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Sat December 22, 2012
The 'Bitter' Tale Of The Budweiser Family
Originally published on Mon December 24, 2012 9:05 am
For nearly 150 years the world-renowned beer manufacturer Anheuser-Busch was a family company. It was passed from father to son for five generations. A couple drops of Budweiser were put onto the tongue of each first-born son before he even tasted his mother's milk. That trademark brew, Budweiser, is known to the world as the "King of Beers," and the Busch family wasn't too far from American royalty.
William Knoedelseder, the author of Bitter Brew: The Rise and Fall of Anheuser-Busch and America's King of Beer, spoke with NPR's Guy Raz about the family and their company.
The story begins in 1857 when a young man, Adolphus Busch, came to St. Louis from Germany. With his meager inheritance — he was one of 22 children — he bought a brewery supply company. Making beer was something that he knew how to do, and could do well.
Ebert Anheuser, on the other hand, couldn't. He was one of Busch's buyers and was a wealthy soap manufacturer who'd come into owning a failing brewery. The Bavarian Brewing Co. produced such horribly tasting beer that "people would spit it back across the bar at bartenders," Knoedelseder says.
Eventually Busch took over the company, changed the recipe, changed the name, and Anheuser-Busch was born.
Busch took that failure of a local brewery and turned it into a national brand of beer. "He was vertically integrated before there was a name for it," Knoedelseder says. Busch was the first person to pasteurize beer so that it would stay fresh on cross-country trips. He also owned the company that built the railroad cars that transported his beer. He owned the company that made his bottles. He even owned a coal mine that fired his plant.
The brand took off. Beer became the national drink, and Anheuser-Busch was reeling in the profits, "They were selling a million barrels a year, which was just unthinkable back then," says Knoedelseder.
Soon, though, prohibition, not alcohol, was on the lips of Americans. Busch launched pre-prohibition ad campaigns to try to curb the movement. Taglines read, "Budweiser Spells Temperance." He claimed the beer was a "light, happy" beverage.
When meeting the president at a political function, Busch launched into a 30-minute lecture about the dangers of the impending prohibition. He would stop at nothing, but his worst nightmare was upon him. His only product was now illegal to sell in the United States.
His son, August Anheuser-Busch, or August A., floated the company through prohibition by selling the raw ingredients instead of the full product. "It wasn't illegal to sell the ingredients, it was illegal to assemble them," Knoedelseder explains. "Their yeast profits saved the company. That was the cash engine that was able to keep the company open."
Prohibition wiped out most of Anhesuser-Busch's competition, but as Knoedelseder points out, August A. was able to keep 2,000 people working and they were poised to forge ahead as the leading American manufacturer of beer — now legal!
For two more generations, ambitious Busch sons pushed the company to international beer power, but it wasn't without trial. The next 75 years were mired in family struggles for power, unexpected deaths, drug addiction, alcoholism and more.
In 2008 Anheuser-Busch was a $19-billion-a-year Fortune 500 company and still operating as a family business. August IV, the great-great-grandson of Aldolphus, and then-CEO, showed up to speak at a beer industry convention but he couldn't seem to get a word out. "He's stoned, he's loaded, he cannot deliver the speech," Knoedelser says. Just a few weeks later, it all came crashing down.
InBev, a company that had not existed four years before, moved in for a hostile takeover, and with that, the reign of the Busch family was over.
GUY RAZ, HOST:
It's WEEKENDS on ALL THINGS CONSIDERED from NPR News. I'm Guy Raz.
The Busch family of St. Louis is about as close to royalty as it gets in that city. For nearly 150 years, the beer they produce, Budweiser, was known as the king of beers. But the story of the Busch family reads almost like a Shakespearean drama full of intrigue, betrayal and eventually collapse.
Bill Knoedelseder tells that story in his new book about the family. It's called "Bitter Brew." And in it, he traces the origins of Anheuser-Busch back to the middle of the 19th century and its founder, a young German émigré named Adolphus Busch.
BILL KNOEDELSEDER: He was an 18-year-old German immigrant from a large family in Germany - one of 22 children. He arrived in St. Louis in 1857. He stepped off a steamboat and took the first steps toward building what would be the world's largest brewery. At the time, there were 40 breweries in St. Louis.
RAZ: Forty in St. Louis.
KNOEDELSEDER: Forty in St. Louis. That's kind of how it was.
RAZ: And St. Louis was a particularly German city.
KNOEDELSEDER: And they did what they knew how to do. They built breweries. At the time, America was a whiskey drinking country, and they built breweries to satisfy the thirst of those people.
RAZ: So here you have this young man - he's in St. Louis - he knows how to brew beer. He's got a little bit of money, and, as you write, he buys a brewery supply business first.
KNOEDELSEDER: Right. And he supplies one very bad brewery called Bavarian Brewery, which was owned by Anheuser - who was a soap manufacturer - who had acquired it, the brewery, in a defaulted debt. And he was not a brewer. And he had this brewery there that made terrible-tasting beer. And, you know, the people would spit it back across the bar, you know, at the bartenders.
And he married Anheuser's daughter, and Anheuser sort of brought him in. He had - Anheuser had built up a debt to him, so he, in exchange for Busch forgiving the debt that he owed - for supplies and stuff like that - he cut him in with shares. Adolphus proved to be a very smart salesman, a very good salesman, and he sort of took over the running of the brewery and the rest is history.
RAZ: I mean, that became Anheuser-Busch.
KNOEDELSEDER: That became Anheuser-Busch. One of the first things he did was get a good recipe for beer, which he acquired through a friend from some monks that made this particular beer in Bohemia in this region called Budweis, and he then proceeded to outthink everybody else. At the time, you brewed beer, it was all consumed locally. I mean, the brewing, it was almost hyperlocal. It was by neighborhood because you couldn't store beer very long.
And he read about the pasteurization of wine and thought, hmm, I bet you could do that with beer. And he was the first person to pasteurize beer so that he could store it longer, he could put it on railroad cars. He thereby built the first national brand of beer. He figured out that, well, you know, I should own the company that builds the railroad cars. I should own the company that makes the bottles that we're putting it in.
He bought a couple of coal mines on the other side of the river from St. Louis that would fire his plant, and he was vertically integrated before there was a name for it.
RAZ: This company was run by five generations of Busches, starting with Adolphus. And as anyone who reads your book will discover, it reads like a Shakespearean tale, a pretty unbelievably scandalous story throughout this book.
KNOEDELSEDER: Right. Exactly.
RAZ: But I want to start by asking about his son August Anheuser. He was the guy who kind of really made this company explode.
KNOEDELSEDER: He saved the company - he kept the company afloat during, you know, Prohibition, World War I and the Depression, which is just astonishing that you could do that. Very few others lasted, and their yeast profits saved the company. That was the cash engine that kept the company open during the Depression. He was able to keep 2,000 people working at a time when the breweries in St. Louis was wiped out. So when Prohibition ended then, they still had some money. They were in a good position, and all the competition was gone.
RAZ: His son, one of his sons, known as Gussy, he sort of pushed his older brother aside to take over the company. He became the sort of legendary, dominating figure for the next, what, half-century.
KNOEDELSEDER: Oh, yeah. He was the - he is the beer baron, and he was also a really larger-than-life character - outspoken, crude, coarse, colorful, funny, outrageous, and I think probably the best beer salesman who ever lived. And he basically came out of World War II determined that he was going to put them back on top and they were going to be the number one beer company in the world, and he did that.
RAZ: Gussy's son, August III, I guess it's sort of an understatement to say, clashed with his father to the point where he basically stages a coup to oust his father and take over the company. What happens?
KNOEDELSEDER: Well, what happened was is that he wanted to modernize the company. And his father, who was getting old, was fighting against it. And he was an authoritarian, old school guy, and he didn't believe in corporate planning or computers and all that. He was always, you know, you react fast to things and you get it done, and he went by the seat of his pants.
So August III, as he rose up in the ranks, a very bright guy, was at loggerheads with his father all the time. The Third, as he was referred to - August III - staged a coup where he convinced the board to vote against his father.
RAZ: The final, sort of, chapter to the Busch family and the beer empire is with August Busch IV. He is the son of The Third. The opening scene in your book actually takes place at the end of that timeline. And he - August Busch IV is late to a meeting. He's supposed to address several hundred Anheuser-Busch distributors. He's late. Eventually, he shows up, and what happens?
KNOEDELSEDER: It's the middle of the afternoon, and he finally shows up after keeping people waiting for half an hour or so, and he's stoned. He's loaded. He cannot deliver the speech. And he had to be led off the stage. And they gave some sort of story that he was taking some sort of, you know, cold medication or something like that, you know, which nobody believed. And it was like three, four weeks later that the hostile bid for takeover of Anheuser-Busch began.
RAZ: This is by InBev.
KNOEDELSEDER: By InBev, the - a company that had not existed four years before.
RAZ: That's an incredible story. William Knoedelseder's new book is called "Bitter Brew." It's about the history of Anheuser-Busch and the Busch family. Bill, thank you so much.
KNOEDELSEDER: Thank you very much. Transcript provided by NPR, Copyright National Public Radio.