BUD-WEIS-HEIR AUGUST BUSCH IV IS REBELLIOUS, RISK-TAKING--AND (NEARLY) READY TO RULE THE WORLD'S LARGEST BREWER.
(FORTUNE Magazine) – At 7 a.m. the sun is rising over Missouri's Spirit of St. Louis airport, and inside a small conference room here, flying ace/beer baron August A. Busch III is hammering his fist on the table, barking management credo, and boring his laser-blue eyes into me. The Anheuser-Busch chairman is happy.
The chief reason for Busch's good mood is that his hotshot vice president of marketing--who happens to be his son, August IV--has been pumping up beer sales to record levels. Not only are the company's TV ads for Budweiser rated the most successful in America right now, but the absurd commercials (new wave T&A: toads--well, frogs, actually--and alligators who love Bud) are winning back twentysomething drinkers who had been abandoning the classic brand for the past decade. "Budweiser isn't your father's beer anymore," says Busch III, 59. Industry rivals are surprised at how the boss's rebellious, risk-loving 32-year-old son has recharged Anheuser-Busch. Profits, disappointing for several years, are increasing at a double-digit pace again, and the company's stock price is up 27% from a year ago. Maybe that's why the chairman finds this an opportune morning to disclose publicly, for the first time, a big piece of news. "I'll be retired by 65. At that point, this is a younger person's game."
Meaning, one can't help but assume: This Bud's for you, August Busch IV.
But Anheuser-Busch's chairman refuses to confirm his successor; he is cagey by nature, not to mention scornful of charges of nepotism. August III, who owns less than 1% of Anheuser-Busch's stock, insists that his board of directors calls the shots on top-tier succession. And the board, he notes, keeps a list of several candidates who could replace him. (Patrick Stokes, president of the domestic beer business and considered "the invisible man," is one.) When I remind him that insiders believe the probability is 99% that his eldest son is the chosen one, the King of Beers says, "I don't think anyone can say there's a 99% chance of anything in life." Well, some people can: The boss's daughter, Susie Busch, 31, laughs at her father's finicky remark and counters, "If my brother continues to perform as he has, it's 100% certain he'll have the job."
Such tough-minded paternal tactics are not new to the Busch dynasty. A college dropout, August III was known as a party boy until his late father, August Jr. (called Gussie), apparently gave him an ultimatum--and he turned into one of corporate America's most fiercely disciplined businessmen. At 38, August III rallied the board and wrested control of the company from his cantankerous father, who at 76 opposed aggressive expansion.
The fifth-generation scion is taking his father's challenge very personally. In his all-black, bachelor-padesque office, he says, "You don't know how different it is walking in these shoes, vs. what people perceive it to be." (Those shoes happen to be cowboy boots--he and his father wear them every day.) The Fourth, as he is known, looks like the chairman (5 foot 10, red-faced, and rugged), but his personality and management style are quite different. The Fourth is friendlier and much more easygoing, yet his nature belies the overwhelming pressure he feels to prove his merit. "People think, 'Here's a guy who's got it all--the Busch name, the best job in the world,' " the Fourth says. "It's a very different reality."
Even more than the Third, August IV has led a tumultuous life. Foremost, there is the strained relationship with his iron-willed father. When the Fourth was 5 years old, his parents divorced; he lived with his mother, Susan, and younger sister, Susie. Although he saw his dad regularly, their relationship was and is, August IV says, "almost all business." As early as second grade, his father had him sit in on corporate strategy sessions. As a teenager, the Fourth was co-piloting the Anheuser-Busch jet, flying with the chairman to inspect breweries and check on distributors. Then came the rebellion: run-ins with the police and, most significant, a Chappaquiddick-like auto accident at age 19. Now here he is, poised to lead the world's largest alcoholic beverage company. "His past isn't an issue anymore," insists his father.
Proving he stands behind those words, August III recently put the corporate estate in order--selling Gussie's beloved Cardinals baseball team, spinning off Anheuser-Busch's bakery division to shareholders, closing unprofitable Eagle Snacks. Beer is why we're here, the chairman says. "Considering the history of my father and my grandfather, he knew he would retire by 65," says the Fourth. But he won't go quietly: The chairman's audacious new goal is to capture 60% of the market (Anheuser-Busch now has 45%) by 2005. That challenge falls to August IV.
Busch testosterone is legendary. Perhaps a remarkable family custom has something to do with it: On the day a Busch baby is born, the little tyke swallows a few drops of Budweiser. Yet despite such early and frequent attempts by August III to mold his son to the business, the Fourth wasn't able to buckle down. A prime example: the auto accident he had during his second year at the University of Arizona. According to police, August IV left a local bar early one morning and was rounding a sharp curve in his new, black Corvette when he careened off the road. His passenger, a waitress from another bar, flew through the sunroof and died. August IV left the scene. Police found him, still bloody, hours later at his townhouse in Tucson. For eight months the Busches wrangled with police and prosecutors. Evidence--samples of blood and urine taken from August IV the day of the accident--was lost or damaged. Authorities finally decided not to charge him with manslaughter.
"They couldn't prove blame," says the Fourth today. The tragedy haunts him, but he insists he has no idea what happened that day in 1983. "I had a bad head injury. I don't remember that part of my life."
The need for speed continued. Although his father attempted to rein in the Fourth by having him finish college close to home at Jesuit-run St. Louis University, he soon veered off course again. Early one morning in 1985, driving his father's Mercedes through St. Louis's tony Central West End, he got into a chase with two unmarked police cars. Two of the cops said August IV intentionally tried to run them over when they got out of their car. August IV contends that the gun-wielding cops never stepped out of their car or identified themselves; he says he was scared to death. A St. Louis jury acquitted him of assault charges. But around the same time, he pleaded guilty to another speeding violation. He received a one-year probation.
"My dad never said, 'Listen, kid, if you wanna be running this company, you better reform,'" the Fourth says. The discipline was more subtle than that. August III explains his philosophy succinctly: "Make sure your standards are high, and if someone doesn't meet those standards, take them out. I don't care whether it's family or not." After college, he required his son to follow the career path he had trod, starting at the bottom of Anheuser-Busch. The Fourth worked as an intern in the yeast culture department, then as a brewing apprentice, and later as a foreman in packaging and shipping.
He discovered his passion when he moved to marketing in 1989. His success was not immediate, though. The Fourth's first brand-management assignment was on a new beer, Bud Dry. Initially Bud Dry looked like a winner, but sales quickly dried up. Consumers didn't understand the concept of "dry," and the Fourth's ad campaign ("Why Ask 'Why'?") suggests he didn't either.
He redeemed himself with Budweiser. The world's biggest beer brand (22% of industry sales in the U.S.), Budweiser is also the main tap for Anheuser-Busch's profits. Trouble is, Budweiser sales topped out in 1990. Everyone in St. Louis knew the reason: Young drinkers were switching to imports and microbrews. Bud, twentysomethings said in surveys, is the beer parents drink--in cans!--at the bowling alley in Sheboygan. August IV told his father that Bud sales would grow only if they revamped the beer's image. "There was a culture weaved into the Budweiser brand," says the Fourth. "No one wanted to change it." His idea was to take Budweiser off its pedestal and move it onto...the toadstool.
The chairman thought his son was nuts two years ago when he saw the monosyllabic frogs who croak "Bud...weis...er." The Fourth, who can be as unrelenting as his father, insisted the frogs would make Bud hip. He poured on research, and August III gave in. Today the Budweiser frog campaign, produced by DDB Needham, is the No. 1 favorite of TV viewers, according to Video Storyboard Tests, which surveys 4,000 consumers quarterly. Asked whether he has lost his legendary instinct for great advertising, August III admits, "I've lost the ability to understand the 21- to 30-year-olds the way I used to."
Today August IV oversees marketing and sales for all Anheuser-Busch beer brands. He is confounding his skeptics. Bud Light is trouncing onetime heavyweight Miller Lite, thanks largely to a funny, youth-skewed campaign (the "I Love You, Man" commercials starring Johnny, who'll do anything to scam a beer). Michelob, the stodgy Cadillac of beers, is making a comeback. The biggest challenge remains Budweiser. It is still losing volume--in part to Bud Light--though at a slower rate than before the Fourth doctored its image. "The question isn't, Can Budweiser grow again? We must grow Budweiser again," the marketing vice president says, sounding very much like his father. "Budweiser is our ticket to go international. Budweiser is our Coca-Cola."
His latest crusade is to promote Budweiser as the freshest beer consumers can buy (see box). It irks the Fourth that young drinkers favor Samuel Adams and other specialty beers, which he says are not as fresh as Budweiser is. He spent three years developing Budweiser's new "freshness" marketing program. His ingenious ads feature a lantern-jawed, ramrod-stiff, type-A beer delivery guy, Gus--irreverently named after August IV's grandfather--who storms beer bashes, blaring edicts on quality. Sound familiar? Jeff Goodby of San Francisco ad agency Goodby Silverstein & Partners acknowledges the character is a comic combination of circumspect August III and exuberant August IV.
As the Fourth looks to the future, he is uncertain how much like the chairman he should become. "One of my biggest weaknesses is that I'm too nice. The Chief tells me that sometimes," says August IV, referring to his father. "I haven't decided yet whether being nice is an asset or a liability." For now at least, his manner is an asset. Colleagues and clients praise August IV as a team player, a consensus builder, and a terrific idea man.
By all accounts, he has toned down his wild side. The chairman made him quit racing cigarette boats (too dangerous). Father and son both own Harleys, but neither rides very often. "I love it, but I don't want to get hurt," the Fourth says. He used to be a notorious womanizer. Former associates recall his carousing to the wee hours with beautiful women, usually blondes, at his side. Now the Fourth gets up at 5 a.m. (like his father) and exercises twice daily (he has black belts in judo, tae kwon do, and hapkito). Most evenings he has dinner with business associates. "I'm not going to hang out in a bar til 11 if I need to be up at five to conquer the world," says the young Busch.
August III is remarried with two children by his second wife, Ginny. He would like August IV to be married too. But the Fourth isn't sure about this. "I'll marry when the time is right and when I'm sure it won't end in divorce," he says. "There's a girl I'm very much in love with"--Sage Linville, who recently moved from California to St. Louis to be with him--"and she may be the one." He can't resist adding a touch of sophomoric humor: "Sage Busch is an interesting name, isn't it? I'm not making predictions about that."
As the 32-year-old recasts some of America's most famous brands, he is doing the same with his own identity. I ask what drives him: the responsibility of leading an $11 billion company that bears the family name on the door? A need for his father's approval? A desire to prove he is smarter than people believe? Or a pure passion for the business? "The latter," he says, smiling. "I love this business."
Then he tells a story that reveals a deeper truth. In an inside pocket of his briefcase he keeps five letters from his father. "Five notes of compliment from the Chief over ten years of full-time employment here," says August IV. "They're few and far between. But I cherish them. As demanding and challenging as he is, the moments of victory and his acknowledgement of my success mean so much to me." Does the Chief know about these letters inside August IV's briefcase? No, says the son. "But he will now."
REPORTER ASSOCIATE Erin Davies