As John Elliott suffers the ignominy of bankruptcy, he really must sit and ponder what might have been. Yesterday we told the story about an alleged falling out with the legendary Anheuser-Busch family after a meeting in the 1980s, in which security guards were said to have frog-marched Big Jack out of the building. This is what we published from an Elliott watcher:
The way I was told, Elliott was escorted from the Anheuser-Busch building by two security guards under orders of the old man Anheuser. Elliott went to see the boss to talk about a proposal to brew Foster’s in the US for him and by the end had made a threat to take Anheuser on. I can’t recall whether it was a threat to take ’em over or to build a Holmes a Court-style stake of influence, but it ended with Elliott being escorted to the front pavement by security. It was a story which had a currency around the time that Elliott was spending a lot of time with Freddie Heineken, so at the time he was moving in pretty substantial but tough circles.
We’ve heard back circuitously from camp Elliott and it seems that Big Jack did indeed meet with “old man Busch”, that being August A Busch III, the current non-executive chairman who has been on the board since 1963. (Check out the current AB directors here. You’ll note that the average length of service is about 15 years so change doesn’t happen too quickly down there in St Louis.)
The meeting took place in New York and while the security escort element is not correct, there was clearly plenty of tension. Big Jack acted on his threat as Elders IXL ended up buying a small stake in Anheuser-Busch from family members who were unhappy with the incumbent management team at the time. Elders did sell out for a “good profit” but there is still a strong element of “what might have been” when you look at the Anheuser Busch of 2005.
Anheuser-Busch had about 36% of the US beer market when Elders tried to stir up the register. Now it is worth about $45 billion, has just under 50% and produces the equivalent of a whopping 42.6 billion stubbies of beer a year – 2,133 stubbies for every Australian. That dwarfs the slimmed down, domestically focused Foster’s of today which produces the equivalent of 2.5 million stubbies of beer a year – just 6% of the US leader’s output.
Only about 10% of Anheuser-Busch’s sales are outside the US and this is where Big Jack’s vision could have worked for everyone. Who knows, maybe an Australian company could have finished up as one of the big four, rather than South African Breweries, Belgian outfit Interbrew and Dutch firm Heineken dominating as they do today. It’s true that Elders also had many discussions with Freddie Heineken trying to merge Foster’s and Heineken but Freddie, who owned 50%, wouldn’t sell.
The original Adolphus Busch came to America from Germany in 1857, settling in St Louis, Missouri. In 1866, he founded the Anheuser-Busch Brewing Company with his father-in-law, Eberhard Anheuser. Busch discovered a way to pasteurise beer, allowing national distribution of his product. By 1901, Anheuser-Busch’s brewery in St Louis was the nation’s largest and today it remains the world’s biggest. Busch also developed a beer lighter than those commonly sold at the time. This beer, named Budweiser, ultimately became the world’s best seller. Bud Light, launched in the 1980s, is now the biggest selling beer in the US.