CORPORATIONS: The Baron of Beer

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At the turn of the century, the most famous painting in the U.S. was Custer’s Last Fight, a huge canvas across which hordes of infuriated redskins hurled themselves at General George A. Custer and the last of his 7th Cavalry at Little Big Horn. The man who made the picture famous was a St. Louis brewer named Adolphus Busch,* co-founder of Anheuser-Busch and inventor of Budweiser beer. Reproduced on outdoor posters and hung in countless saloons, Custer’s Last Fight became an amazingly successful advertisement. The company filled 1,000,000 requests for copies in 50 years, while Budweiser sales rose steadily.

Nothing could be more appropriate to the $2.5 billion U.S. brewing industry today than Custer’s Last Fight. Never has there been such whooping, shooting and scalping. Reason: at a time when nearly everything else in the U.S. economy is bubbling and foaming up, beer sales are going down. Thus, every U.S. brewer, from the Big Three national giants—Anheuser-Busch, Schlitz, Pabst—on down to the smallest local brewery is on the warpath, each trying to scalp the others in the fight for sales. At the top of the heap, and battling to stay in the No. 1 spot, is Anheuser-Busch’s President August Anheuser Busch Jr., grandson of Co-Founder Adolphus. Like his grandfather, “Gussie” Busch is a salesman with a flair for advertising and promotion, combining dawn-to-dusk energy with dusk-to-dawn good fellowship. Says Busch: “This is the year that we are going to separate the men from the boys in the brewing industry.”

George Washington Brewed Here. To beer drinkers and nondrinkers alike, the drop in beer sales is surprising. Ever since the Pilgrims landed at Plymouth Rock, with “our victuals much spent, especially our beer,” beer has been one of the staples of U.S. life. Revolutionary War soldiers got a daily ration; George Washington had his own small home brewery at Mount Vernon. To the sun-baked fisherman, the lawn-mowing suburbanite, the baseball fan, beer has always been the symbol of inexpensive relaxation. This week, as July ushered in the height of the beer-drinking season, Americans were pouring upwards of 100 million bottles a day.

Nevertheless, in 1954 the U.S. consumed but 83 million bbls.—4,000,000 bbls. less than the alltime peak in 1947. In terms of per capita consumption, the dip is even sharper; beer sales last year were down almost 15% from the wartime high of 18.7 gals, per person. And beer is not the only beverage industry hit: hard liquor sales have slumped nearly 30% from the postwar high, to 1.18 gals, per capita. And sales of soft drinks are also down.

Cars & Calories. No one knows why. Some brewers say that they themselves have brought on the slump in beer by preaching moderation. Others feel that it is the natural result of changes in U.S. living habits. Once, the saloon was the workingman’s club, where he put away large quantities of the poor man’s drink. But now, with more people making more money than ever in history, the workingman is much less inclined to idle over a glass of suds. He has too many other things to occupy his leisure hours: auto trips, sports, do-it-yourself hobbies, home improvement. Moreover, motorists are increasingly conscious of the danger in drunken driving. Other reasons for the decline in beer drinking: reducing diets, the fad for low-calorie soft drinks, rising beverage taxes, which have helped to make the poor man’s drink expensive.

Whatever the reason, U.S. brewers are trying every trick of the trade to boost their lagging sales. To keep ahead of the pack, Anheuser-Busch’s President Gussie Busch has taken over the sales job personally, is kicking off a record $14 million advertising campaign to plug his beer; to tempt the TV-watching home market he has brought out new four-fifths-of-a-quart bottles, plus 16-oz., 10-oz. and tiny 7-oz. “ladies’ size” bottles. As a running mate for premium Budweiser, the company has developed a brand-new, cheaper (5¢ to 10¢ a bottle) beer called Busch Lager, is now test-marketing it in St. Louis and Texas in the hope of taking sales away from competing nonpremium local beers.

Milwaukee’s Schlitz, which once loaded its beer with vitamin D, is spending millions on TV advertising, has brought out 16-oz. cans to tempt the home market, and a new, specially treated paper cup to make beer taste better at ball games. Milwaukee’s Pabst also has half-quart sizes, is pushing an “Ice-Pak” beer cooler for the summer trade and a new “four-pak” carton, has even set up a special “gustametric” laboratory to test beer flavor on a scientific basis by charting the tastes of a dozen beer drinkers. Together, Pabst and Schlitz have spent $35 million for new West Coast breweries to match, the $25 million plant Anheuser-Busch opened last year in Los Angeles. Throughout the industry, every brewery is scrambling to fortify its market against the national giants. No one dares relax.

“Love Your Work.” August Anheuser Busch Jr., fourth in a 90-year family line to head the brewery, does not fear this competition; he thrives on it. Trim (5 ft. 10 in., 164 lbs.), greying, hard as an oaken keg at 56, Gussief Busch operates on a simple formula: “Work hard—love your work.” Whether at his baronial suburban home or his main brewery sprawling alongside the Mississippi River in South St. Louis, he spends most of his waking hours selling beer. He rarely talks in a normal voice; he sounds more like a hoarse lion. On his way to appointments, he lopes in a half-walk, half-trot, arms pumping like a sprinter, while he bellows orders to an aide panting along behind. He often loses his bowstring temper. But recently he has learned to temper his tantrums with humor. “All right, you guys,” he roared at a recent company meeting when everyone started clamoring at once, “let me blow my top first. Then you can blow yours.”

Carpets & Parties. To sell his beer, Busch whistle-stops around the U.S. in the most luxurious private railroad car on tracks—an 86-ft. stainless-steel, wood-paneled, deep-carpeted traveling office with a sitting room, four conference rooms, kitchen, bar, an ample supply of Budweiser, and accommodations for eleven. For his trips, he used a twin-engined DC-3 airliner, at one time even drove around in a super de luxe company bus fitted out with kitchen, bedrooms and offices. On long business trips Busch himself loved to spell the driver at the wheel, go careering down the highway, eyes alight with pleasure. But now he has passed on both plane and bus to lesser Anheuser-Busch executives, the plane because he hates flying and the bus because, with his new railroad car, he no longer needs it.

On his railroad trips Busch is apt to pull into a siding unannounced at night, make a whirlwind tour at 2 a.m. through one of his breweries to make sure that everyone is on his toes. At every stop he invites his wholesalers on board for a drink of beer (or whisky) and a pep talk.

For those he misses, Busch lays on baronial parties in his St. Louis home. One of the biggest was a mammoth affair last summer, after Budweiser sales in St. Louis had dropped sharply. Busch invited every wholesaler, retailer and saloonkeeper in the area to his home—11,000 in all.

For eleven nights running, the guests arrived in batches of 1,000. Busch, with his handsome third wife Gertrude, 28, made sure to pump every hand, pass a few pleasant words with each. “When midnight came,” Busch recalls, “my hand would be so swollen I couldn’t move my fingers.” Every night he soaked his hand in Epsom salts until the swelling went down; on the eleventh night the soaking took two hours. But when St. Louis’ Budweiser sales shot up 400%, Brewer Busch was satisfied.

Bison & Tessie. The house and farm where Busch entertains are unique in contemporary America. The house is a 34-room red brick French Renaissance chateau set on 220 acres of rolling Missouri countryside outside St. Louis. Among the formal gardens and cool blue ponds are eight buildings; a 350-yd. portion of the mile-long fence is made entirely of Civil War rifle barrels. From his bedroom window Busch looks out on one of the world’s finest animal parks; he can see bison, North African mountain sheep, great European red stags, rare rapier-horned Indian black bucks.

The air-conditioned stables house 17 sleek hackney horses, rawboned hunters and jumpers, all champions, with 600 trophies to their credit since 1950 alone. Up at sunrise, he often takes his white mare Miss Budweiser over the 5-ft. jumps. Sometimes he hitches up a coach-and-four from his $1,000,000 collection of antique carriages, and rides over his acres, occasionally stopping to toot a brass-throated hunting horn to startle the deer. For his merriment Gus Busch even has his own private zoo: a camel, a trio of performing, cowboy-suited chimpanzees and a stubborn baby elephant (3½ years old, 750 lbs.) named Tessie.

As Busch strides to the stables each morning, he bawls at the top of his lungs: “Tessie! Tessie! Where are you?” Tessie immediately trumpets back her greeting, and the two engage in a bellowing match as he tries to put Tessie through her tricks until finally Tessie gives in, obediently does a jig, salutes, rolls over and retrieves a handkerchief.

Syrup & Clydesdales. Six months a year, Busch throws open his estate to touring groups of children and adults (32,000 last year), shows them his treasures, dispenses free soda pop, cookies and ice cream smothered in Anheuser-Busch corn syrup. Anheuser-Busch also spends $550,000 annually breeding Clydesdale draft horses; Gus Busch sends them around the U.S. hitched to red Budweiser wagons, promoting beer in dry farm areas where Prohibition sentiment is still strong. His latest plan: to cross tiny Sicilian donkeys with even tinier Shetland ponies, thus develop the world’s smallest mules to plug a 7-oz. “ladies’-size” Budweiser bottle.

Two years ago, Busch scored his biggest advertising coup by buying the St. Louis Cardinals baseball team when the Cardinals’ owner, Fred Saigh, was jailed for income-tax evasion. Ostensibly, Busch bought the Cardinals to save them for St. Louis. But he makes no bones about the fact that the team helps him sell more Budweiser. When sportswriters needle him about his commercialism, Busch snorts that Colonel Jacob Ruppert owned the New York Yankees for 30 years while he also owned Ruppert brewery, and that many of the 16 major-league team broadcasts are sponsored by beer companies.

“Mean Stories.” Busch first seized on the Cardinals as a chance to have some fun and recapture his youth. At the first spring training, he arrived in a squeal of brakes, driving his bus, hopped out, donned a uniform and joined the practice. But now Busch spends much less time with his disappointing team. Last year the Cardinals finished sixth; this year they are fighting to keep out of seventh place. After investing $7,800,000 on buying the team and improving the ballpark (changed from Sportsman’s Park to Busch Stadium), Busch desperately wanted a winner. When he did not get it, out went Manager Eddie (“The Brat”) Stanky, in came Manager Harry (“The Hat”) Walker, a hustling player-manager from the Cardinals’ Rochester farm who, Busch hoped, would give the team—and Budweiser sales—a lift. As for rumors that Busch is about to sell out, he purples at the mere suggestion, denies the rumors as “dirty, mean stories,” hints that his competitors planted them to embarrass him.

Busch seldom interferes with the running of the Cardinals, leaves the job to the manager and Anheuser-Busch Vice President Richard A. Meyer. His policy on baseball is the same as on brewing. He never interferes with the brewmasters. Says he: “Their only boss is the beer. All they have to do is make the beer—we’ll sell it.”

6,000 Years of Beer. Anheuser-Busch’s brewing process is no secret. Beer is one of the oldest of all drinks. The ancient Babylonians, Egyptians and Greeks made it, and the Romans found beer in the farthest reaches of their empire. But in modern days, not even an Englishman could like the ancients’ sweet, flat brews. Actually, the first true dry beer came to the U.S. with immigrant Germans in the 1840s. In German fermentation tanks the yeast worked at the bottom of the brew rather than at the top, as in ale, thus producing the lighter, less alcoholic “lager,” i.e., “stored” beer, that has become the U.S. favorite.

Barley & Rice. Anyone can (and millions did, during Prohibition) brew a batch of beer. But its uniform mass production is a highly technical manufacturing process. At Anheuser-Busch, the brewmasters claim that Budweiser and its higher-priced companion beer Michelob (sold only on draught) have only the finest ingredients, e.g., imported hops, rice instead of oily corn grits, and two-row “Hannchen” barley, whose two rows of kernels in the head are bigger, more even, and contain more starch and less moisture than the more prevalent six-row barley kernels.

From start to finish, the brew, made in relatively small 630-bbl. batches, is constantly checked for taste and uniformity. As the ground-up barley and rice are boiled, the hops and yeast are added to ferment the beer and give it its characteristic, slightly bitter tang. Both temperature and time must be controlled to the minute. The immense lagering cellars, where the fermentation goes on for 21 days, must be airtight to keep out all airborne bacteria. Finally, Anheuser-Busch treats its beer with a time-honored process that no other major national brewer uses. In glass-lined tanks floored with sterile beechwood chips, the beer is injected with a freshly yeasted brew known as “krausen,” which starts a secondary, month-long fermentation to carbonate Budweiser naturally. Some brewers argue that krausening is an expensive, old-fashioned process which does little good. But Anheuser-Busch’s brewmasters insist that it results in a fresher, better-tasting beer.

Most beer drinkers believe that kegged beer tastes better than bottled beer,* and bottled beer better than canned. Kegged beer is better because it is fresher, is not pasteurized and contains less air. (Air helps beer to oxidize, thus become stale). Bottled beer also contains less air than canned beer, which to many drinkers has a metallic taste. In Budweiser’s $1,000,000 laboratory, one of the biggest in the industry, 225 technicians are currently at work, some of them on a new can-crimping machine that will cut down on the air, keep canned beer as fresh as bottled brew. Another project: a new pasteurization process so that Michelob can be bottled.

“Ah, This Is It.” But with all the new techniques, everything still depends on the brewmaster. Each afternoon at 4 p.m., Anheuser-Busch’s Brewmaster Frank H. Schwaiger, 46, a big, granite-faced Bavarian, walks to a special room at the brewery where a table is lined with unmarked glasses. Some hold the day’s Budweiser, some Michelob, some specially air-expressed samples from Budweiser breweries in Newark and Los Angeles, some competitors’ beer. Schwaiger sniffs each glass, holds it to the light to check the color, drinks deeply in great, man-sized gulps, never sipping or swirling the beer in his mouth the way whisky or wine tasters do. “Ah,” he will say quietly, “this is it,” or, “No, no, the malt, the malt.” Then he will order any one of a thousand slight changes to keep the various Anheuser-Busch brews uniform. After two hours of tasting. Brewmaster Schwaiger heads for home in a rosy glow of beer and good cigars. Says he: “And I think then that perhaps I have the very best job in all the world.”

Beyond the brewing, Anheuser-Busch faces complicated pricing and distribution problems. The company charges its wholesalers $2.46 per 24-bottle case, yet it makes only 14¢ profit. The rest of the average $5-per-case retail cost of Budweiser goes for retailers’ and wholesalers’ markups, steep state and local taxes. To conform with varying local liquor laws, Anheuser-Busch has to use some 600 different labels, packages and bottle caps.

The Family. In his zest, his super-salesmanship, his devotion to beer, Gussie Busch follows in the well-marked footsteps of his beer-baron ancestors. The brewery is still controlled by the founding families. Together with St. Louis’ Anheuser family, the Busch clan owns 65% of Anheuser-Busch’s 4,816,218 outstanding shares; Gussie himself owns 22%, worth some $20 million, and is paid a salary of $150,000 a year. Eberhard Anheuser, the 74-year-old grandson of one of the founders, is chairman of the board, but Gussie, grandson of the other founder, is the man in command. Says he: “The thing I want to do more than anything else in the world is run this business in a way that would make my grandfather and my father and my brother proud of me.”

More than anyone in the family, Gussie Busch is like Adolphus Busch, the son of a prosperous Mainz, Germany wine merchant, who emigrated to the U.S. in 1857. Settling in St. Louis, Adolphus Busch got into the brewing business by marriage. In 1861 he married the 17-year-old daughter of Eberhard Anheuser, a prosperous St. Louis soap manufacturer who had taken over a small South Side brewery after its owners went broke. When young Adolphus got back from the Union Army, Eberhard Anheuser asked him to run the beer company. He could hardly have found a better man.

A good salesman, with training in chemistry and physics, Adolphus Busch increased the brewery’s annual production from a trickle to 25,000 bbls. within eight years. He also began brewing Budweiser after a tour of Europe. According to the apocryphal story, Adolphus got the secret formula of the famed brew of a monastery. Actually, he developed the formula with Carl Conrad, a St. Louis restaurateur, tried to match the light beer he found in the Bohemian town of Budweis. He felt that it would become more popular in the U.S. than the heavy beer then being made. He was the first big brewer to perfect refrigerated railroad cars, thus opening vast new markets in the South, installed the first pasteurization process for beer. In 1879 the name Busch first appeared in the company title, and Adolphus was well on his way to pushing beer sales past the 1,000,000-bbl. mark.

By the time his grandson (Anheuser-Busch’s current president) was born in 1899, Adolphus Busch was a legendary figure in St. Louis. At his 20-room brick mansion he lavishly entertained such guests as Sarah Bernhardt and Teddy Roosevelt; he bought homes in Pasadena, Calif. and Cooperstown, N.Y., bought himself a manor on Germany’s Rhine, had himself painted by Sweden’s Anders Zorn. Traveling to New York in his private car, he passed out gold coins on all sides. Adolphus Busch could afford it. When he died in 1913, he left his family an estate valued at $50 million and a brewery turning out beer at the rate of 1,600,000 bbls. a year.

The Dark Days. His son, August Busch Sr., took over the presidency, steadily boosted sales even through World War I, when anti-German feeling ran high in the U.S. He built the chateau on his estate to move his children out to the country, where, as Gussie Jr. says, “a kid just couldn’t have had more.” Friends remember young Gussie as difficult for other children to get along with, recall that he was hot-tempered and impatient with dogs and horses. Says Gussie himself: “Let’s just say I was the original Peck’s Bad Boy.” He went to Fremont Public School in St. Louis, then tried Smith Academy, a private school. “Without doubt,” says Busch, “I was the world’s lousiest student. I never graduated from anything.” Instead, Gussie Busch learned his lessons at the brewery, where he first went to work in 1922, just two years after Prohibition had staggered the industry.

While Gussie scrubbed vats, his father tried to hold the company together and fought for survival and repeal. Anheuser-Busch turned from beer to a variety of other products: yeast, refrigeration cabinets, bus and truck bodies, corn and malt syrup, and a variety of soft drinks, including a chocolate soft drink named Carcho. The losses were staggering. Nevertheless, the company stayed in business. Young Gussie used the time to climb through the ranks. By 1924 he was brewery superintendent; in 1926 he was named general manager and sixth vice president; eight years later, when Prohibition was finally repealed, he was ready to fill the jobs of first vice president and boss of the entire brewery division.

Brewer Busch vividly remembers the night of April 7, 1933. “The crowds were singing and having a wonderful time,” he recalls, “and at midnight every factory in St. Louis blew its whistle. Then the trucks rolled out of the gates and took Budweiser to bars all over St. Louis. People were backed all the way out to the curb waiting for their turn at the bar.” Gussie, his father and his older brother picked one of the first cases off the bottling-plant line and sent it air express to President Franklin D. Roosevelt as a heartfelt token of thanks. Ever since Gussie Busch has been a Democrat (“I’ll be damned if I’ll bite the hand that fed me”), thus giving some latter-day verisimilitude to Horace Greeley’s remark, circa 1860: “I never said all Democrats were saloonkeepers. What I said was that all saloonkeepers were Democrats.”

Though the fight was won, it had taken too much out of Gus’s father. Suffering from high blood pressure, gout and a bad heart, August Busch Sr. shot himself to death on Feb. 13, 1934. In accordance with family tradition, Gussie’s older brother Adolphus III was elected president, and from 1937 to 1945 he kept the company at the top of the industry. Gussie Busch went off to World War II in 1942, spent most of his time helping to break tank-production bottlenecks at Detroit’s automotive center, came out in 1945 as a colonel with the Legion of Merit. In 1946, when his brother died of cancer, Gussie stepped into the president’s job. But no sooner was he in command than Busch found himself and his company in deep trouble.

The New Leaders. During the war, when demand soared way above production, Anheuser-Busch’s sales division had become lazy. With peace and competition, Milwaukee’s hustling brewers shot ahead. By the end of 1946, Pabst was on top, though only by a bare 20,000 bbls. Busch was stunned. The next year he pushed sales and production up to 3,608,738 bbls. But still Anheuser-Busch skidded into fourth place. A new leader, Schlitz, took over and kept on top for six straight years.

From 1947 to 1952 Busch rode his company as if it were a balky jumper, forced it over hurdle after hurdle. Overruling his conservative directors, Busch kicked off a $50 million expansion program for the St. Louis brewery to boost capacity 2,630,000 bbls. to 6,230,000 annually, rammed through a $34 million project for an East Coast brewery at Newark, another $25 million for the West Coast brewery. Production rose enough to put Anheuser-Busch in second place, right on the heels of Schlitz. Then, in 1953, Budweiser broke through. With the new Newark brewery capable of turning out an additional 1,840,000 bbls. a year, Anheuser-Busch turned out an alltime record of 6,711,222 bbls., 1,500,000 bbls. more than its nearest competitor, Schlitz. One of the big helps was Milwaukee’s eleven-week beer strike, which cost his Milwaukee competitors an estimated 2,500,000 bbls. But Busch kept ahead in 1954, too.

Worst Mistake. Busch has also made some mistakes at Anheuser-Busch. One of the worst was boosting the price of beer in 1953 by 15¢ a case wholesale, a price that in many instances translated itself into a $1.20-per-case boost to U.S. beer drinkers. As a result, Anheuser-Busch, while it still beat out Schlitz by 400,000 bbls. last year, slumped 800,000 bbls. from its 1953 peak. Worst of all, most of the loss was to less expensive local beers, a market that Busch has not yet been able to win back. Characteristically, Busch took the full blame. Said he to his stockholders at the annual meeting: “We made what was probably the worst mistake in the company’s history. As your president. I take sole responsibility.” The upshot: the stockholders so admired his frankness that they asked only a few questions and adjourned.

Today. Busch presides over an industrial giant with a net worth that has grown to nearly $400 million, sales of $216 million, and profits topping $12 million in 1954. At full capacity, his three breweries across the U.S. can produce 8,990,000 bbls. of beer annually, more than any other brewer. How 1955 will turn out is anyone’s guess. For the first three months Schlitz held a slight lead, but now, with Budweiser sales soaring, Busch flatly predicts that his beer will win going away.

On his recent whirlwind tour to visit Budweiser wholesalers around the U.S., Busch bet every man he met a brand-new hat—900 in all—that he could not top his local sales quota for the year. So far, the challenge seems to be paying off. For May and June, Budweiser’s wholesalers jumped their sales 5% over 1954 levels. Says Anheuser-Busch’s President Gus Busch: “By the end of the year, I’ll either have a houseful of hats or I’ll be the biggest hat buyer in the country.”

*Busch bought the Cassily Adams painting for $35,000, and turned it over to a lithographer to reproduce. The lithographer redrew most of it, adding dozens of new figures and buckets of gore (i.e., three dying soldiers being scalped) to what was once a fairly restrained, stilted scene. †A long-used diminutive that Busch barely tolerates. Most people who refer to him as “Gussie” call him “Gus” to his face. *Bottled beer, says Gussie Busch, should not be poured by dribbling it down the side of a tilted glass. The bottle should be tipped almost straight up so the beer surges into the glass, thus forcing the carbonation up through the beer rather than letting it escape, as it does when beer is poured slowly.