August Busch IV Inherits a Shrinking Beer Kingdom

Acquisition Buzz Trails Brewery Scion's Ascension to President-CEO Post

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CHICAGO ( -- August Busch IV was named president-CEO of Anheuser-Busch Cos. today, capping an ascension that did not always appear certain for the brewery scion.
August Busch IV has been groomed for the top spot since a young age.
August Busch IV has been groomed for the top spot since a young age.

Mr. Busch -- who had been president of the U.S. brewery since last year -- replaces Patrick Stokes, 64, as CEO of the No. 1 brewer. The promotion places him squarely in the footsteps of his father, August Busch III, the company's current chairman, who will be replaced in that role by Mr. Stokes in December.

The kingdom is shrinking
Mr. Busch, 42, inherits the reins of a company that dominates the U.S. beer business with a nearly 49% market share, but is losing ground in the overall alcohol market to spirits and wine.

The transition appears much smoother than the last Busch family handoff at A-B, when August III led a boardroom coup to oust his father. "Anheuser-Busch is ready for the next generation of leadership," the older Mr. Busch said in a statement today. "August IV has successfully prepared himself by leading the U.S. beer company through a period of great change and challenge. He brings with him the new thinking of his generation, yet appreciation for the great traditions and values of this company."

Mr. Busch brings a strong marketing background to the executive suite, having led the company's marketing efforts. He was responsible for the agency's memorable Budweiser frogs and "Whassup?!" campaigns, and also for the unsuccessful push behind Bud Dry. More recently, he's starred in ads for the upscale "Budweiser Select" light beer brand.

The younger Mr. Busch -- a trained brewmaster who legend has it was fed a thimbleful of Busch beer at 1 day old -- has been groomed for the top spot from a young age, sitting in on meetings even as a child.

Dogged by reputation
But out-of-the-office issues have long dogged him, raising questions about his ability to run the company. He first entered the public eye in 1983, when as a 19-year-old student at the University of Arizona his car ran off the road after he left a bar and his passenger, Michele Frederick, was found dead at the scene. The police found him at his townhouse. Blood and urine samples taken from him were lost or damaged. No charges were ever filed. Mr. Busch claimed he didn't remember what happened during the accident and denied alcohol was a factor.

As he grew older, he developed a playboy reputation that reportedly worried people around the company and its wholesalers. But those concerns appear to have eased now that Mr. Busch recently married, although good-natured jokes about "going clubbing with Augie" were hard to avoid at the National Beer Wholesalers Association convention in Orlando, Fla., earlier this month.

He generated far more buzz at that convention during a private meeting with A-B wholesalers in which he outlined the continuing threat the inroads spirits companies have made with younger drinkers posed to all brewers, and A-B in particular. Several wholesalers in attendance left convinced that he was laying the groundwork for a major spirits acquisition, and much of the speculation since has centered on Absolut vodka parent Vin & Spirit, which is owned by the Swedish government and could be sold soon. Past speculation has linked A-B to a major joint venture with Bacardi.

'Proactive, nimble company'
"We believe that under Busch IV's direction, A-B will become a more proactive, nimble company," UBS analyst Kauml Gajrawala wrote in a note to investors today. "According to industry insiders, Busch IV could be more amenable to bigger, more transformational deals. In our view, A-B will likely engage in additional transactions, and possibly even consider a large acquisition in the spirits and wine industry."

Mr. Busch has "got to worry about not only Miller and Molson Coors, but also Diageo now," said veteran beverage industry analyst Manny Goldman. "But I think he has the experience and knowledge to be up to the task."
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