Wednesday, December 21, 2011

Cool Yule #6! Beer Books for 2011: Under The Influence

Cool Yule! #6

Cool Yule! 12 Beer Books for 2011

Not a list of the dozen best-of-the-best books about beer of 2011, but, rather, my list of 12, some personal delights, others of unique or deserved merit. Some of the books have been published this year, while others are worthy chestnuts. I'll reveal my selections between 20 November and the Winter Solstice New Year.

So ... cue six geese-a-laying.

Cool Yule Beer Book for 2011

Under the Influence:
The Unauthorized Story of the Anheuser-Busch Dynasty

Peter Hernon and Terry Ganey
Hardcover: 461 pages
Publisher: Simon & Schuster (US 1991)
ISBN: 0671690248

The Busch family was dysfunctional: from shootings to philandering to poor decisions making to losing the family jewels. All of us —consumers, distributors, competitors —believed that these guys were on top of the beer world. For quite a while their company, Anheuser-Busch, was indeed. But now, they aren't, and it isn't.

From humble beginnings in the mid-19th century, Anheuser-Busch built itself into an American totem, as American as 'apple pie.' How could America itself, to stretch the point, be sold? But it was, and to a foreign conglomerate, InBev, itself cribbed together from smaller breweries in South America and Europe.

Under the Influence follows the story from the progenitor, Adolphus Busch, a German emigre to St. Louis, Missouri, who, in 1861, married the daughter of Eberhard Anheuser, a wealthy brewer, and thus entered the brewing business. Even with his quickly growing success, however, Busch
preferred wine to his own beer, which, according to one published account, he called "dot schlop."

Under the Influence ends with the stewardship of August Busch III, who in the 1970s into the early 1990s, achieved the dream of controlling the majority of U.S. beer sales. Anheuser-Busch achieved a 52% market share. That was its pinnacle. The loss of independence would come rapidly. points out:
Since its release in 1991, this New York Times Best Seller has become increasingly popular among beer enthusiasts, and has become very difficult to find as it has gone out of print despite ongoing demand.

But if you can find it, it's a valuable read.

At a recent seminar on the state of the craft beer business in Washington, D.C., one person asked the panel why the American mainstream breweries became non-viable, and then, with Anheuser-Busch's sale in 2008, lost any American ownership. There were the usual tropes offered: lack of flavor, lack of quality, etc. The questioner was dissatisfied, and persisted with a followup question. "But if they had been so successful, why did they fail?" Find some of the answers, in this book.

Midwestern breweries, such as Anheuser-Busch, eventually eclipsed the larger East Coast breweries, because, in part, the Midwesterners were forced to ship greater distances and open more breweries. Population was concentrated in the large cities on the East Coast; breweries there did not have to be as aggressive for a customer base. Anheuser-Busch just was more ruthless in its marketing and sales than its competitors ... and luckier.

The level of family dysfunction, of profligacy, of seemingly arbitrary decisions at home and work is a shock to read about and often flies in the face of the company's ruthless success. But Anheuser-Busch did manage to market itself amazingly well. The brewery became the beer brand of America. Budweiser was an icon of he nation recognized throughout the world.

As to the quality of the beer, so often derided by 'craft' beer makers and drinkers?

The science and technology of modern breweries was developed by the large breweries, and especially so, after Prohibition, when under-capitalized breweries couldn't keep up. To deny the quality of the mainstream breweries —whether one likes the flavor (or lack thereof) or not— disregards the technology and business of beer. And small breweries today ignore quality control and sales to their peril.

For the story afterward —the seemingly doomed leadership of August Busch IV and the consequent buy-out of the brewery by InBev, a Belgian-Brazilian conglomerate, in 2008— read Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon, by Julie McIntosh, a reporter for the Financial Times. It's available from and as a Kindle eBook.

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

Julie McIntosh
Hardcover: 408 pages
Publisher: Wiley (2010)
ISBN-13: 978-0470592700

The sale of AB occured during a perfect storm of business circumstance. In 2008, the financial situation in the U.S. had begun to seriously crash, but the contagion had not spread completely: InBev was able to secure the 50 billion plus dollars in financing it needed.

Despite controlling 52% of all beer sold in the U.S., Anheuser-Busch was experiencing declining sales by 2008. The real growth was in foreign beer markets, and in the U.S., craft beer, although that, at 5% of the market, was small beer, so to speak. The company had just begun to conduct serious cost-cutting and to investigate foreign mergers and acquisitions, but it was too little too late.

There are two real shockers to this story. The Busch family only owned 3% of the shares. Thus, when InBev tendered its offer of $65 per share, CEO Auggie Busch IV and his retired father could not put up a stock fight.

The second shock is that A-B had actually devised a plan to remain independent. A-B owned 50% of Modelo in Mexico. They offered to purchase the remaining 50% of the stock with A-B stock, and install Carlos Fenandez Gonzales, CEO of Modelo, as the new CEO of a re-christened Anheuser-Busch Modelo, headquartered in St. Louis. August Busch IV wold have been forced out, although still on the board.

But ... AB's board rejected the plan, even after asking for it, and even after the closely-held Modelo board had agreed to it. Ms. Martin's implication is that the fix was in. Some anonymous sources suggest that several AB board members privately signalled to Carlos Brito of InBev that $70 per share would cinch the deal. InBev quickly agreed, and Anheuser-busch was American owned no more. InBev recognized the power of the Budweiser brand name however. It attached the name to the new company —Anheuser-Busch Inbev— and kept brewing operations and headquarters in St. Louis (even though some offices and managerial positions were moved to New York City.

The book concludes with Auggie Busch IV's sad personal decline after the sale.

None of the former great names of American brewing exist as brewing entities or as American-owned breweries. Coors is owned by Molson. Miller is owned by South African Breweries. Pabst is a marketing company, most of tis beers brewed by SAB/Miller. There is no more Schlitz, Shaefer, Stroh's, National Brewing. And, as of 2008, Anheuser-Busch InBev was (and still is) the world's largest brewery. That means that Yuengling —the oldest brewery in the United States (1829) and still family owned— is now the largest American-owned brewery in the United States, or it's Boston Beer, the publicly-owned maker of Sam Adams. That depends on what stats you're looking at.

A man walks into a bar. "Do you have any Belgian beers," he asks? "Sure do," the bartender replies. "How about a nice cold Bud Light?"

Cool Yule for 2011, so far:
  • #7: Designing Great Beers
  • #8: The Best of American Beer & Food
  • #9: Beer & Philosophy
  • #10: Evaluating Beer
  • #11: Windows on The World
  • #12: The Story of Brewing in Burton on Trent


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