Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer Part 14

For the TV commercials, D'Arcy and Roarty's marketing team hit upon the idea of using Miller's own advertising against it by casting some of Miller's ex-jocks in spoofs of their famous "Tastes Great, Less Filling" spots. In addition to Mickey Mantle, they signed up former Miami Dolphin linebacker Nick Buoniconti, former heavyweight boxing champ Joe Frazier, former Yankees pitcher Catfish Hunter, and former NBA star Walt Frazier for a series of thirty-second spots that featured malaprop-p.r.o.ne comic Norm Crosby interviewing the "five athletic supporters" about why they had switched from Lite to Natural Light (they each signed a sworn affidavit that they picked it over Miller Lite in a blind taste test).

Roarty debuted the campaign during the broadcast of NCAA basketball finals, commercial high ground previously held by Miller but now captured at considerable cost by A-B, which also had acquired sponsors.h.i.+p rights for the 1984 Los Angeles Olympics and twenty of twenty-six major league baseball teams.

A spokesman for Philip Morris carped that the "Switch" ads were typical of A-B's copycat creativity: "What do you expect? The 'This Bud's For You' campaign was stolen from our 'Miller Time' spots. It violates every rule of marketing."

Roarty could barely contain his delight at the turnabout. "Sports figures are America's heroes, and [Miller] was wise enough to use ex-athletes," he told a reporter, smiling impishly. "But how long can you let them get away with that? You couldn't let them give the impression that they owned the franchise, could you now?"

In October 1980, August made good on his 1962 promise to Denny Long that they would rise to the top together, promoting his former a.s.sistant to president of the company. Two months later, A-B's two top dogs stood with Gussie as a group of plant employees and executives gathered in the racking room to witness the ritual bunging of the fifty millionth barrel of beer produced that year.

"This is the big one," Long said of the gold-plated barrel specially made for the occasion. "In the 128-year history of Anheuser-Busch there has never been a greater moment than this," said August, who had made sure his father was present for the ceremony. The old man smiled proudly as August used a gold mallet to pound the rubber plug into the commemorative barrel of Budweiser. It took him three tries, and he got a face full of foam in the process, but he wiped it off with a handkerchief and quipped, "Best thing in the world to take a bath in." Looking frail, Gussie didn't address the gathering, but he joined in enthusiastically when the crowd broke into in a ragged version of the old German drinking song "Ein Prosit" (A toast).

There was plenty to drink to. A-B's record 50 million barrels increased its lead over Miller to nearly 13 million barrels and brought its market share to 27.8 percent. Miller's operating profit dropped 20 percent, and after five years of gobbling up market share, the company posted a mere .03 percent gain, to 20.7. The fast-moving freight train had slowed to a crawl.

August already was looking past the war with Miller. He'd recently completed his long-desired corporate reorganization, which included making Anheuser-Busch, Inc., a wholly owned subsidiary of a Delaware-based holding company called Anheuser-Busch Companies, Inc. The new structure would "more clearly communicate the increasingly diversified nature of Anheuser-Busch business," he said. His plan had always been to diversify the company in much the same way his grandfather August A. had done during Prohibition, expanding further into related areas where A-B had developed expertise-theme parks, resorts, leisure-time activities, real estate, nonalcoholic beverages, snack foods, and baked products. The experience of competing with the much larger and more diversified Philip Morris made it all too clear that being the biggest brewer was not enough to guarantee the company's continued success and independence. With Denny Long and Mike Roarty in place, he felt it was now time to focus his full attention on a "diversification initiative," through which he hoped to lead the company to heights his ancestors never imagined.

Never one to be outdone, eighty-two-year-old Gussie announced an initiative of his own. On March 15, 1981, he revealed to forty guests at a private dinner party in St. Petersburg, Florida, that he had secretly married again. The fourth Mrs. Busch was Margaret Snyder, a sixty-four-year-old widow who was the first woman ever named to the A-B board of directors and who had been his secretary for sixteen years.

13

"TELL ME I'M A HORSE'S a.s.s"

In the early summer of 1981, Andy Steinhubl, A-B's vice president of brewing and chief brew master, was sitting in a meeting with the wholesalers' panel, a representative group of the company's distributors that conferred with home office executives several times a year. The panel was August's creation, and it was a good thing, but at times the meetings grew tedious. This was one of those times.

Steinhubl could tell that August was bored, too, because he'd left his seat and was pacing around in the back of room, his mind on something other than the presentation. Suddenly, August was standing next to him, leaning down and whispering. "I want you to make me up a recipe for something we will call Budweiser Light," he said, and immediately went back to pacing.

After more than five years of watching Miller dominate the light beer market, August finally was ready to commit the Budweiser name-with all of its prestige and tradition-to the fight. When the meeting ended, Steinhubl walked over to where August was sitting and placed a handwritten note on the desk in front of him.

"What's that?" August asked.

"It's your recipe."

"Already?"

"Yeah; it doesn't take long."

"When can I taste it?"

"I can have it for you by the first of September."

Steinhubl knew he was in for a rough few months. He may have written the recipe, but ultimately August was going to decide the taste of Budweiser Light. And until August tasted what he liked, he would make Steinhubl's life difficult.

Much of the company lived in constant fear of August's taste buds. He functioned as A-B's unofficial taster-in-chief, relentlessly sampling the output of all nine plants. "And if he tasted something he didn't like, then everyone down the line was definitely going to hear about it," said one longtime senior executive.

Each brewery had a tasting room where a panel of five to seven men from the brewing and malting operations sat at tables every afternoon and, along with the brew master and his staff, sampled and took notes on their plant's product, as well as that of other plants. Among other things, they tasted for the specific attributes of each brand, checking for any variations among the breweries. It was no easy task ensuring that 100 million barrels a year tasted consistent and uniform to the consumer.

Of course, a good taster could discern deviations that the average beer drinker would never notice. It was said that members of Andy Steinhubl's master tasting panel, which met in Room 220 of the Old Brew House, could sample a bottle of Budweiser and identify which plant it came from by the characteristics of the water that went into it.

August was considered one of the company's best tasters, if not the very best. He could tell whether a beer was five days old or fifteen. "There were very few who could taste like he could," said one former executive. "He was a genius at it," said Denny Long. "He set our standard."

He also enforced it. Plant managers outside St. Louis never knew when he might drop down out of the sky in one of the corporate jets, but whenever he did, they knew there would be a command performance in their tasting room that day. Gathering as many as twenty people, he would call for a particular batch from the cooler, say, Tuesday's Budweiser from the Newark brewery, and they would all take several sips and make notes. Then he'd ask what they had noticed. A wrong answer would be to have missed something he'd written down.

The tasting went on constantly wherever August went. At the end of a long day on the road meeting with wholesalers, he would press one or more a.s.sociates into service in the hotel bar, announcing with almost childlike enthusiasm, "Let's taste some beer," and the sipping and quizzing would begin. If he happened to be in Denver, where there was no A-B plant, and he felt the need to taste that day's Budweiser from Houston, then samples would be flown to him.

"He truly enjoyed the process," said Mike Brooks, a former vice president of sales. "And by virtue of the fact that he did it with such commitment, it said to everyone in the company that quality was the most important dynamic of the business, because the chairman was on it like white on rice."

Serving as a roving one-man quality control department, August incessantly scanned bottles and cans for the "date codes" that identified not only where the beer had been brewed but also the date and the fifteen-minute interval during which it had come off the production line. Because the taste of beer deteriorates over time, A-B had a strict policy that any beer older than 105 days had to be pulled from distribution, removed from retail shelves, and destroyed. And woe betide the local wholesaler if August ever came upon an expired freshness date.

"Everyone knew that at any time they could get a phone call telling them that August had found a problem with their beer and they had to be available to discuss their involvement," said Brooks.

Andy Steinhubl remembers the call he got from August at home on a Sat.u.r.day morning a few days before Christmas.

"I had some beer from St. Louis last night, and it was absolutely terrible," August said. "So I want you to come out here to the farm, and on the way I want you to stop at four different places and pick up a six-pack of Budweiser, and we will taste it together."

Steinhubl schlepped the beer thirty miles out to Waldmeister, but neither man could find anything wrong with it. "The beer I had the other night didn't taste like any of these," August said as Steinhubl began looking through the beer cooler under the bar. He pulled out a couple of bottles from the brewery in Columbus, Ohio. "Let me see that," August said, checking the date codes and finding, to his horror, that the beer was four months old. He turned to his wife in the kitchen and asked, "Ginny, where did this old beer come from?" Without even looking in his direction, she replied, "You know I never touch your beer, dear."

August knew then that he had allowed his own stock of beer to go beyond its expiration date. "You must think I'm a horse's a.s.s," he said to Steinhubl.

"No, I don't."

"Yes, you do. I want you to tell me I'm a horse's a.s.s."

"No, I am not going to do that."

"You can't leave here until you tell me I'm a horse's a.s.s."

Realizing that August probably would not let him leave, and that this was his awkward way of apologizing for wasting three hours of his time on a weekend, Steinhubl gave in. "Okay, you're a horse's a.s.s."

August smiled broadly and said, "Good."

Steinhubl and his brewing team set to work creating Budweiser Light in a small pilot brewery behind the Brew House. They were shooting for a crisp, full-bodied beer with a "flavor impact" that built up quickly and then "finished clean," meaning it would leave no aftertaste in its wake. It would be brewed naturally and contain only five ingredients-water, rice, barley, hops and yeast. In other words, it would be pretty much like Budweiser, but with 60 fewer calories. And therein lay the difficulty.

To make a lower-calorie beer, it is necessary to reduce the amount of sugar produced in the mas.h.i.+ng process, which in turn reduces the amount of alcohol produced in fermentation. Most beer drinkers are unaware of the direct correlation between calories and alcohol content. Steinhubl expected that naturally brewed Budweiser Light would have an alcohol content of 3 percent at best, compared to Miller Lite's 3.2 percent, which was achieved with the help of non-natural chemical additives. The disparity, though slight, could put Budweiser Light at a compet.i.tive disadvantage, since "less alcohol" was hardly a selling point to the college crowd.

Because alcohol enriches the combined flavors of hops and barley, less alcohol in the brewing process can result in less taste. Along with the entire A-B hierarchy, August thought Miller Lite tasted thin and watery, so Steinhubl's recipe for Budweiser Light increased the amount of hops in the mix to give it more flavor. Hops contribute a bitter taste that plays against the sweet taste of the barley malt. The relative bitterness, or "hoppiness," of beer is measured numerically by what are known as "international bitterness units." The higher the IBU number, the more bitter the brew. At the time, most European beers had an IBU between 20 and 45. Budweiser had an IBU of 15. For Budweiser Light, Steinhubl b.u.mped the IBU to 17, which was potentially problematic because August didn't like bitter. In fact, he claimed that whenever he tasted Budweiser that contained a slightly elevated level of hops, he experienced a throbbing sensation in his forehead that he called "head feel."*

Veterans of tasting sessions with August had seen head feel. It registered on his face as he squinted his eyes, furrowed his brow, and began rubbing his forehead with his forefinger and thumb. But only one other person, Denny Long, ever felt the sensation. "Maybe it was because he trained me to taste," said Long, who described the feeling as "the onset of a sinus headache right above the eyebrows." Still, Long said he only experienced head feel once or twice. And most of August's fellow tasters thought head feel was a figment of his imagination. They'd roll their eyes and exchange looks whenever he brought it up, and joke behind his back: "Yeah, I've had head feel, boss. It's called a hangover."

After a month of tinkering with the Budweiser Light recipe, Steinhubl and his crew had the first sample brew ready for the tasting panel. The consensus in Room 220 was that it still needed a little tweaking, but they were close.

"Overall, pretty good," said August. "Nice body, smooth, with a good flavor impact that leaves nothing hanging in your mouth." Then came the note Steinhubl was expecting. "But it tastes a little bitter. What's the IBU?"

"Seventeen," Steinhubl admitted.