Dethroning the King (29 page)

The fact that Anheuser-Busch brews beer always made its lobbying efforts more challenging. It constantly faced opposition from groups like Mothers Against Drunk Driving (MADD) and others who said its advertising targeted underage drinkers. It was precisely because of that sensitivity over alcohol that Anheuser needed to wield such significant political influence. The company had already been through Prohibition once, and it was determined to push its roots deeply enough into Washington's soil to prevent shifts in public sentiment from wreaking havoc on its business again.

August III, like his ancestors, understood how the beer business and politics intersected and was diligent about staying ahead of the fight. At a time when pressure was growing in Washington to ban alcoholic beverage advertising entirely, he deftly handled criticism from MADD by throwing a bunch of money behind the effort to curtail drunken driving. “That slowly turned the focus to driving,” said Charlie Claggett, who handled Anheuser's “Know When to Say When” moderation campaign. “It's not the beer that's the enemy, it's the fact that you get behind the wheel. That's the enemy. Get a designated driver and don't drive while drunk. Take care of yourself and your friends. It just changed the whole game.”

The Third did the same to stanch frustration over discarded beer cans, endorsing the “Pitch In” litter pickup campaign and creating a recycling unit in 1978 that recycled more than 430 billion aluminum cans in its first 30 years. And when civil rights leader Jesse Jackson attacked Anheuser-Busch in 1982 over whether it had enough minority-owned distributorships, the boycott failed. The Third refused to meet with Jackson rather than pandering to him as other CEOs had, and decided to fight back by showing how the company's policies benefited minorities.

Anheuser-Busch also spent plenty of cash in Washington to help ensure that its burgeoning market share never became a political hot button. By the early 1990s, The Third's desire to control half of the U.S. beer market had grown relentless. Many other CEOs, knowing that seizing half of their market could make them a target for public ire, might happily settle for 49 percent to avoid the controversy. Not August III.

“Mr. Busch, why?” Buddy Reisinger remembers asking The Third. “You hate the public stuff, you hate the government, the S.E.C. Why would you want to put an industry that's a functioning oligopoly . . . why would you want the government on your back? At fifty-share, a little bell is going to go off. Why is that the important thing?”

The Third, uncowed, pushed religiously onward. Hitting that magic number had become how he defined the next level of success, and the risk of having to run a political gauntlet to attain it was worth it. More likely than not, the dollars he spent in Washington would help smooth things over. And they did.

InBev, espousing that same notion, hired four of Washington's best-known lobbying and PR firms to calm tempers over its takeover attempt, including one run by former senators Trent Lott and John Breaux and another run by Joe Lockhart, a former White House press secretary. It started paying operatives from Mercury Public Affairs to call local politicians around the country to outline why it wanted to buy Anheuser-Busch and what the deal would mean for voters. And it sent two letters explaining the deal and the commitments it planned to make to key public officials in target states.

That Tuesday and Wednesday, several of Brito's new lobbyists escorted him to the offices of five Missouri congressional representatives and to a meeting with South Carolina's James Clyburn, the third-ranking House Democrat. The highly orchestrated spectacle, which drew a herd of reporters who followed at Brito's heels, was little more than an expensive and elaborately staged game. Brito wasn't going to convince any of those politicians to back the takeover—the sound bites they'd get for opposing the deal were too important for their next elections. And he certainly wasn't going to back down and scrap InBev's bid based on some minor agitation out of Missouri. His Washington jaunt was about face time, shaking hands, and kissing rings, not about demonstrable results.

McCaskill sat down with Brito and two of his aides at noon on Tuesday and offered them a choice between three Anheuser-Busch beers. Brito and McCaskill both grabbed Bud Lights, and she made a quick toast—”To Anheuser-Busch!”—before launching into a lecture on how hard it was going to be for InBev to win the hearts and minds of her Missouri constituents. The meeting adjourned after half an hour and McCaskill quickly huddled with Brito's attendant group of media scribes.

“They basically came to try to get me on board, so to speak,” McCaskill told the reporters. “I said, ‘Not going to happen.' ” She was shameless in breaking out the rhetoric. “We do not have a ‘For Sale' sign on our front lawn in America,” she told the
St. Louis Post-Dispatch
in one interview, calling InBev's bid a “premium profit for hedge fund investors.” Brito called his meeting with McCaskill “very, very helpful.” She issued a letter that day to Anheuser's board that called for them to reject InBev's offer.

Brito met with Kit Bond the following day and he, too, used the opportunity to voice opposition to the deal. It would mean job losses in St. Louis, a blow to the Missouri economy, and a loss of charitable contributions in St. Louis, said Bond, who couldn't resist tossing in a few of his own lines of cheesy politico-speak: “My Missouri constituents say, this Bud's not for you,” he said.

Brushing aside all of the pomp and circumstance, Brito's trip to D.C. actually helped both sides get what they wanted. He was able to promote InBev's cause and generate some press, and the politicians whose constituents cared about Anheuser-Busch were able to make it seem as though they were putting up a fight, even though it was clear there was little they could do to stop the deal. Brito only ended up needing to make one trip to the nation's capital. The political unrest sparked by InBev's bid didn't last long, but that wasn't because he had charmed his way into American beer drinkers' hearts. It was because they had too much else to worry about.

When InBev launched its attack on America's favorite beer company, the country's baby boomers were just coming down from the high of living beyond their means for three decades. These Cadillac Escalade and McMansion owners were suddenly facing overdue mortgage payments, empty 401(k)s, and unemployment lines. Regardless of how many cases of Bud were stacked in their four-car garages, they had little will to rally en masse for Anheuser—a company that had grown just as fat and delusional during the good years as they had. Anheuser's relevance in their lives, or at least the pride they took in drinking American-made beer, had diminished to a point where a hostile takeover of the company seemed on par for the course when so much else in America was already going wrong.

Given the madness that was unfolding in the markets and on Main Street, some of the news coverage of Anheuser's takeover battle that might otherwise have run on the front page of the world's biggest newspapers was relegated to their middle sections—or left on the cutting room floor. “It was almost like it got just a flash on CBS evening news,” said board member General Shelton. “I really thought it would be viewed as a much bigger deal, but obviously it wasn't.”

My concern is that across America, this is happening,” he said. “Maybe it's not all bad—I'm a big believer in globalization and a world economy and things that could lead to peace long term. But I do worry when so many U.S. companies are going into foreign ownership.”

At certain points in American history, protectionist rhetoric alone might have rustled up enough popular anger to ruin InBev's takeover attempt. But this was not a time for political or economic frivolity. People were too distracted by the credit crunch-related turmoil in their own lives to care about whether Budweiser was brewed by an American or Belgian company. That was the sort of philosophical debate people wasted time on when they actually had the luxury of time to waste, rather than spending it searching for a job or struggling to save the job they had.

So while InBev's takeover bid had brought with it two major types of risk—financial and political—one actually ended up helping to nullify the other. Americans who might otherwise have hoisted pitchforks in protest were distracted by the financial markets, which were threatening to collapse in shambles. And politicians found it tough to justify wasting time on Anheuser-Busch rather than addressing rising job losses, budgetary deficits, and disintegrating real estate markets. Yes, they'd ostensibly be fighting to save American jobs by endorsing Anheuser's independence. They'd also be helping to bail out a company that was run by multimillionaires and had been inefficient for years. It was already looking likely that they'd have to step in to float the wreckage of another iconic American company whose leaders had been too beholden to family interests, had gotten fat, happy, and lazy, and had ultimately run it into the rocks—General Motors.

Brito's public relations push was helpful, but InBev's ability to suppress public outrage had less to do with his efforts than with the complacency, resignation, and distraction of the American public. Protectionist sentiment, whether it was logical or not, just wasn't strong enough—Congress battled several months later over whether to include a “Buy American” provision in President Obama's $787 billion stimulus bill, but the fever over that issue also quickly died. The strongest words spoken against InBev, in fact, may have come from Stephen Colbert, the Comedy Central satirist who drowned his sorrows on camera in an effort to enjoy as much Budweiser as he could “before those waffle humpers change the formula.”

“The big backlash some people predicted just really didn't happen,” said Harry Schuhmacher. “You had some of it in St. Louis, but outside of Missouri, people appear not to know or care where their beer gets made. I think it's just an apathy on the part of people who drink light beer. They don't think about their beer. It's really just a nice, refreshing way to get ethanol into your system.”

The cards were stacked against Anheuser-Busch. It could have produced a brilliant plan to slaughter InBev in the press, pulling out all of the protectionist stops and draping itself in the American flag, and much of it might still have fallen on deaf ears based purely on timing.

Curiously, though, Anheuser didn't come up with a brilliant counterattack. At first, it made a deliberate, and arguably foolhardy, choice to have no defense strategy at all.

InBev had assumed that its bid might spark a negative political reaction, and had nervously prepared for Anheuser to come out swinging as soon as the bid was official. Anheuser didn't have much of a leg to stand on from a financial or operational point of view, but it boasted a century and a half of American ownership and had legions of devoted Budweiser drinkers, union workers, and distributors at its disposal if it wanted to rally pro-American sentiment.

When InBev made its offer official on June 11, Anheuser scrambled to quickly issue a press release that said its board of directors would review the bid and decide “in due course.” The merger battle appeared to be starting off with a bang. So after a quick gut check on Brito's part, InBev fired back almost immediately with the first rounds of a PR campaign it had painstakingly developed. Why give Anheuser-Busch time to gasp for air if everything was already prepped and ready?

InBev went live with a web site it had created to outline the proposal, and it started meeting with Wall Street analysts to argue its case. Brito wrote an opinion piece in the
St. Louis Post-Dispatch
where he reiterated the pledges InBev made in its offer—that it would keep all of Anheuser's 12 U.S. breweries open, for example, and maintain its North American headquarters in St. Louis. The company even began posting “interviews” with Brito online where people could watch him answer questions about the bid and what it would mean for Anheuser's workers, beer drinkers, and investors. It didn't matter that the person who interviewed Brito was Steve Lipin, InBev's outside public relations guru from the Brunswick Group, who had stepped in at the last minute to replace a former BBC journalist whose British accent—when paired with Brito's own foreign inflection—sent the wrong message. How would that have looked to people in St. Louis, InBev's team wondered? It was better to have the questions posed by an American, and InBev knew that most of the people who would watch Brito's interview online didn't know Lipin from Adam.

Like many of those who advised InBev on its Anheuser-Busch bid, Lipin had a long and lucrative history with the company and was incredibly loyal to Brito. When he discovered that the caterers at his daughter's Manhattan bat mitzvah didn't offer InBev's beer brands, he arranged for special accommodations. He couldn't be seen hosting a huge party where the bar was stocked with Stroh's rather than Stella Artois.