From Soap Suds to Suds

How Anheuser-Busch became the largest brewer in the world

By Sanford Wexler U.S. subsidiary, has worked at the company for over 30 years. One out of two sold in the While Busch III is no longer chief U.S. is brewed by Anheuser-Busch of executive, as chairman of the board he s e v i

h St. Louis. The family-run company remains heavily active in continuing to c r A e t traces its origins to the 1860s, but build and grow the world’s largest a r o p r

o 2002 marks the first time in the com- brewer that produces over 100 million C h c

s pany’s 142-year history that its presi- barrels of beer annually and has $12.9 u B - r e

s dent and chief executive will be a non- billion in yearly sales. “My job is u e h

n family member. This past July, August my hobby, my hobby is my job,” A e h t

f “Auggie” Busch III, 65, who became Busch III once said. “I happen to o y s e

t chief executive in 1975 and is the like it an awful lot, and I thrive on it. r u o

C great grandson of the company’s I love competition.” Top: pocketknife, silver, founder, , was suc- ca. 1890 – 1900. ceeded by Patrick T. Stokes, 59. Adolphus Busch Bottom: Budweiser “Bud Girl” Stokes, who was previously president The year 2002 also marks the 150th wallhanging, 1970s. of Anheuser-Busch Inc., the brewer’s anniversary of the founding of the

Financial History ~ Winter 200230 www.financialhistory.org St. Louis brewery where one of Amer- Civil War, Busch joined his father-in- Busch was far from satisfied with ica’s greatest business success stories law’s brewery as a salesman. The highly the beer that his brewery was turning began. The Bavarian Brewery, which ambitious and enterprising young out. He reportedly called it “dot eventually became the Anheuser - Busch would transform the local St. schlop.” Busch was always on the Busch brewery, was established Louis brewery into a thriving national lookout for ways to brew a better tast- in 1852 in St. Louis. brewery. By 1869, ing beer. In fact, studying the In 1860, Eberhard Busch had sold industry was his favorite pastime. Anheuser, a prosper- his brewery supply ous St. Louis soap business and had and candle manufac- bought out the The Birth of Budweiser turer, invested in the interest of Anhe- Around 1875, Busch teamed up with a bankrupt brewery. user’s partner. St. Louis wine and liquor importer, The brewery was Busch was now a Carl Conrad, who “discovered” a renamed the E. full partner with smooth, light tasting beer that was Anheuser & Co. his father-in-law. produced at a Bohemian brewery in Bavarian Brewery. the town of Budweis, then part of Shortly after taking Germany and now in the Czech over the failing brew- Republic. (Today, the town is called ery, Anheuser was Ceske-Budejovice). In collaboration introduced to Adol- with Conrad, Busch developed the phus Busch, a 22- formula for a new beer that imitated year-old German the light beer that was brewed in the town of Budweis. What made this immigrant who ran s e v i h

c brew so unique was its natural car- a brewery supply business. Anheuser r A e t

a bonation, which was based upon an

was one of his customers. r o p r Busch, the son of a wealthy o ancient European brewing process C h c

s called kraeusening. The beer is fer- merchant and landowner, arrived in u B - r e

s mented a second time just when it

New Orleans in 1857 with little u e h n is beginning to age. This brewing money and without any home or A e h t

f process results in a distinctive, frothy- employment. What he did have was o y s e t barrels and barrels of daring ambi- r headed pale golden beer. u o c

s In 1876, the beer that would tion. He traveled up the Mississippi o t o h River and eventually settled in St. P become the world’s most popular Louis, where he found work as a Top: Adolphus Busch brand — Budweiser — was introduced. “mud clerk.” Busch inspected steam- Bottom: August A. Busch Jr. The name Budweiser was coined boat manifests and sampled cargo. by Busch because he felt that despite When his father died, Busch drew its Germanic sounding name, it could upon his inheritance to establish a For his time, Busch was undoubt- be easily pronounced by Americans, brewery supply company. He already edly an innovative beer promoter. As and therefore appeal to both Ameri- knew something about serving up he traveled from tavern to tavern, he cans and German immigrants. Bud- pints of beer, as he once worked left a “calling card” that gave cus- weiser soon became the beer of choice in a brewery that was partly owned tomers a memorable and long-lasting for beer drinkers who preferred the by his father. impression of his St. Louis brewery. It light brew to the heavier, sweet The young Busch fell in love was a small jackknife with the E. beers that were on the market. with one of Anheuser’s three unmar- Anheuser & Co. logo on the handle. Budweiser would ultimately become ried daughters. Adolphus Busch and At the end of the blade was a tiny pic- America’s first national beer. At the Lilly Anheuser were married in ture of Adolphus Busch that could turn of the century, some one million March of 1861. The ceremony was a only be seen by looking through barrels of Budweiser was being double marriage affair of which a peephole. produced each year. Busch’s brother, Ulrich, married “Our business,” Busch repeatedly When died in Lilly’s sister, Anna. told his father-in-law, “is not just 1880, Busch became president of the In 1864, following a stint as a cor- making beer. No. Making friends St. Louis brewery, now called the poral in the Union Army during the is our business.” Anheuser-Busch Brewing Association.

www.financialhistory.org31 Financial History ~ Winter 2002 Nationwide Marketing Campaign Besides being the first brewer to suc- cessfully preserve and bottle beer, Busch was also the first to market beer on a grand scale. The nationwide, pro- s e v

i motional campaign for Budweiser h c r A

e included print and billboard advertis- t a r o

p ing and a vast array of novelty items, r o C

h such as Anheuser-Busch playing cards, c s u B -

r bottle openers, corkscrews, calendars, e s u e

h match boxes, pocket knives, post cards, n A e h

t and various signs and posters. f o y

s On barroom walls across the coun- e t r u o try, a poster of the attractive “Bud- C weiser Girls” became a familiar sight. The famous, panoramic reproduction of the 1876 Little Big Horn massacre, entitled “Custer’s Last Fight,” which Busch commissioned artist F. Otto Becker to paint, was hung on tavern walls from coast to coast. Distributed s s e e v

v to over a million saloons, it became i i h h c c r r A A one of the most recognizable paintings e e t t a a r r o o

p in the nation. p r r o o C C

h To Busch, marketing of bottled h c c s s u u B B -

- beer was what made his product r r e e s s u u e e

h stand out from all of his competitors. h n n A A e e h

h “It is the cream of our business,” he t t f f o o y y

s once declared. s e e t t r r u u o o The vast brewing empire that Busch C C had created made him one of the Top: Sponsorship advertisement, “Ken Murray Show,” 1850s. Lower Left: Advertisment, “Life at it’s best,” ca. 1933. nation’s richest men. The young Ger- Lower Right: Advertisement, “Now…a new carton,” ca. 1936. man immigrant who arrived in the U.S. with only a few marks in his A few years later, Carl Conrad, who Budweiser to be bottled and distrib- pocket lived a lavish lifestyle. He had was Busch’s Budweiser partner and uted to beer drinkers way beyond the several homes, including an ornate, also the bottler and distributor for St. Louis area. Millions of people Gothic mansion in St. Louis, a country Anheuser-Busch, went bankrupt. throughout the country were soon estate, two palatial homes in Busch bought out Conrad’s interest popping open bottles of Budweiser. Pasadena, , a hop farm in and acquired the trademark rights When artificial refrigeration was Cooperstown, New York, two villas in to the beer. introduced in the 1880s, Busch took Langenschwalbach, Germany, and full advantage of this technological also a private railroad car. When he Pasteurization breakthrough. Previously, the brewery died at the age of 75 in 1913, his & Refrigeration stored its inventory in small caves, wealth was estimated at some $60 where the beer was naturally cooled In the days before pasteurization, beer million. Adjusted for inflation, Busch’s for three to four months before it was usually only lasted for a few days. fortune would equal around $600 packaged and shipped out. Budweiser Drawing upon the preservation meth- million today. ods that were perfected by Louis beer was refrigerated in stock houses Pastuer, Busch applied pasteurization at the St. Louis brewery as well as in The Dry Years in the brewing process at the St. Louis railroad cars and in ice houses that August A. Busch, Sr., the eldest son of brewery. This made it possible for were located along railroad lines. Adolphus and Lilly Busch, succeeded

Financial History ~ Winter 200232 www.financialhistory.org his father as president of the company and lead the giant brewery through the dry days of Prohibition, which took effect in 1920 and lasted for 13 years. While many breweries went out of business due to Prohibition, Busch, Sr. managed to keep Anheuser-Busch afloat by turning to non-beer prod- ucts, such as soft drinks, ice cream, s e v and bakers’ yeast. It also expanded i h c r A

into producing truck bodies and com- e t a r o mercial refrigeration units. p r o C

To quench the thirst of millions of h c s u B - beer drinkers, the company produced r e s u e a malt-derived non-alcoholic beverage h n A e h called Bevo. The name was derived t f o y from “pivo,” the Bohemian word for s e t r u beer. At first, Bevo was selling some 5 o C million cases a year and bringing in Saurer Co. Budweiser truck, ca. 1911 – 1917. about $6 million in profits. But the imitative beer product soon lost its himself in the heart, apparently driven the world’s largest brewing company. appeal when the American public to suicide by the intense pain from Under his stewardship, beer sales turned to spiking soft drinks with ille- heart disease, gout, and dropsy. The climbed from 3 million barrels in gal alcohol or patronizing the neigh- Busch who successfully steered the 1946 to more than 34 million in 1974. borhood speakeasy. company through its most trying Another first that Busch, Jr. set in place On April 7, 1933, swigging down a times was succeeded by his oldest son, was being the first beer company to bottle of beer or having a shot of Adolphus Busch III. Under his short advertise on the then unproven whiskey was no longer illegal. To but productive reign, Busch III medium of network television. In the celebrate the repeal of Prohibition, increased Anheuser-Busch’s beer pro- 1950s, Anheuser-Busch began market- August Busch, Sr., drew upon his duction to more than 3 million barrels ing its flagship brand, Budweiser, to childhood memories of the giant, a year. Fifty-five-year-old Busch III millions of television viewers. Every elegant horses that once pulled died in 1946 from cardiac arrest and generation of Americans is familiar Budweiser beer wagons through the cancer of the stomach. with the memorable Budweiser com- streets of St. Louis. The return of legal mercials — from “Pick A Pair,” “When quaffing was heralded by two antique August A. Busch, Jr.: you say Bud, you’ve said it all,” and Anheuser-Busch wagons that was the recent “Whassup?!” pulled by an eight-horse hitch of The Master Showman Busch, Jr. was an avid baseball fan. Clydesdales. One paraded up New August A. Busch, Jr., who was nick- In 1953, he realized one of his lifetime York City’s Fifth Avenue and delivered named “Gussie,” succeeded his dreams with the purchase of the St. the first case of post-Prohibition beer brother, Busch III, and headed the firm Louis Cardinals. Angry over how the to Alfred E. Smith, the former New for the next 28 years. Known as a Brooklyn Dodgers, who had Jackie York governor who was a tireless master showman and a persuasive Robinson, were trouncing every team, champion for repeal. The other wagon salesman, Busch Jr., who had a voice he asked his team’s management how rolled down Pennsylvania Avenue that was like the roar of a hoarse lion, many black players were being hired. and delivered a case of Budweiser to was determined to rise above all of When he found out the number was President Franklin D. Roosevelt at his competitors. “Being second isn’t zero, Busch, Jr. roared, “We sell beer the White House. Since this dramatic worth anything,” he once told The to everyone!” The next year, the St. day that celebrated the end of Prohibi- Times. Louis Cardinals had a black first base- tion, the eight-horse hitch of Clydes- Busch, Jr. pioneered the building of man. (In 1996, Anheuser-Busch sold dales has become as famous as the a nationwide network of 10 breweries the St. Louis Cardinals). Budweiser brand. that were located in areas of large and By the 1960s, Anheuser-Busch was Nearly a year after Prohibition’s increasing populations. He trans- no longer simply a beer company. It repeal, 68-year-old August Sr. shot formed the St. Louis brewery into had broadened its business holdings continued on page 37

www.financialhistory.org33 Financial History ~ Winter 2002 Events Calendar

Events Calendar WINTER 2003 JANUARY 24 Guided tours of the American Numismatic Society’s “Drachmas, Doubloons, and Dollars” exhibit on the history of money. Federal Reserve Bank of New York, 33 Liberty Street, 1 pm. Call 212-908- 4694 for reservations. Free. FEBRUARY 26 Lecture and book signing with Willard S. Randall, author of Alexander Hamilton, A Life (HarperCollins, January 2003). New York University Stern School of Business, 44 West 4th Street, NYC. 7 pm. Free. 21 Guided tours of the American Numismatic Society’s “Drachmas, Doubloons, and Dollars” exhibit, see above. 28 “High Notes” exhibit closes. MARCH 18 “The Nobel Prize: Celebrating 100 Years of Creativity and Innovation” opens in the Museum gallery. 28 Broadway, NYC. 212-908-4110.

Soap Suds to Beer Suds continued from page 33 into family entertainment arenas, such Aggressive growth and strategic Expansion: An Eyewitness History. a Busch Gardens in Tampa, . In marketing is the hallmark of Busch Both books are published by Facts On 1989, it further expanded in the lucra- III’s remarkable legacy. In the age of File. He can be reached at Sanford- tive, theme park industry with the market segmentation, he reinvented [email protected]. purchase of SeaWorld. Adolphus Busch’s credo: “Making friends is our business.” The brewer Sources August A. Busch III: expanded its affiliation with a vast Cancelada, Gregory. “Busch III Retires as Quality Comes First array of sporting events, including Industry Giant after Building Brewer baseball, football, basketball, boxing, August A. Busch, III, the great grand- into Behemoth.” St. Louis Post-Dis- son of the company’s founder, suc- hockey, golf, tennis, soccer, fishing, patch, June 30, 2002. ceeded his father, Busch, Jr., as chief sailing, rugby, auto racing, jogging, “King of Bottled Beer,” Fortune, July 1935. and even round-the-world ballooning. executive of the company in 1975. Martin, Wilbur. “Here Comes the King — Busch III set his sights far beyond He had his first swig of Budweiser of the Beer Business,” Nation’s Busi- the borders of the U.S. He successfully soon after he was born. “The first ness, November 1978. Vol. 66, No. 11; established a global presence. Today, thing I ever tasted, before mother’s pgs. 66 –73. milk, was beer,” he told The Los Anheuser-Busch has breweries in the O’Hanlon, Thomas. “August Busch Brews Angeles Times. “It was five drops of and China and Up a New Spirit in St. Louis.” Fortune, Budweiser from an eye dropper when licenses the production of Budweiser January 15, 1979. I was five hours old.” in Canada, South America, Europe, Plavchan, Ronald Jan. A History of Like his father, he literally worked and Asia. FH his way up from the ground floor. Anheuser-Busch, 1852 – 1933. Arno He swept floors and cleaned beer tanks Sanford Wexler is a New York-based Press: New York, 1976. in the St. Louis brewery. “When you freelance writer. He is the author Welles, Chris. “Anheuser-Busch: Tough finished a shift there,” he told Fortune of The Civil Rights Movement: An Approach Made it King of Beer.” Los magazine, “you knew you were a man.” Eyewitness History and Westward Angeles Times, December 15, 1985.

www.financialhistory.org37 Financial History ~ Winter 2002