 under the collar. Hadn’t they already been slashing costs for a year to make the company more competitive? And what did the Busch family think about all this? Didn’t they control Anheuser-Busch?
Guys, I’m down here and I’m trying, but I’m telling you I don’t know anything, Muhleman said, looking out over a roomful of suspicious stares.
There had long been an unspoken assumption that it would be impossible for another company to buy Anheuser-Busch without the approval of Anheuser’s domineering patriarch, August Busch III. August III, who was often called The Third, was no longer CEO, having stepped down from active management six years earlier. His imposing presence on the company’s board of directors, however, was still seen as a significant deterrent to would-be buyers.
The notion that Anheuser-Busch was actually controlled by The Third and the rest of the Busch family, though, was a commonly held misperception. The Busches were all bark and no bite from a financial perspective. They owned only 4 percent of the company—less than billionaire investor Warren Buffett, Anheuser’s second-largest shareholder. The family still wielded a great deal of influence, and August III’s son, 43-year-old August A. Busch IV, was now the company’s chief executive, but they had nothing in their wallets to back themselves up.
They were just the titular heads of this company, said one former executive. They didn’t have control. It was like a monarchy in Great Britain. These guys really didn’t have the authority to do anything.
The people of St. Louis, where Anheuser-Busch had been based since it was founded, could be forgiven for forgetting that. Residents there were emotionally tethered to Anheuser-Busch despite how antiquated and paternalistic the company and its ruling family had started to look in comparison to the world’s other leading corporations. It wasn’t just August III and August IV whose names and faces wall-papered the town. There were so many Busches in the area that an online search of the city’s phone directory for the last name Busch elicited an exclamation from the computer: Whoa! Over 100 results found. Some Busches were more notable—or notorious—than others. All who were part of the brewing clan knew what it felt like to be important. They’ve always considered themselves as part of a special class of people, and they were treated as such, said one former Anheuser-Busch executive. They were treated like royalty.
When Anheuser’s top executives arrived at the soccer park that morning in June, they brought with them an electric current of fear and apprehension. They were scheduled to meet with chief executive August IV to put the finishing touches on a plan to slash and burn as many costs as possible. Their goal just a few months earlier had been $500 million, but with InBev now breathing down their necks, it might have to be double that. The whole world was watching to see whether InBev would make a move, and this was the best option Anheuser had for keeping its investors happy.
They had never been known for cost-consciousness. For decades, the aviation-loving Busch men and other staffers had hopscotched around the country on the company’s own fleet of sleek, leather-outfitted Dassault Falcon corporate jets. It got to the point for a while where even the wives of strategy committee members hadn’t flown commercial in years. To keep Air Bud running smoothly, the company had its own flight operations department with a staff of 20 pilots, plus mechanics and other workers, all operating out of a spotless private hangar at the Spirit of St. Louis Airport.
When they weren’t flying private, Anheuser staffers flew first-class. I want my employees at the front of the bus everywhere they go, August III used to say when he was CEO. They should feel very important. First-class flights were essentially company policy, and the perk stretched far down the pecking order. During The Third’s tenure, the company even bought first-class tickets for young staffers who traveled back and forth between St. Louis and top business schools in Philadelphia and other cities.
Trips to New York meant stays at the glitzy Pierre hotel and $1,000 dinners. Visitors to St. Louis were treated to suites at the Ritz-Carlton. Still, the money Anheuser-Busch spent wasn’t all for the home team’s personal enjoyment—it also spent copious amounts of cash on its breweries, its theme parks, and even its Clydesdale horse operations to ensure that it had the best beer-making technology, the cleanest bathrooms, and the freshest paint jobs and flower arrangements available. For the 27 years he served as CEO, all of these costly efforts were undertaken to meet The Third’s exacting standards, and many Anheuser executives were proud to work for a company that cared so much about quality.
The soccer park itself was a money pit. Anheuser-Busch helped build it in the early 1980s to house local youth players, and later bought it outright, spending two and a half years upgrading the facility to open it up to collegiate and professional teams. Because it was constructed on low ground, it was prone to flooding—and preventing and draining those floods was expensive. The irony was just too much. The Busches, who were avid duck hunters, would at points deliberately flood property on their massive farms to create the right environment for fowl during hunting season. However, the Anheuser—Busch—owned soccer park, which flooded on its own naturally, had to be pumped dry at significant cost.
August IV, who was known in aptly royal terms as The Fourth, had been trying to right Anheuser’s listing ship since becoming CEO a year and a half earlier in December of 2006. These weren’t easy changes to make after decades of excess, especially with his father still on the company’s board of directors. It was going to require real effort from his entire team.
Each executive showed up that day with a mental list of things he or she could offer up. Some were responsible for large segments of the company, like its brewing operations, its entertainment unit, or its giant marketing division. They weren’t accustomed to being asked to take a hacksaw to their budgets. Still, this was not the time for idle contributions. They weren’t panicked. They hadn’t actually seen a bid from InBev. Even if one never materialized, however, it seemed likely that they would now spend the next several years fighting back one assault or another, whether from other rivals or from shareholders. The company needed to get leaner and meaner, and the group had two days to figure out how.
They filtered into a large conference room at the soccer complex and grabbed eggs and pastries from the breakfast buffet, milling about and chatting until August IV strode in and set his materials down at the head of the table.
The Fourth was a loyal Bud dresser, often sporting Anheuser-Busch—themed cufflinks or shirts with the company’s logo embroidered on the front. He donned cowboy boots nearly every day, frequently in a preferred shade of green reptile skin, and on dressier business occasions he tended to pair them with an oddly tinged green suit. The boots afforded his five-foot-ten-inch frame an extra inch and a half or so, and he had Tony Lama, founder of his favorite boot maker, to thank for that—along, again, with Warren Buffett, who had owned Tony Lama’s namesake company for the past eight years. The boost in height tended to help his cause with women but failed to prompt similarly adoring gazes from his strategy committee. They knew The Fourth had picked up the boot trick from his height-challenged father, and they weren’t falling for it.
August IV had never liked coming in to his office at Anheuser headquarters downtown, but he had been skipping out even more frequently in recent months. He had set up an office and even a health room at the soccer park and preferred to work from there, citing construction on one of St. Louis’s major highways as an excuse. He, after all, didn’t pilot a helicopter to work every morning the way his father did. All the same, his decision to isolate himself from the rest of his troops illustrated how disjointed things had become for The Fourth at his own company, which, except for a brief stint, had boasted a Busch family member as CEO since its formation. The Fourth was feeling frustratingly ineffective and hamstrung by his father, and his increasingly distant attitude had rubbed off on the rest of the strategy committee. The cat’s away, the mice will play, one of them said.
He increasingly was getting lazy about coming to the office, this person added. He said, ‘My war room is the soccer park.’ But not really. We’d do meetings at his house, we’d do meetings at the soccer park, and because he flew a lot, we’d meet at Spirit, at the hangar. We’d have a lot of meetings there. It was reminiscent of times in the past when The Fourth, as the company’s marketing head, would disappear from the office for days and force his deputies to track him down if work needed to be done. He just never went to the office, the strategy committee member said. He never did. And that was