Book Review: The Hostile Takeover of Anheuser-Busch

Dethroning the King:
The Hostile Takeover of
Anheuser-Busch, an American Icon

By Julie MacIntosh
Wiley, 408pp, $27.95

The Busch family, erstwhile owners of the largest brewery in the U.S., used to feed their male heirs five drops of Budweiser within hours of their birth. This ritual suggests the family took its beer very seriously, but it also hints at a unique sense of child-rearing. And while Julie MacIntosh's Dethroning the King is ostensibly about the beer business, it spends just as much time unraveling the twisted dynamics of a family in which fathers and sons have battled for generations.

August Busch III—known simply as The Third—seized control of Anheuser-Busch from his father, Gussie, in a boardroom coup in 1975 and ruled the company imperiously for the next 27 years. The Third trusted no one, particularly his own son, August IV—aka The Fourth. Before taking the top job in 2006, The Fourth endured a two-decade-long apprenticeship, much of which, according to MacIntosh, consisted of being belittled by his dad. "They didn't communicate much," she quotes one executive as saying, "unless you call communicating...getting your ass chewed."

Industrial brewing is driven by economies of scale, and by 2000 the business was dominated by a handful of international conglomerates. By the end of The Third's reign, Anheuser-Busch's independence was in serious jeopardy. Although the company could have jumped ahead of the trend and become a global brewer in the '90s, The Third eschewed the chance to buy Mexican-owned Grupo Modelo outright and preferred to concentrate on the U.S. market. This decision left The Fourth—and the Anheuser-Busch board—with limited options when InBev (BUD), the giant Belgian-based brewer, launched a successful takeover bid in 2008.

MacIntosh argues that it was a tragedy for an American such as Budweiser to pass into foreign hands, yet her evidence suggests otherwise. The Busches were hardly vigilant stewards of their shareholders' money, particularly since the family owned only 4 percent of the company. They indulged themselves and their executives with a lavish stream of company-paid $1,000 dinners and a fleet of Dassault Falcon corporate jets with a staff of 20 pilots. An avid pilot himself, The Third often flew to work in his helicopter, landing on the rooftop at One Busch Place in St. Louis and trotting a floor down to his office—all to finesse his phobia of elevators. Under The Third, Anheuser-Busch grew to control just over half the U.S. beer market, but it also suffered from his lack of interest in the wider world. "He was not well traveled or well read," says a former colleague. "He was extremely provincial in his viewpoints. Everything was St. Louis and hunting and fishing and the brewery."

The Third's lack of interest in the burgeoning beer markets outside the U.S. border might not have been so problematic if he'd had a more impressive heir waiting to transform the company. The Fourth, however, was no one's idea of CEO material. As a student at the University of Arizona, he flipped his Corvette and crashed in the small hours of the morning, killing a 22-year-old woman in the passenger's seat. The Fourth was found, MacIntosh writes, injured in his townhouse a few hours later. The author explains that he wasn't charged with manslaughter because prosecutors couldn't prove he was driving the car or demonstrate that he was under the influence of alcohol at the time. The Fourth went on to lead a private life that resembled a beer commercial, replete with speedboats, hot tubs, and bikini-clad women.

In between partying, he moved into marketing at the family firm. After an initial failure with Bud Dry—and against the resistance of his father, who couldn't fathom how an ad could work without the classic "pour" shot of beer filling a glass—he championed the inexplicably successful campaign in which three frogs croaked out the syllables "Bud-weis-er." The Fourth struck gold again with the blockbuster "Wassup?!" campaign.

When he finally landed the top job, though, U.S. beer sales were slowing and new competition was coming from better-tasting craft brews and globe-spanning companies such as InBev and SABMiller. If Anheuser-Busch, with its only-in-America attitude and luxurious executive lifestyle, epitomized old-style brewing, InBev was the new face of the industry. The Belgian company was run by penny-pinching Brazilians who flew economy and stayed in modest hotels. After on-again, off-again efforts to strike a deal with Grupo Modelo, The Third betrayed his son and, along with the board, agreed to the buyout.

MacIntosh makes much of the loss of an American institution, but even she doesn't seem totally convinced. What lingers after finishing this book isn't any great outrage at the natural course of globalization but rather sadness at how a great company can be undermined by family bickering.

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