Now, It's Jack Macdonough Time

Jack N. MacDonough was prepared for the worst when he walked into August A. Busch III's office in September. After all, what he was about to tell the chairman of Anheuser-Busch Cos. was tantamount to treason in the take-no-prisoners world of selling beer. MacDonough -- the AB marketing veteran responsible for the legendary "This Bud's For You" campaign -- had accepted the job of president and chief operating officer of archrival Miller Brewing Co. It was a safe bet, MacDonough knew, that ab's steely CEO would not take the news well.

As it turned out, the meeting with Busch was "very professional," Mac- Donough says. People close to the negotiations say Busch even tried to top Miller's offer to prevent MacDonough from fleeing the AB family. Family, of course, was precisely the problem, however. After 15 years at AB, it was increasingly clear that MacDonough's career path was blocked by the frothy rise of Busch's 28-year-old son, August A. Busch IV -- now in charge of the Budweiser brands and odds-on favorite for the top spot. As MacDonough joked to friends later, had the elder Busch asked, "What'll it take to keep you?," Mac- Donough would have had only one reply: "Adopt me."

FRAYED RELATIONSHIP. MacDonough, 48, could end up wishing he had explored that option. The Miller he took over faces a world of problems. On Nov. 6 -- three weeks after announcing a 42% plunge in third-quarter earnings, to $55 million -- the brewer said it would lay off 400 production workers on top of a 10% cut in salaried employees. Beer shipments, too, hit the skids, sliding nearly 9% during the quarter in the biggest drop since 1983. The Lite brand, which represents about half of Miller's $4 billion in sales, continues to lose ground in a bruising battle with Bud Light and Coors Light. And Miller's relationship with its wholesaler network has frayed badly, partly over charges that the brewer has forced distributors to take on too much inventory.

It is the fervent hope of Philip Morris Cos., Miller's parent, that MacDonough can revive the flailing brewer. He was tapped for his marketing expertise, which was never the strong suit of his predecessor, Warren H. Dunn. An attorney who came up through Miller's legal department, Dunn remains CEO. But MacDonough will direct day-to-day operations. "Jack knows the innermost secrets of Anheuser-Busch," laments Michael J. Lamonica Sr., a former Anheuser executive who is now an AB wholesaler. "That's why he's such a valuable commodity." Anheuser-Busch officials would not comment for this story.

Before MacDonough took over Anheuser's international marketing in early 1991, he ran marketing for ab's core U.S. beer unit. He served on the elite committee that sets overall strategy for the brewer and was widely considered one of ab's smartest executives. During the 1980s, a period when AB sealed its industry dominance, MacDonough was one of the generals. He helped to design the much-lauded strategy of flooding local markets with promotions ranging from Bud-sponsored chili cook-offs to sponsorships of professional sports teams.

The question is whether he can stop ab's relentless advance now that he plays for the other side. In the past decade, Miller's market share has stayed flat at 22%, while Anheuser has advanced smartly, from 33% to about 46% (chart). With twice the size, Anheuser has twice the efficiency in everything from production to advertising. MacDonough insists he has a promise from Philip Morris that he will be given the resources to compete. But some doubt Philip Morris' commitment. "Miller is in deep trouble," says industry consultant Robert S. Weinberg. "The wild card is how tight with the pencil Philip Morris will be."

A native Midwesterner, MacDonough was a young recruit to marketing. His late father, who spent his early years touring as a vaudeville comedian, headed a predecessor of Chicago's Tatham EURO RSGC ad agency. After earning an MBA at Stanford University, MacDonough became a marketing manager for General Mills Inc. In the mid-1970s, he scored his first big coup when he introduced the nation to granola bars.

In 1977, he jumped ship to join AB just as the beer wars were escalating. MacDonough stood out among a group of young turks and was soon promoted to manage the aging Budweiser brand. His two-pronged strategy: While "This Bud's For You" targeted Bud's core blue-collar crowd, MacDonough also went after younger drinkers with offbeat ads on shows such as Saturday Night Live.

THRILL-SEEKER. He also fostered an ultra-aggressive style that became known in the industry as guerrilla marketing. When the now-defunct Jos. Schlitz Brewing Co. won sponsorship of the 1980 Olympics in New York's Lake Placid, for instance, MacDonough took the offensive. For two months before the games, he ran Budweiser ads featuring the U.S. bobsled team, making it seem as if AB were the Olympic sponsor. The ads were a hit for both AB and MacDonough, who at one point hopped a ride on the team's bobsled. "I'm probably the only person at Lake Placid ever to go down the run in a suit," he jokes.

The truth is, MacDonough is a thrill-seeker at heart. During the late 1970s, before he married his current wife and had a son, he tooled around St. Louis in a shiny Lotus and frequented the city's club scene. Bar owner Paul Runyon, an old friend, says: "He had the first hot tub I ever saw." MacDonough has mellowed, but the lanky exec still entertains himself by flying stunts in an acrobatic airplane.

He'll need some quick maneuvers at Miller -- especially when it comes to Lite. Competition among low-calorie beers has knocked 5% off Lite's share since 1990. And poor advertising -- including Leo Burnett Co.'s widely derided slogan, "It's It. And That's That" -- hasn't helped. MacDonough insists he won't dump Burnett, which won the $100 million Lite account last year. But the troublesome situation will test what many say is his biggest strength: inspiring agencies to excel. "He's able to communicate strategic thinking to creative people and bring the advertising to life," says Ron Bess of Bayer Bess Vanderwarker.

Needless to say, MacDonough is on the spot. He jokes that jumping from Anheuser to Miller may not be "as risky as bobsledding or acrobatic flying." But if the beer wars intensify, Miller's new president may recognize the sensation. It might feel something like skidding along ice at 60 miles an hour.

    Before it's here, it's on the Bloomberg Terminal.