Anheuser Busch

ANHEUSER-BUSCH

Benigno Borjon III

RES/351

April 25, 2016

Benjamin Millard

ANHEUSER-BUSCH

The Anheuser-Busch company is one of the most enduring business ventures in the history of the United States. The joining between two businesses—Eberhard Anheuser's Bavarian Brewery and Adolphus Busch's brewing goods supply—would become the largest and most profitable beer company on Earth.  One of the main drivers of Anheuser-Busch’s success over the past 150 years has been its creativity and innovation in advertising and marketing. As times changed, Anheuser-Busch always has created new ways to connect beer drinkers with its products. One of the ugliest conflicts in the modern era for Anheuser-Busch was its no-holds-barred battle against upstart Miller brewing. In 1970, Miller had been picked up by cigarette giant combine Phillip Morris, which was determined to revive the flagging company. It did so in a gamble on a new product: Miller introduced Miller Lite shortly after purchase, and Phillip Morris poured millions into its high profile campaign to promote the beer. Anheuser-Busch was undergoing one of its periodic generational changes in command, bringing to the fore August Busch III. “Auggie” Busch, as head of the company, was an unremitting workaholic, known well for his “perform or leave” attitude toward business associates, 12-hour days, and relentless pursuit of the profitable bottom line. Auggie viewed the start of the new Miller effort as a direct assault on Anheuser-Busch and its signature brand, Budweiser.

The public advertising war between the brewers told only half the story. Miller brewing attacked Busch's brand via the Federal Trade Commission (FTC), using the argument that Anheuser-Busch was falsely advertising its beers as “naturally produced” because it used tannic acid, a chemical product, in the brewing process. Busch fought back, also through the FTC, by going after Miller's Euro-brand Lowenbrau, which Miller claimed was brewed according to an original German recipe—it was not, Busch claimed, and the FTC agreed. In the midst of the lawsuits, the commercial wars, and the general atmosphere of brutal battle on both sides, a dirtier battle was fought in the trenches of the ground war. Distributors were battling for sales with wholesalers, account wars raged, and millions of dollars were spent.

The Miller War, as it became known, set in motion a corporate culture of massive spending—particularly on advertising. When Auggie Busch first came on board as the Beer King, he brought with him a horde of financial whiz kids and holders of master of business administration degrees (MBAs), along with others almost unknown to the Busch empire of earlier eras to modernize and streamline the company. In 1988, as a product of an internal investigation at Anheuser-Busch, two Anheuser-Busch executives, Joseph E. Martino and Michael A. Orloff, along with Mark L. Shyres, an executive at Bingham (Advertising) Group, were pulled into federal court to answer for a kickback scheme that blossomed into outright fraud from the St. Louis advertising group for a bit of extra business. Orloff (vice president of wholesale operations) and Martino (vice president of sales) faked inflated Anheuser-Busch invoices for thousands of dollars, as well as “gifts” of clothing, airline tickets, auto repairs, and club memberships over a five-year period. All three were convicted and were sentenced to three-year terms and large fines.