As I've noted here before, my concern about the InBev acquisition of Anheuser-Busch stemmed from my fear that a Great Company would, under the new leadership, become Just Another Company. (And as I've also said here, and in other places, you don't have to like the beer in order to respect A-B's relentless, obsessive concern for quality. See, for example, this sort-of-related essay.)

Anyway, Jeremiah McWilliams, our man on the St. Louis beer beat, investigates this very topic in a piece in today's St. Louis Post-Dispatch. Also see his related entry at Lager Heads, his excellent blog-about-beer.

I got an email the other day from a person who used to work at A-B InBev, who wrote to share some thoughts about what it was like to be on the inside during the turmoil of the past few months.

He was kind enough to allow me to share his comments with you, although I'm posting his comments anonymously in order to protect his identity. (I hasten to add that I have confirmed he is who he told me he is.) I've deleted some of the text for the same reason. His observations are fascinating and thoughtful.

. . . .I don't think any of the messages on the blogs fully convey the train wreck that this InBev deal appears to be. The company was fat with management, but thin on technical people -- and the company has a lot of highly automated systems. The tech people that understand these are leaving.

For example, there is only one man who knows how the entire domestic system's order write system works (written in Fortran years ago -- not a common language nowadays), and he just took the early retirement package. I think they realize the peril and are bringing him back for 3-5 hours of consulting a week, but the whole thing is on thin ice . . . . The news that the contractors are getting 10% cuts hit the contractors this morning, and they're mad as hornets. It's approaching the level of mass revolt.

The place has always been somewhat dysfunctional (at least as long as I've been there), but I think most large organizations are. . . . But the Busch culture has been really odd, because the dysfunction has heretofore always been gilt (masked) with gold. My own feeling regarding that is that the Busch family has always had a sort of inferiority complex associated with the working-class nature of the drink: I suspect there was always some back-of-hand chatter at the coming-out balls in early 20th century St. Louis. So those old Germans ran roughshod over all that with money. Lots of it.

In any case, the gold is gone now, and the dysfunction is now out in the open. I was in a meeting . . . with several members of good, competent mid-to-upper management types, and the tone was astonishingly similar to the tone you see in one of those old war movies, where grim GIs sit in a bunker under heavy fire and make quiet, wry jokes about the hopeless situation and the incompetence of the top brass. No one was angry, just jaded and tired. These guys are trying to do their jobs and make this work, but it's almost like they've been ordered to charge into withering fire -- they're not sure it'll do any good, or if they'll survive the task.

One of the problems ABInBev will face is that they are following a script that will probably not work well in the environment AB built. . . . .[S]upposedly that script is a book that Brito thinks is the bible of business called "Double Your Profits: In Six Months or Less". It sounds to me a lot like something you'd see hawked on an infomercial, but I know someone that's ordered and read the book, and supposedly you can go through it with a pencil and check off the steps Brito's taking, item by item . . . .

Supposedly, one of the tenets in this book is that you cut until someone screams loud enough, and when they do, you put that part back.

Problem is, these aren't things you turn off and on at will -- even if you have lots of money to do so (and I'm not sure InBev does). For example, the warehouse picking system is a complex program which only two men really understand. And one of those men is now working elsewhere. There is no way to train someone on this stuff in short order, and there will likely be no successful way to beg people back: no one I know yet is either leaving for money or would return for it. . . .

He's spot-on about the "inferiority complex": In the 19th century and into the 20th century, the rich-and-powerful of St. Louis society looked down on many of the German immigrants who'd done well, and being a brewer didn't help. St. Louis elites held people like the Busch family at arm's length

And to his comment about that, I would add this: When I started researching my book, I figured out right away that American beermakers, and especially the Busch family, had reason to be paranoid and suspicious of "outsiders." Beermakers in particular faced real hostility from prohibitionists. The more well-known the brewer, the greater the venom. And of course because of their German heritage, many of them were accused of disloyalty and treason during World War I. (Never mind that they were American citizens...)

Again, that was especially true for the Busch family, which has been denounced by name not once, but twice, on the floor of Congress.

Also, his comment about the clash-of-cultures is dead-on. David Kesmodel predicted as much in a piece in the Wall Street Journal last summer. But anyone who knows the history of A-B would have predicted it: A-B's philosophy has always been "spend money to make money and make friends."

Or, as industry analyst Harry Schuhmacher calls it, A-B's "all in" approach: At a meeting for sales reps or distributors, it wasn't enough to have one shrimp platter; there would be fifteen shrimp platters. InBev under Carlos Brito operates from a completely different philosophy: Return maximum value to shareholders and do so by slicing costs to the bone. Those two approaches to business are at opposite ends of the spectrum, so, well, it was easy to see this trainwreck coming.

My thanks to my (anonymous) correspondent. MUCH appreciated!

From Jeremiah McWilliams of the always-informative [example of why journalism must survive] Lager Heads, news that Bob Lachky is leaving Anheuser-Busch.

I'm not even remotely surprised. Heck, I'm 55. I can understand the desire to do something different. Especially when what you've been doing is slammed by a tsunami named Carlos. Although I absolutely believe the take on it: that Lachky had been thinking of this for some time. (Because he'd no doubt seen that the times they were 'a changing.) (For which we ought to applaud his ability to take the long view of the big picture.) Lachky, by the way (whom I've only met once) is the guy who responded (by paper letter) last summer to my plea that A-B try to save the archives and library, for which I was grateful.

Bob: good luck and godspeed.

News today from MolsonCoors: Beer sales are down.

Of course they are. And you're scoffing at the idea that somehow this is all due to the dollar's strength against other currencies. That's because you read this and this. S

ee how all your new-found historical perspective is paying off when you read the news? History's not so bad. Really, it's not! (Note, too, that MillerCoors joint venture is indeed paying off, thanks to all those "efficiencies" the venture's leaders began working on a year ago. Which may be what saves them from the fate I predicted.) (Although to be fair to myself, when I made that prediction, I had no idea that InBev was about to ram the gates.)

. . . which I was doing just a few days ago: This just in from the hops industry. (Via, and tip o' the mug to, the folks at Rooftop Brew)

Stan replied to my previous post, and you can read his entire comment at that entry -- but I want to highlight something he wrote:

I worry, since they've been a great supporter of the Halltertau hops region, about what happens to the hops growers there when the bean counters step in.

He's referring here to Anheuser-Busch InBev, which is now in the hands of bean counters par excellence. Stan's right to worry, as are those hops growers. Indeed, one of my fears during the Great Takeover was that A-B will go the way of other great breweries that have been destroyed by bean counters -- the classic example being, of course, the spectacular collapse of Schlitz Brewing in the 1970s.

I console myself with this thought: People at A-B have read and studied my book (that's not intended to be boastful; it's fact), and so they know about what happened at Schlitz. Maybe they can persuade Brito to read that section of that chapter. (*1) Time will tell

. __________________

*1: A used copy of the book, of course, because he'd never agree to, ya know, buying a new copy. Although the library at ABI is still intact and it contains several copies. So the guy has no excuse.

Ah. Finally. The answer to a question that I've been pondering for months: Would new, leaner, meaner Anheuser-Busch InBev scale back A-B's traditionally, ahem, major presence during the Super Bowl?

The answer, apparently, is no. If you watch the game, you'll see 4.5 minutes of A-B IB advertising. Worth noting, if only because television ads, especially during the Super Bowl, are the main flaw in the main event of what is otherwise a months-long, televised, guaranteed cure for insomnia.

Tip o' the mug to a number of sources, some "free," some not -- but my (free) favorite is Jeremiah McWilliams at Lager Heads.

Jeremiah McWilliams, our man-on-the-scene in St. Louis (okay, not MY man on the scene, but you get my drift), has an update on the layoffs, including a eye-witness account from a now-former A-B employee. Read it here. And while you're at it, why not add Jeremiah's Lager Heads to your rss feed? (How do I love thee, rss feed. Let me count the ways.) On the other hand, if you do that, then you have no reason to visit my blog. What to do? What to do?

Hmmmm.......... My anonymous commenter yesterday may be right. Because this sure ain't reassuring...... Again, much of this would have happened no matter who was in charge. After all, August IV more or less had to promise this in order to stave off the sale of the company (not, of course, that it did him any good.) And then the economy tanked. Still. The brute reality is, well, ugly. As always, my thoughts -- and my perhaps-unwarranted-optimism -- are with the good folks in St. Louis.

Yesterday, I got an email from a former employee at Anheuser-Busch. He's obviously not happy about being laid off, but he's also sad about the sale of the company and fears for its future under the new InBev regime. He gave me permission to post his comments -- anonymously. His first email to me came in response to my comments yesterday on Stuart Varney's program on Fox Business Network (I'm a regular contributor to Varney's show.)

Just saw your interview on FBN with Varney. Shame on your frivolous approach to a complex industry. Many of the jobs cuts will profoundly effect the final product. Packaging materials such as glass and cans can be bought at varying levels of quality. Brewing materials such as rice can be purchased here in the U.S. (unbroken grains) as well as Africa, Europe and Asia )who knows). The best are procured, tested and packaged by a highly competent group of people that will no longer be employed.

If Inbev were such a great company, why have they never had any meaningful organic growth with any of their current portfolio of brands? Everything that they've accomplished has been through buying other companies and cut, cut, cut.

Don't dismiss this American business success as bloated.

He's right: I unintentionally sounded callous. At the time, I was simply responding to Stuart's question, but I did not add my usual caveats about the human toll the sale would have. I was assuming, stupidly, that most people listening had seen me before (I'm on regularly) and knew how much I had opposed the sale and how much I feared for the company's future. I got a nice reply from him, which is also worth sharing:

As you probably figured out I just took the enhanced retirement package after 30 years of proud service in packaging material design. So now I have time to watch FBN in the middle of the day! Having said that, the sad reality is that most of my former colleagues will shortly become unemployed along with most of the engineers that made the delicate balance between cost efficiency and quality happen.

Myself and former department are well aware of the current quality of materials that Inbev has been importing to the U.S. through the previous distribution agreement and it certainly is not up to the standards that we tried to build for our brands. Just look at their packaging on the store shelves.

Only time will tell if Inbev develops plans to purchase commodities as has been done in the past or elects to reach out to the best "worldwide" sourcing and pricing.

Lastly, I don't accept that Inbev is a marketing company. If they were, Stella, Becks, LaBatt's and their South American brands would be worldwide better sellers. My belief is that they had wrung all the costs out of those acquisitions and needed a way to "grow" something new.

Well, enough of my "highly partisan" point of view about AB. I'm not really a harsh person, just protective of the house that beer built.

My thanks to him for taking the time to write, and to share his views with me (and you). As I told him, I am optimistic (perhaps stupidly so) that the people at A-B will take a cue from what happened at Schlitz and not screw with the beer. We can hope........

By now the news out of St. Louis is about a day old: Job cuts at Anheuser-Busch. Lots of them. Not surprising. August IV more-or-less promised them last summer while the InBev deal was still a bad dream. Still -- a sad day for the fine folks at A-B, who are, in my experience, dedicated to their work and the company. I'm sure they knew it was coming but .... For excellent coverage on the event, I turn the "mic" over to the man-on--the-beat, Jeremiah McWilliams at the St. Louis Post-Dispatch. The link is to his "Lager Heads" blog, but there's plenty of other team coverage by Jeremiah and his colleagues here. To my friends at A-B: I'm thinking of you.

One-stop shopping for all things A-B/InBev. The St. Louis Post-Dispatch has created a web page to "hold" its InBev/A-B coverage from the past few months. The page also contains links to a number of cool audio/visual features about the deal and the companies involved.

I know I'm the only person who's choked up about this. What can I say? I'm a historian. As I noted elsewhere, I take the long view of the big picture. And as I noted a few days ago, some of you might actually miss A-B. Anyway ....

Next-day addition to original post: Just realized how callous the above sounds. Obviously I'm not the only person who cares about this. Many people do. Thousands of people. Especially the ones who already have or are about to lose their jobs because of the merger. My apologies.

Today the Justice Department approved InBev's purchase of Anheuser-Busch, subject to InBev unloading Labatt's USA. Read more here. The lovely and always-alert Harry Schuhmacher at Beer Business Daily, the deal itself may close sometime next week.

Why does my brain keep singing "Yer gonna make me lonesome when you go?" God only knows, because that particular song (one of my favorites) has NOTHING to do with this deal. But I am feeling just a wee bit sniffly about this moment. Sigh. Probably emotional hang-over from the election.

And yeah, yeah, yeah, I know the rest of you don't give a shit. To which I say: SOMEONE has to care. Better me than some random whoever, right?

In the current issue of Beer Advocate magazine (volume II, issue X) a reader chides the magazine's publishers/editors for running ads from the "big" brewers.

". . . I don't think BA should be a forum for the advertisers at BudMillerCoors. In the same way, I don't want to see a Wal-Mart ad in my sub-culture, indie-rock magazine, even if Wal-Mart's music department claims to bring in 'the latest alternative music.'"

He goes on to say:

"BA has a history of representing a subculture of small-batch brewers. If you open the doors to every size of beer, BA loses some of its identity as a billboard for the little guy."

I understand the writer's irritation with what he interprets as an invasion into "his" sub-culture.

But here's another perspective on the situation: Take away the three full-page ads for A-B products found in the same issue of Beer Advocate, and that issue of Beer Advocate might not have appeared at all. Ditto for All About Beer and Draft magazines.

Yes, there are plenty of other beer ads in the beer magazines, but the majority of them are mostly quarter-page ads. That's all that most small brewers can afford, but that's probably not enough to keep the magazines going. Put another way, the "big" brewers (or, as the letter-writer calls them, "BudMillerCoors") help subsidize beer journalism.

If you enjoy reading Beer Advocate, thank A-B (and MillerCoors and some of the bigger importers) for helping make the magazine possible. Sometime in the next few weeks, InBev will likely complete its acquisition of Anheuser-Busch. Expect a fair amount of fist-pumping and "take thats" from beer bloggers and participants in the on-line forums as they celebrate A-B's "demise But here's another thought -- and now I'm quoting myself from a piece I wrote for the October issue of Modern Brewery Age:

The gloating may be premature. It’s hard to imagine Carlos Brito funding an endowed chair at the nation’s most prestigious brewing school, as A-B did at University of California-Davis some years ago. Flip through one of the beer-consumer magazines and look at the expensive glossy ads that A-B buys each month. Will the penny-pinching Brito continue the practice? Can the magazines survive if he does not?

And what about the “Here’s To Beer" campaign?

A few years ago, A-B suggested that brewers mount a collective, industry-wide campaign to promote beer as a sophisticated beverage for discerning consumers, something brewing needed as aging consumers turned to wine and spirits.

Brewers said no thanks, and beer geeks mocked the suggestion. (Would they have done the same if the idea had come from, say, Jim Koch?) A-B went ahead anyway -- and left no fingerprints. As far as the average consumer knows, this was just beer’s version of the milk industry’s “Got Milk?" campaign. Craft brewers in particular would have benefited from the project, but the opportunity is likely gone for good.

And so, apparently, is the Busch family. But as American brewers witness the end of an extraordinary saga, I hope they’ll take a moment to ponder the Long View and the Big Picture: For more than 140 years, the Busch fathers and sons waged war, created enemies, and broke hearts. But their warrior stance also inspired competitors to aim higher and work harder; inspired them to imagine a better beer. As the door closes, take a moment to say thanks.

___________________

My thanks to Pete Reid, editor and publisher of Modern Brewery Age ,for allowing me to quote from my essay "Farewell and Thanks: Why The Busch Family Mattered," which appeared in the October 2008 issue. You can read the entire piece (and the entire issue) here.

As expected today, Anheuser-Busch shareholders have approved the sale of the company to InBev. There's still plenty of legal and financial work to be done on both sides (eg, regulatory approvals, stamp of approval on InBev's financing, etc.), but both sides expect to complete the sale before year's end.

Oh, this is the hard part: when companies merge, when buyouts occur, when two companies launch "joint ventures," the impact goes beyond shareholder statements and stock values. It affects human beings.

The "exiting" process (sounds like a term from a Kafka novel) is now underway at Miller, at Coors, and at Anheuser-Busch. People I respect and admire are losing their jobs. That's the reality.

The beer folk may snipe at the "corporate brewers" all they like, but the reality is that these companies are composed of human beings: The "they" at A-B is your neighbor down the street, the woman in the church choir, the guy you see walking his dog or run into at the coffeeshop, and the mom who always makes time for soccer team fund-raising. Real people. And now, lots of those real people are losing their jobs.

And while I'm at it: I know that many people in the beer world -- beermakers, beer geeks, bloggers, etc. -- despise A-B. But over the past 150 or years, it's been a great employer and provided millions of people and their families with good jobs. It's also been a good citizen in the St. Louis area, donating what is now probably hundreds of millions of dollars to various charitable groups, a tradition that began with Adolphus Busch back in the 1870s. It practiced affirmative action before it had to and hired women before it was required to do so. It's been a great company. Let's hope it continues to be one under the new leadership (which will likely take charge sometime before year's end.)

Analysts continue to, well, analyze the InBev acquisition of Anheuser-Busch. Most seem to agree the deal will go through, but there is doubt, and there is apparently growing doubt that it will go through in its original form. Time will tell, obviously (time, in this case, being sometime in December).

Meanwhile, details here and here.

I'm back from Denver and will post a report about that soon -- but this is a quick drive-by entry about the A-B InBev deal: At least one analyst now rates the deal as a 90% certainty, which is precisely where I'd pegged it last week. (InBev is borrowing the cash to make the purchase, and as I think we all know, banks everywhere took a serious hit last week. No one wanted to loan money to anyone for anything.) (Hey. If I rated the deal as 90% certain, and a Big Shot Analyst agrees with me, maybe I'm in the wrong business!)

And as expected, Carlos Brito has announced that Dave Peacock will serve as A-B's new president. This is good news for everyone at A-B: Peacock, who is currently VP of marketing at A-B, is respected, admired, and liked by A-B employees and by the larger brewing industry.

So -- onward and upward.