From Soap Suds to Beer Suds - Museum of American Finance

From Soap Sudsto Beer SudsHow Anheuser-Buschbecame the largestbrewer in the worldTop: Budweiser pocketknife, silver,ca. 1890 – 1900.Bottom: Budweiser “Bud Girl”wallhanging, 1970s.Courtesy of the Anheuser-Busch Corporate ArchivesBy Sanford WexlerOne out of two beers sold in theU.S. is brewed by Anheuser-Busch ofSt. Louis. The family-run companytraces its origins to the 1860s, but2002 marks the first time in the company’s142-year history that its presidentand chief executive will be a nonfamilymember. This past July, August“Auggie” Busch III, 65, who becamechief executive in 1975 and is thegreat grandson of the company’sfounder, Adolphus Busch, was succeededby Patrick T. Stokes, 59.Stokes, who was previously presidentof Anheuser-Busch Inc., the brewer’sU.S. subsidiary, has worked at thecompany for over 30 years.While Busch III is no longer chiefexecutive, as chairman of the board heremains heavily active in continuing tobuild and grow the world’s largestbrewer that produces over 100 millionbarrels of beer annually and has $12.9billion in yearly sales. “My job ismy hobby, my hobby is my job,”Busch III once said. “I happen tolike it an awful lot, and I thrive on it.I love competition.”Adolphus BuschThe year 2002 also marks the 150thanniversary of the founding of theFinancial History ~ Winter 200230www.financialhistory.org

St. Louis brewery where one of America’sgreatest business success storiesbegan. The Bavarian Brewery, whicheventually became the Anheuser -Busch brewery, was establishedin 1852 in St. Louis.In 1860, EberhardAnheuser, a prosperousSt. Louis soapand candle manufacturer,invested in thebankrupt brewery.The brewery wasrenamed the E.Anheuser & Co.Bavarian Brewery.Shortly after takingover the failing brewery,Anheuser wasintroduced to AdolphusBusch, a 22-year-old Germanimmigrant who rana brewery supply business. Anheuserwas one of his customers.Busch, the son of a wealthymerchant and landowner, arrived inNew Orleans in 1857 with littlemoney and without any home oremployment. What he did have wasbarrels and barrels of daring ambition.He traveled up the MississippiRiver and eventually settled in St.Louis, where he found work as a“mud clerk.” Busch inspected steamboatmanifests and sampled cargo.When his father died, Busch drewupon his inheritance to establish abrewery supply company. He alreadyknew something about serving uppints of beer, as he once workedin a brewery that was partly ownedby his father.The young Busch fell in lovewith one of Anheuser’s three unmarrieddaughters. Adolphus Busch andLilly Anheuser were married inMarch of 1861. The ceremony was adouble marriage affair of whichBusch’s brother, Ulrich, marriedLilly’s sister, Anna.In 1864, following a stint as a corporalin the Union Army during theCivil War, Busch joined his father-inlaw’sbrewery as a salesman. The highlyambitious and enterprising youngBusch would transform the local St.Louis brewery into a thriving nationalbrewery. By 1869,Busch had soldhis brewery supplybusiness and hadbought out theinterest of Anheuser’spartner.Busch was now afull partner withhis father-in-law.Top: Adolphus BuschBottom: August A. Busch Jr.For his time, Busch was undoubtedlyan innovative beer promoter. Ashe traveled from tavern to tavern, heleft a “calling card” that gave customersa memorable and long-lastingimpression of his St. Louis brewery. Itwas a small jackknife with the E.Anheuser & Co. logo on the handle.At the end of the blade was a tiny pictureof Adolphus Busch that couldonly be seen by looking througha peephole.“Our business,” Busch repeatedlytold his father-in-law, “is not justmaking beer. No. Making friendsis our business.”Photos courtesy of the Anheuser-Busch Corporate ArchivesBusch was far from satisfied withthe beer that his brewery was turningout. He reportedly called it “dotschlop.” Busch was always on thelookout for ways to brew a better tastingbeer. In fact, studying the brewingindustry was his favorite pastime.The Birth of BudweiserAround 1875, Busch teamed up with aSt. Louis wine and liquor importer,Carl Conrad, who “discovered” asmooth, light tasting beer that wasproduced at a Bohemian brewery inthe town of Budweis, then part ofGermany and now in the CzechRepublic. (Today, the town is calledCeske-Budejovice). In collaborationwith Conrad, Busch developed theformula for a new beer that imitatedthe light beer that was brewed in thetown of Budweis. What made thisbrew so unique was its natural carbonation,which was based upon anancient European brewing processcalled kraeusening. The beer is fermenteda second time just when itis beginning to age. This brewingprocess results in a distinctive, frothyheadedpale golden beer.In 1876, the beer that wouldbecome the world’s most popularbrand — Budweiser — was introduced.The name Budweiser was coinedby Busch because he felt that despiteits Germanic sounding name, it couldbe easily pronounced by Americans,and therefore appeal to both Americansand German immigrants. Budweisersoon became the beer of choicefor beer drinkers who preferred thelight brew to the heavier, sweetbeers that were on the market.Budweiser would ultimately becomeAmerica’s first national beer. At theturn of the century, some one millionbarrels of Budweiser was beingproduced each year.When Eberhard Anheuser died in1880, Busch became president of theSt. Louis brewery, now called theAnheuser-Busch Brewing Association.www.financialhistory.org 31 Financial History ~ Winter 2002

A few years later, Carl Conrad, whowas Busch’s Budweiser partner andalso the bottler and distributor forAnheuser-Busch, went bankrupt.Busch bought out Conrad’s interestand acquired the trademark rightsto the beer.Pasteurization& RefrigerationIn the days before pasteurization, beerusually only lasted for a few days.Drawing upon the preservation methodsthat were perfected by LouisPastuer, Busch applied pasteurizationin the brewing process at the St. Louisbrewery. This made it possible forCourtesy of the Anheuser-Busch Corporate ArchivesTop: Sponsorship advertisement, “Ken Murray Show,” 1850s.Lower Left: Advertisment, “Life at it’s best,” ca. 1933.Lower Right: Advertisement, “Now…a new carton,” ca. 1936.Budweiser to be bottled and distributedto beer drinkers way beyond theSt. Louis area. Millions of peoplethroughout the country were soonpopping open bottles of Budweiser.When artificial refrigeration wasintroduced in the 1880s, Busch tookfull advantage of this technologicalbreakthrough. Previously, the brewerystored its inventory in small caves,where the beer was naturally cooledfor three to four months before it waspackaged and shipped out. Budweiserbeer was refrigerated in stock housesat the St. Louis brewery as well as inrailroad cars and in ice houses thatwere located along railroad lines.Courtesy of the Anheuser-Busch Corporate ArchivesCourtesy of the Anheuser-Busch Corporate ArchivesNationwideMarketing CampaignBesides being the first brewer to successfullypreserve and bottle beer,Busch was also the first to market beeron a grand scale. The nationwide, promotionalcampaign for Budweiserincluded print and billboard advertisingand a vast array of novelty items,such as Anheuser-Busch playing cards,bottle openers, corkscrews, calendars,match boxes, pocket knives, post cards,and various signs and posters.On barroom walls across the country,a poster of the attractive “BudweiserGirls” became a familiar sight.The famous, panoramic reproductionof the 1876 Little Big Horn massacre,entitled “Custer’s Last Fight,” whichBusch commissioned artist F. OttoBecker to paint, was hung on tavernwalls from coast to coast. Distributedto over a million saloons, it becameone of the most recognizable paintingsin the nation.To Busch, marketing of bottledbeer was what made his productstand out from all of his competitors.“It is the cream of our business,” heonce declared.The vast brewing empire that Buschhad created made him one of thenation’s richest men. The young Germanimmigrant who arrived in theU.S. with only a few marks in hispocket lived a lavish lifestyle. He hadseveral homes, including an ornate,Gothic mansion in St. Louis, a countryestate, two palatial homes inPasadena, California, a hop farm inCooperstown, New York, two villas inLangenschwalbach, Germany, andalso a private railroad car. When hedied at the age of 75 in 1913, hiswealth was estimated at some $60million. Adjusted for inflation, Busch’sfortune would equal around $600million today.The Dry YearsAugust A. Busch, Sr., the eldest son ofAdolphus and Lilly Busch, succeededFinancial History ~ Winter 200232www.financialhistory.org

Events CalendarEvents CalendarWINTER 2003JANUARY24 Guided tours of the American Numismatic Society’s “Drachmas, Doubloons, and Dollars” exhibit onthe history of money. Federal Reserve Bank of New York, 33 Liberty Street, 1 pm. Call 212-908-4694 for reservations. Free.FEBRUARY26 Lecture and book signing with Willard S. Randall, author of Alexander Hamilton, A Life(HarperCollins, January 2003). New York University Stern School of Business, 44 West 4th Street,NYC. 7 pm. Free.21 Guided tours of the American Numismatic Society’s “Drachmas, Doubloons, and Dollars” exhibit,see above.28 “High Notes” exhibit closes.MARCH18 “The Nobel Prize: Celebrating 100 Years of Creativity and Innovation” opens in the Museumgallery. 28 Broadway, NYC. 212-908-4110.Soap Suds to Beer Sudscontinued from page 33into family entertainment arenas, sucha Busch Gardens in Tampa, Florida. In1989, it further expanded in the lucrative,theme park industry with thepurchase of SeaWorld.August A. Busch III:Quality Comes FirstAugust A. Busch, III, the great grandsonof the company’s founder, succeededhis father, Busch, Jr., as chiefexecutive of the company in 1975.He had his first swig of Budweisersoon after he was born. “The firstthing I ever tasted, before mother’smilk, was beer,” he told The LosAngeles Times. “It was five drops ofBudweiser from an eye dropper whenI was five hours old.”Like his father, he literally workedhis way up from the ground floor.He swept floors and cleaned beer tanksin the St. Louis brewery. “When youfinished a shift there,” he told Fortunemagazine, “you knew you were a man.”Aggressive growth and strategicmarketing is the hallmark of BuschIII’s remarkable legacy. In the age ofmarket segmentation, he reinventedAdolphus Busch’s credo: “Makingfriends is our business.” The brewerexpanded its affiliation with a vastarray of sporting events, includingbaseball, football, basketball, boxing,hockey, golf, tennis, soccer, fishing,sailing, rugby, auto racing, jogging,and even round-the-world ballooning.Busch III set his sights far beyondthe borders of the U.S. He successfullyestablished a global presence. Today,Anheuser-Busch has breweries in theUnited Kingdom and China andlicenses the production of Budweiserin Canada, South America, Europe,and Asia. FHSanford Wexler is a New York-basedfreelance writer. He is the authorof The Civil Rights Movement: AnEyewitness History and WestwardExpansion: An Eyewitness History.Both books are published by Facts OnFile. He can be reached at Sanford-Wexler@hotmail.com.SourcesCancelada, Gregory. “Busch III Retires asIndustry Giant after Building Brewerinto Behemoth.” St. Louis Post-Dispatch,June 30, 2002.“King of Bottled Beer,” Fortune, July 1935.Martin, Wilbur. “Here Comes the King —of the Beer Business,” Nation’s Business,November 1978. Vol. 66, No. 11;pgs. 66 –73.O’Hanlon, Thomas. “August Busch BrewsUp a New Spirit in St. Louis.” Fortune,January 15, 1979.Plavchan, Ronald Jan. A History ofAnheuser-Busch, 1852 – 1933. ArnoPress: New York, 1976.Welles, Chris. “Anheuser-Busch: ToughApproach Made it King of Beer.” LosAngeles Times, December 15, 1985.www.financialhistory.org 37 Financial History ~ Winter 2002