Dethroning the King

by Julie MacIntosh

  Roy Bostock, who was chairman and chief executive of the agency, quickly jetted to St. Louis from New York to contain the damage. He had met August III a few times before, once during a celebration of the 75th anniversary of Anheuser’s relationship with D’Arcy that had been held at Grant’s Farm a few years earlier. Bostock had gotten up on stage to present August III with a Clydesdale colt named D’Arcy. Conversation between the two men and their wives at the head picnic table had been torturous, and they hadn’t exactly become fast friends since. Bostock was just the kind of Wall Street striver the provincial August III loved to hate. He passed down D’Arcy’s decisions out of Manhattan, which bred people The Third didn’t trust, and over the next decade and a half, he became a prominent force in corporate America, serving as chairman of Yahoo! during Microsoft’s failed attempt to buy the company, as the chairman of Northwest Airlines, and as a director of Morgan Stanley during its battle to survive the 2008 financial crisis. August III’s gruff style of intimidation, meanwhile, was just as off-putting to Bostock, who had taken it directly on the chin during the wholesaler convention at which The Third had publicly maligned D’Arcy’s ad.

  Bostock knew that from a profitability standpoint, D’Arcy’s relationship with Philip Morris was far more lucrative than its relationship with Anheuser-Busch. Anheuser had even suggested at one point that D’Arcy should gladly handle its account at a loss because it helped D’Arcy improve its reputation.

  Bostock met with August III and August IV to explain that D’Arcy wasn’t buying media space directly for Miller—it was buying huge blocks of time for Miller’s mammoth parent Philip Morris, which independently allocated the slots to its various brands. The practice had been common for decades, Bostock pointed out. D’Arcy also did media buying for both Procter & Gamble, which owned coffee maker Folgers, and General Foods, the owner of Maxwell House.

  The Third peppered Bostock with angry questions but appeared to let the matter die. So when Claggett got a Saturday afternoon phone call from Bob Lachky that November, it stoked curious surprise rather than panic. “The Chief wants to see you out at the hangar tomorrow,” said Lachky, who had been unwittingly roped by August III into helping manage the situation.

  “What’s it about?” Claggett asked. “I’ll let him tell you,” Lachky replied.

  The next day, August III, U.S. brewery head Patrick Stokes, and Lachky pulled into the parking lot by the company’s hangar at the Spirit of St. Louis airport at the same time Claggett drove in. The men gathered briefly out on the pavement to shake hands before heading inside.

  “Go ahead, you go first,” one of them said as they ushered Claggett toward the building, triggering a nerve that indicated something wasn’t right. It felt like a Mafia hit.

  They shuffled into a small room at the hangar, and August III launched into a brief preamble before getting to the punch. “We have to end our relationship,” he said bluntly.

  “What do you mean?” Claggett said.

  “Well, you’re not going to be our agency anymore,” said The Third.

  “Does that mean . . . so, you’re taking the Budweiser account?” Claggett replied.

  “All of it,” said The Third.

  “Michelob, Natural Light, O’Doul’s,” Claggett queried, listing the brands D’Arcy had managed his entire career.

  “Yeah, all of it,” The Third said again.

  “Our business in Israel, Europe, Asia?” Claggett stammered, growing increasingly stunned as he internalized his own words. “Busch . . .”

  “Charlie, all of it.”

  Claggett was speechless. Those accounts represented 80 percent of his office’s revenue. Still, The Third no longer trusted the agency, and his trust was all but impossible to win back. With the meeting essentially over, he drifted wordlessly out to his car, plopped down in the driver’s seat, and flipped on his phone to call Bostock in New York.

  Bostock’s response to the news made his loyalties clear.

  “What a bunch of thugs.”

  The Third later called Bostock to lobby for détente between the two parties, at least in public, to keep Anheuser-Busch from being criticized for its decision. Bostock wasn’t particularly eager for his agency’s reputation to be dragged through the mud, either.

  “Let’s make this civil,” The Third said. “Let’s not make anybody look bad.”

  D’Arcy’s loss led to a huge win for the Chicago office of Omnicom’s DDB Needham, however, which won the Budweiser account. The day after firing D’Arcy, Lachky made a call to DDB’s John Greening.

  “John, I’ve made the sad call and now I get to make the glad call,” Lachky said. “You’ll be working on Budweiser, and we’re going to come up there on Monday.” The occasion was important enough to prompt a rare trip by August III to the agency’s office atop the distinctive AON Center in Chicago, the city’s second-tallest building at the time. That presented a problem for August III, who preferred meeting skyscraper-bound colleagues in their lobbies before heading to a destination closer to sea level.

  He summoned enough gumption to step into the elevator with his bodyguard, Gary Prindiville, who told DDB’s executives to maintain eye contact with The Third and to keep talking as the elevator sped to the top. The ad men turned to look straight at August III and started yammering on about whatever came to mind—Chicago’s Blackhawks hockey team, the weather—until the elevator slowed to a stop and the doors slid open.

  The Third made plenty of controversial decisions, but it was tough to question them when you looked at his results. Anheuser’s share of the U.S. beer market doubled from 22 percent to 44 percent between 1977 and 1990, and four years later, Bud Light topped Miller Lite to become the best-selling light beer. August III made good on his quest to dominate America thanks largely to the power of propaganda.

  “When I joined the company, we had 10 percent of the U.S. beer market,” said Jack Purnell. “When I retired we had almost 50. And August III was the driving force.”

  Chapter 5

  The Fourth Abides

  I love my father. Take a walk through my house, and it looks like a father museum. Every picture on the wall is of my father, or me and my father—to the point where my mom comes over and says, “Where are all my pictures?” But he has been extremely tough on me. Maybe you can call it tough love.

  —August Busch IV (Gerry Khermouch, Julie Forster, and John Cady, “Is This Bud for You, August IV?” Business Week, November 11, 2002)

  Some of the best ads during Anheuser-Busch’s golden era in the 1990s were shepherded through not by August III but by his son, an up-and-comer in the Marketing Department who had a knack for picking irreverent winners. The Third was just as brusque with his own son, though, and even more begrudging with his praise, than Gussie had been with him.

  On June 15, 1964, at 10 hours of age and just over 8 pounds in weight, August IV was fed his first few droplets of Budweiser beer. And like his father, little August IV debuted at Anheuser-Busch at a very young age. That wasn’t surprising, since the office was one of the few places in which the two could consistently interact. Ad agency executive Steve Kopcha remembered watching The Fourth bounce into Anheuser-Busch’s boardroom, trailed by one of The Third’s assistants, at the age of five or six—right around the time his parents were divorcing. As Kopcha and his team packed up their materials at the end of a marketing meeting, The Fourth plopped down in an oversized red leather chair and started spinning around in slow circles. “Well, Mr. Busch, I’ll take him back now,” The Third’s assistant said, piping in after a few moments.

  “Hell, no!” The Third replied. “Let him stay here and see how it’s done.” So young August IV stuck around for the next meeting—and got an early glimpse of what life might look like 30 years down the road if he played his cards right. By the time he was in second grade, he was sitting in on corporate strategy sessions.

  “Here are all of the old big shots sitting down at the table, and one little five-year-old kid,” Kopcha s
aid. “And later on, he’s the man.”

  The Fourth started working for Anheuser-Busch in his teens, driving a forklift and working to culture yeast. He traveled with his father on the company’s corporate jets, even co-piloting them at times, to visit distributors and check in on breweries around the country. By his senior year in high school, he was working more than 15 hours a week at the brewery, some of them for course credit.

  Susan Busch, whose six-year marriage to The Third ended in 1969, generally elicits praise for her efforts to rear their two children, August IV and Susie, on her own. “One of the benefits of August being raised largely away from his father is that he had a somewhat normal upbringing,” said Bob Lachky. “She is a wonderful woman, just a wonderful person with a great personality.”

  Despite The Third’s demanding schedule, the family’s wealth and warped history, and even, according to Susan, “definite threats over the years” of kidnapping, August IV and his sister did relatively well while under their mother’s control and tutelage and achieved more advanced levels of schooling than previous generations of Busches. Still, they suffered from their father’s insular world view. The Fourth enjoyed an immensely privileged life, but he lived much of it in St. Louis and at the brewery, not mastering the broader liberal arts or traveling the globe to build his cultural acumen.

  While out on a jog once with August IV, D’Arcy’s Claggett turned to the young man to make small talk. “So, do you have any hobbies?” he inquired.

  “Yeah, this is my hobby,” responded The Fourth, who by that time had grown into a slightly taller version of his more compact father.

  “Running?”

  “No, working at Anheuser-Busch.”

  Claggett, who had just returned from living in London for a few years, asked whether The Fourth had done much traveling. He had been to Europe once, The Fourth replied.

  “Both he and his sister Susie had pretty much spent their whole lives focused on the brewery,” Claggett said later. “Wouldn’t you think that if you had all of the money in the world, you’d want to broaden your horizons a little bit, get out to see what was going on?” It was certainly possible that The Fourth had such aims in mind but met with resistance from his father, who left the comforts of his farm and the city of St. Louis only when necessary.

  Once The Fourth hit college, however—and slipped out from beneath The Third’s physical restraints and the protection of St. Louis locals—he began to dabble more aggressively in the temptations of youth. His devil-may-care behavior started to rain repercussions on his record, his family, and the company.

  He enrolled at the University of Arizona in Tucson, a rich kid on campus at his father’s alma mater, and spent his freshman year in 1982 unmolested by controversy. That changed in an instant in the wee hours of the morning on November 13, 1983, when 19-year-old August IV’s shiny new black Corvette flipped and crashed a few miles off campus on a curvy desert road, killing 22-year-old waitress Michele Frederick, who had been in the car’s passenger seat and had flown through the sunroof. The Fourth, injured and dazed, was found hours later at his townhouse. Police found a Magnum revolver inside the wreckage of his car, along with a fake Missouri driver’s license that put his age at 23. After a seven-month investigation that was swarmed by media coverage, local prosecutors determined they couldn’t charge him with manslaughter and leaving the scene of an accident. It wasn’t clear they could prove he had been the driver of the car, and they didn’t have definitive evidence to show that he was under the influence of alcohol at the time of the crash.

  Susan, who heard about the accident when she was contacted by the authorities, later said she was “absolutely devastated for young August. To have to go through something like that.” She felt her son had been unfairly treated because “there is no just treatment for families with a name and money.” When asked about the accident 15 years later, August IV said, “Somebody will always bring it up. I wish that weren’t true, not only for me but for others whose lives were affected.” He said alcohol was not involved in the crash.

  The Fourth ducked out of the University of Arizona prematurely, just like his father had, and moved back to St. Louis to enroll at St. Louis University, where he started earning good grades in his business classes. He didn’t stay out of the police blotter for long, though. Whether he hadn’t absorbed enough lessons from the crash or whether, as his family claimed, he had a target unfairly slapped on his back, he got into another major scrape less than a year after being cleared of the charges in Arizona.

  At 1:30 A.M. on May 31, 1985, August IV led police on a highspeed car chase through the Central West End of St. Louis, which ended when a detective finally shot out the tire of his silver Mercedes-Benz. He had sped dangerously close to an unmarked police car on a St. Louis highway, police said, and then took off after undercover narcotics officers in the car attempted to pull him over. A chase at speeds up to 85 miles per hour ensued.

  After his tire was finally blown out, police found a loaded .38 caliber revolver on the floor behind The Fourth’s driver’s seat and took him into custody, charging him with two counts of third-degree assault, unlawful use of a weapon, and various traffic violations. The assault charges stemmed from the allegation that he nearly hit both officers who tried to approach his vehicle. Once they realized who they had arrested, however, the cops bent down and changed The Fourth’s tire, chatting while they worked about how much they loved Grant’s Farm. The Fourth said he hadn’t ridden the train that circled the compound since he was 12 years old, which shocked one of the officers.

  “You get me out of this,” The Fourth said according to Under the Influence, a book on the Busch family, “and I’ll fucking give you that train.”

  The Fourth’s spokesman said the next day that he hadn’t pulled over during the chase because the undercover officers were impersonating criminal types—he thought they were kidnappers. The police said they had taken chase because they thought The Fourth was a drug dealer who drove a similar car. After a three-day trial, 21-year-old August IV was acquitted, and his father stood up to personally shake the jurors’ hands.

  The indignities brought on by those public referenda on August IV’s character and silver-spoon upbringing were overwhelming. Every citizen in St. Louis could already deftly weave a story about the scandal-plagued Busch family when called upon, and The Fourth’s delinquencies made matters worse. They also made it harder for him to turn on a dime and devote himself to the company in the same way his father had. By 1997, The Third was telling the media that his son’s past wasn’t an issue anymore. Yet even during the takeover battle with InBev, 25 years after the Arizona crash, the New York Times decided to dredge up and rehash all of the sordid details yet again. “I wouldn’t care too much about it,” The Fourth told one of his advisors the day of the Times report, shrugging it off after so many years of badgering. “They’ll be wrapping fish with it tomorrow.”

  While the heavily public scandals sullied The Fourth’s reputation to a point where many would-be CEOs wouldn’t have been able to recover, they failed to damage his standing enough to put his single greatest ambition out of reach, and he threw himself into the family business a few years after returning to St. Louis. The Fourth’s professional “reformation” wasn’t nearly as stark or all-encompassing as his father’s—he never progressed to a point where anyone would consider him austere.

  “He always had, and still has, personal demons,” said Harry Schuhmacher. But he certainly made an effort to recover from the past and prove the naysayers wrong.

  In many respects, the grassroots start of his career at Anheuser-Busch mirrored his father’s. In one particularly critical way, though, The Fourth’s approach differed starkly. Rather than having the foresight to build a team of loyalists and pull them up through the ranks as The Third had with his eaters, The Fourth let himself be led by The Third. “When I was there, the thinking was ‘When is it going to click for August IV, and when is he going to build that kind of
team?’” said one former staffer. “His closest people around him were his partying, socializing people who were not really telling him the truth.” The Fourth took a more casual approach to leadership than his father did, and while it put his subordinates at ease, it also left them wondering whether he had the guts and drive to run a global corporation. Had he not been born with the name August Busch IV, some insiders said he might never have been a candidate for promotion to the top.

  The Fourth worked hard, perhaps because he knew his detractors’ talking points all too well. In 1991, he acknowledged how complicated it could be to sit in his chair. “Everybody thinks, ‘It must be easy to be you,’ ” he said. “It’s probably the hardest thing in the world to be me and to work under the pressure you have to be under. You have to do three times as good as the next guy to be considered to be doing the same job as he does.”

  August IV spent his first few years of official employment at Anheuser-Busch on the brewing side of the business. He worked for roughly a year as an assistant to legendary brewmaster Gerhardt Kraemer, spent another year as a line foreman, and spent three years as an apprentice brewer, even joining the Local Six branch of the Brewers & Maltsters union in a symbolic hat-tip toward the company’s manual laborers. After dropping out of the University of Arizona, he finished a bachelor’s degree in finance at St. Louis University in 1987 and then went to Europe to earn a brewmaster’s degree from the heralded Berlin academy Versuchs und Lehranstalt für Brauerei.

  Once his technical brewing education was deemed sufficient, The Fourth was pulled into an enviable position as an assistant to Mike Roarty. Many of the company’s top executives over the years came up through the Marketing Department, and the move positioned August IV as the potential nucleus of the next generation.