Several years ago, Saint Arnold Brewing owner Brock Wagner compared the business of multi-national breweries with his own, today much bigger but still tiny by most measures.
“We’re trying to add 10 customers at a time. The big brewers are trying to add a million,” he said. “We’re in different businesses. We both make something called beer, but they don’t really taste much alike. The big brewers are of a completely different mindset. A-B has more in common with Coca-Cola than they do with us. That’s not to say their beer is bad. It’s just different from what we make.”
Wagner worked as an investment banker before founding Saint Arnold. The skills he learned no doubt serve his business well, but any story about his brewery starts with beer. In contrast, beer is not at the center of Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon. The book details the takeover of one brewing giant (A-B) by another brewing giant (InBev). Lots of hostile fire, some flirtations, plenty of intrigue, all of it happening at a stunningly fast pace.
Beer itself is barely at the periphery through much of the book. It’s most prominent when author Julie MacIntosh turns her attention to the Busch family, notably the uneasy relationship between August III and August IV. Almost every review of this book has pointed out with some surprise that the family controlled so little A-B stock by 2008. Few add that although the Busch family did not have it in their power to block the takeover it came together during a rocky economic time in 2008 and could easily have fallen apart. Had August III not pushed for the deal, and her sources certainly indicate he did so with a capital P, the financing window could have closed before InBev had everything in place.
Again, Dethroning the King is about the deal. How it happened, and pretty much why it happened. It’s not about the relationship between the city of St. Louis, its corporate and spiritual home, and the company. Recently, stories in The Washington Post and Bloomberg have examined how the takeover opened the door for smaller brewers in St. Louis. MacIntosh barely touches on such matters.
Not to make fun of her, but an example from the early pages indicates how little of St. Louis — more time spent in boardrooms than barrooms, plus the various locations (notably an airport hangar) where meetings were held — she got to know. Writing about the “Wassup?” advertising campaign she describes August IV giving the spots a final test run on “a well-known hill in St. Louis where a pack of Italian restaurants was concentrated.” This, of course, is not a hill but The Hill, one of America’s more famous Italian neighborhoods.
OK, it’s not fair to judge a book by what’s not in it. However even though A-B became a global company, and even though it operates a dozen breweries all over the United States we always understood that if Budweiser was the king the throne had to be in St. Louis. What does the change mean there? On the national scale, why all the attention to the fact that a foreign operation officially owns what was already an international company?
Those questions, as well as others of global impact, will be more easily answered after additional time has passed. This book, full of financial details, was ready to be written. It’s likely one historians will consult for years.
For instance, MacIntosh points repeatedly to how the company spent lavishly for travel and various amenities on the corporate side. Such “fat” that could be easily eliminated made A-B vulnerable, because InBev (and previously Ambev) has been famous for rewarding stockholders by ruthlessly improving the bottom line.
Although she doesn’t explain that the company spent just as freely when it came to acquiring the best ingredients that too was part of the Busch philosophy. Since the deal closed the new company has divested itself of many contracts with hop growers from the south of Germany to the American northwest (honorably it should be pointed out). Wouldn’t you think this has implications for A-B InBev beers? As significantly it may affect what hops are generally available, plus their quality, for all brewers. More for history to sort out.
*****
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I was unaware of the hops divestment AB-InBev has gone through (not that I have been following it very closely). Maybe they think they can fudge the taste a bit, without anyone noticing, or raise the price (which they have been doing?) with little repercussion, if the need arises (hop shortages or what not).
AB was actually a Jeopardy column last night. The $1000 answer was a Daily Double question. “AB ages their beer on this wood to create Budweiser’s taste” (or something to that affect). The contestant got it wrong, but I swept the column (its the little things in life).
Interesting post. Stan, is there anywhere you could recommend for people interested in learning more about the beer related specifics of the buyout?
Not yet, Chris. I hope somebody writes that book, but we need a little more “down the road” first.
Really interesting point about the hops. That suggests real reason to think that AB product quality might suffer amid the InBev cost-cutting regime. Naïvely, I’d been thinking that there was no reason to suppose product quality might suffer, even if costs are cut everywhere else.
So she doesn’t address the St. Louis perspective much? AB was a very generous company in the community, for charities and various civic groups, all justified as part of the “making friends” business. Losing that has been a blow locally.
I am part way through this book and I am astounded at how little beer plays into it. I knew from the outset that it was a book about the merger and big business but to me it is telling that the word beer could be replaced with widgets and the story would not really be all that materially affected.
It wouldn’t surprise me to see a craft brewer become the favorite of St. Louis in the future (if it hasn’t happened already).
Im just getting into it, about 25%, but the author has captured the essence of AAB III and what it’s like to work for him. For me, I can’t put it down-I remember so many of these situations and incidents, and it’s fascinating to relive them from another point of view. She doesn’t know beer, she has made some factual errors, but if you want to know what the atmosphere was like at AB Corporate in St. Louis, this book will tell you.
Perhaps she was better off because AAB III refused to be interviewed for the book.