old son, August A. Busch IV. Sure, the new Budweiser brand manager looked like his dad, but was this kid serious with these ads? "Some of us were a little leery," admits John E. Dickerson Jr., a Monroe (Ohio) distributor.
`WITH-IT.' Although "the Fourth" was grilled mercilessly that day in Orlando, it turned out the ads he had championed did better in market research than the bouncing bimbos the distributors had wanted. They were so successful among young drinkers, in fact, that a wholesalers' group apologized to the young August at their next meeting, conceding that he was "a lot more with-it" than they were. August III, standing next to his son at the ceremony, permitted a rare, tight smile to cross his face. "Son," he said, "don't let it go to your head."
The wholesaler test was the the most public chapter yet in the grooming of Augie -- an exacting apprenticeship crafted by August III for his eldest son. It began with the thimbleful of Budweiser August IV received on the day he was born. Now, young August is manager of A-B's most important brand. The position caps a frothy rise through the ranks of the nation's No. 1 brewery that should be familiar to anyone who watched his father ascend to the chairman's seat during the '60s and '70s. August IV is the fifth-generation Busch to advance in the company (table). And as long as he keeps performing, he has every chance of following in his father's footsteps.
For now, though, there's no doubt who's in charge of Anheuser-Busch. Interviews with August III, August IV, and many close associates confirm that the father is molding the son in his own image. In the mid-1970s, August III organized the ouster of his own father as CEO when it became clear the old man wasn't up to battling the onslaught of Miller Lite. Now, he appears to be reaching into the future, tapping the next generation through his son.
QUICK STUDY. That's not to say August IV doesn't have a mind of his own. Despite an adolescence riddled with rich-boy run-ins with the law, he gets high marks among former and current company executives for being a quick study. His father is unequivocal that August IV must perform to advance. "There is no guarantee that August has a direct line of succession in this corporation," he says. Adds Joseph Corcoran, the Fourth's predecessor as Budweiser's brand manager: "Does Aug have an advantage over a guy named Joe Corcoran? Yeah. But if he doesn't work his butt off, it won't happen."
Clearly, Augie is getting his chance at a crucial time. The Budweiser brand produced nearly 40% of the publicly traded company's $12.6 billion in 1991 sales. It poured out about half of its $1.7 billion in operating profits. For years, Bud has been the brewing industry's behemoth, accounting for one out of every four beers chugged by Americans each year.
Yet the King of Beers faces what could turn into a big problem -- namely, three straight years of declining shipments. Bud suffered its steepest drop in 1991, as recession-weary consumers traded down to lower-priced brews, such as Busch and Natural Light, following a 100% hike in the federal excise tax. Industry newsletter Beer Marketer's Insights estimates that Bud shipments fell by 5.2% last year, double the industry's decline.
That's why August III keeps his son on a tight rein. Father and son often share long, private conversations commuting by helicopter to and from Waldmeister Farm, August III's 2,000-acre estate in Missouri. August III routinely calls as early as 6 a.m. and sometimes late in the evening to chew over marketing promotions or bounce around ad strategies for Bud. "There's not a day in the week where he doesnt ask me a question or give me a hard time about something," says August IV.
DUCK HUNTING. At a conclave to discuss ads ads for St. Patrick's Day and the upcoming Summer Olympics, the Fourth rejects a series of possible new rock-concert Bud signs presented by a half-dozen or so creative types from ad agency D'Arcy Masius Benton & Bowles Inc. He shakes his head, looking over the Bud logo rendered in shades of blue, white, and red. "Remember your directives?" he asks. "We got to do it in red, guys, or else we get fried. We can't do something different when he told us so," referring to Dad's insistence that the Bud logo stay red. "If you want to, go upstairs and show it to the chief . . ." There's nervous laughter all around, and someone says: "Yeah, and I'll watch with binoculars when you do!"
The Fourth's on-the-job training began at 15, driving a forklift at a wholesaler's warehouse. His next job was shoveling Anheuser's trademark beechwood chips out of tanks used for aging beer. Early on, he learned what it meant to be the boss's son. But unlike his father -- who often comes across like a Prussian general -- August IV strives to fit in as one of the guys. "I don't think people are scared of me," he says. "If they are, I try to disarm them."
Despite August III's taskmaster approach, father and son have always been close. Each is licensed to fly fixed-wing planes and helicopters, and they love to fly together. They also venture to A-B's corporate retreat on Lake of the Ozarks to race speedboats and like to hunt ducks at Waldmeister Farm.
But August IV has also incited his father's fury. As a 19-year-old student at the University of Arizona, he was involved in an auto accident, allegedly alchohol-related, that resulted in his female companion's death. To make matters worse, Busch left the scene of the accident. Police found him the next morning in his condominium, naked except for a sheet wrapped around him, caked in dried blood. In the condo were a semi-automatic rifle and a sawed-off shotgun. The Pima County prosecutor considered bringing charges of manslaughter and leaving the scene of an accident. August III responded by assembling a crack legal and investigative team in Tuscon and St. Louis. An eight-month investigation ended in a dropped case, largely because the hospital lost a blood sample taken from August IV after the accident.
Furious, August III yanked his son back to St. Louis University. "We have to put some discipline into him," he told a school official. Even today, when asked about the accident, the father clenches his fists and lightly pounds a table. "It was tough for a while," August IV says. "That's all I want to say."
PLAYBOY. At St. Louis U., where he studied finance, Busch was diligent and low-key. But outside of school, he gained a reputation as a playboy, hitting the St. Louis bars with beautiful women -- most often blondes. As a sophomore, he landed in trouble again. This time, he led undercover narcotics detectives on a late-night chase through downtown St. Louis after an excursion in his father's Mercedes-Benz to a topless bar. The detectives saw a speeding car with tinted windows and suspected him of being a drug dealer. He was accused of trying to run over a police officer, but in a highly publicized court trial, the jury acquitted him of all charges.
Busch finally started buckling down after graduation. At the brewery, he became the assistant to A-B's top brewmaster. Then, after working as the marketing chief's assistant, he took on his first brand-management job, heading up the national launch of Bud Dry Draft in 1990. To promote the brand, August IV raced the Bud Dry offshore speedboat, reaching speeds of up to 140 mph, before his father "retired him." The brand was a hit in its first year, but slipped in 1991.
These days, Busch is busier than ever at work -- though sometimes it seems like play. His job often entails schmoozing with wholesalers and bar owners. At a pre-Super Bowl bash in Minneapolis, he toured the bars promoting Bud with an entourage of salespeople and Bud girls dressed in tight spandex. There's no letup for the rich young bachelor at home, either. His mother, Susan Busch, who was divorced from his father when the Fourth was 6, says he's so busy that the only time he has to visit with her is on Saturday mornings, when he trains with a personal martial-arts instructor at the company gym. "It's a chance to catch up between punches," she laughs. "I'll take what I can get."
Busch has attained black belts in akido, tae kwon do, and judo -- largely for security reasons. The family has had numerous kidnap threats. When he runs in the park across from his $380,000 home in St. Louis' tony central west end, he usually takes his two dogs: a German shepherd and a new rottweiler pup. But he still makes the St. Louis social scene regularly, and he is seldom alone. Although he announced his engagement to a model named Judy Buchmiller early last year, he backed out of the wedding plans. The two are still dating.
`SOMEDAY.' His most serious relationship seems to be with the family business, specifically Budweiser. And rivals think it will take all his energy. "The new generation doesn't want to drive their father's Oldsmobile or drink their father's Bud," says Robert A. Rechholtz, Adolph Coors Co.'s executive vice-president for sales and marketing. Putting a Busch on the case and increasing spending should help with wholesalers and retailers, who are impressed by the family's commitment to the brand. And the company hopes the new ads -- youth-oriented, less sexist -- will appeal to a fresh generation of Bud drinkers. As for bikini-clad babes, A-B still supplies plenty in its Busch and Bud Light ads.
While the Fourth has his work cut out for him, he'll likely have the Third around for a while giving advice -- wanted or unwanted. "You're looking at a guy who's 54 years old. I intend to be around here a long time," his father says. Having finally gotten himself under control, August IV would like "to step into my father's shoes someday." But dad's not planning to swap his hand-tooled cowboy boots for slippers until he thinks the time is right.