Dennis Long is the vice president and general manager of the Anheuser-Busch brewery division. In last Sunday's editions, his first name was incorrect in a photo caption. Also, the estimated 1977 per capita consumption of beer in the U.S. was a record 22.4 gallons and Busch volume this year should approach 40 million barrels. Due to errors involving the words "million" and "billion," these figures were incorrect. There are 15 1/2 gallons in a half-barrel of beer.
Anheuser-Busch's huge brewery here is a reminder that private enterprise once lavished huge sums on man's working environment.
The Brew House correctly has been designated a National Historic Landmark. Built in 1891-1892, the brick fortress with clock tower is a Victorian delight.
Intricate ironwork, painted white, surrounds openings on each floor and is used as stair bannisters, while columns have goldleaf decorations. Natural lighting from huge windows saves energy.And a multistoried chandelier, with the metal carved as hops, hangs through the center of the structure.
Although crowds of tourists gape as these unusual industrial workplace decorations as they are conducted on regular tours, the most unusual fact about the Brew House is that it is not a relic at all, like an old steam railroad locomotive. Busch employes work here around the clock, manufacturing beer and keeping the place so spotless that a dropped toothpick would appear out of place.
No, Anheuser-Busch operates more than a museum, and more than teams of Clydesdale draught horses. While certainly aware of and anchored to a rich history that dates back to 1876, Anheuser-Busch Inc. is today waging a deadly serious business war designed to make certain that the Brew House here remains at least a symbolic centerpiece of the world's largest brewing company.
Although a publicly traded company, Busch remains under leadership of the founding family. Chairman August A. Busch III says his great grandfather, Adolphus Busch, "set out to brew a beer that would be universally popular, transcending regional tastes, preferred over the hundreds of local regional beers brewed in America in the 1870s."
If only Adolphus Busch could see how well his young firm succeeded in producing a truly national brand, and in leading to a dramatic decline in regional beer manufacturing, particularly after World War II.
Today, there are only about 50 American brewers compared with 400 or so two decades earlier. Moreover, the top five companies in the business today account for about 70 percent of sales compared with 60 percent in 1970 (and the top five firms are not the same). By the early 1980s, the top companies' share probably will exceed 80 percent.
Anheuser-Busch dominates the business now as it did at the start of the 1970s, with 23 percent of all sales last year (vs. 18 percent in 1970). What has changed in the business is the arrival of Miller Brewing in the No. 2 spot, with 15 percent of sales last year. The subsidiary of Philip Morris was only seventh in the industry seven years earlier. The other industry giants are Jos. Schlitz, Pabst and Coors.
Overall, U.S. brewers shipped 157 million barrels last year compared with 150 million in 1976. Estimated 1977 per capita consumption of 22.4 million gallons was a record.
But, according to such industry analysts as Emanuel Goldman of Sanford C. Bernstein & Co., the only companies that really count in terms of sales growth are the biggest - Busch and Miller. The prospects are that, although beer consumption continues on an upward trend, most companies remaining in the business won't share the growth on a level consistent with current market penetration.
Dennis P. Long, the 41-year-old vice president and general manager of the Busch brewery divison, agrees with this assessment.
In an interview, Long said his company increased its market share in the first two months of 1978 to a level never before achieved (it was 23.4 percent in 1975 before a three-month strike in 1976 sent annual volume plummeting to just over 19 percent that year).
Long also said competition in the American beer business now amounts to a "two-horse race" between his firm and Miller. "I don't see all of the big five sharing in the 10 percent total market share growth by the early 1980s," he added.
"There is considerable room for growth . . . we have only 23 percent of the market, far less that other companies in other industries," said Long, expressing his view that there is no need for federal government action in response to the increased dominance of sales by a few companies. "It's been done by consumers. There has been no collusion. It will continue."
Recovering in a strong way from the 1976 strike, Busch last year listed record profits of $91.9 million ($2.04 a share), a gain of 66 percent over the previous year. Sales rose 27 percent to a record $2.2 billion and beer sales volume was 36.6 million barrels, an industry record.
Although reluctant to make specific forecasts, Long said beer volume this year should be close to the 40-billion-barrel range. Expansions at beer factories across the country, including a doubling of capacity at the modern Anheuser-Busch brewery at Williamsburg, should bring the firm's annual output capacity to 51 million barrels by 1981.
To achieve a sales volume of that magnitude, Busch is expanding its product lines and markets for existing drinks. Long said the company's program includes:
Introduction in the District of Columbia and 30 states on April 3 of the company's Michelob Light Beer. This beer has been marketed on an experimental basis since the first of the year in five states - Ohio, Florida, Georgia, South Carolina and Michigan - and "exceeded all sales expectations."
Initial sales, also on April 3, of Busch Bavarian beer in the New England states. Currently available at popular prices in the Midwest, Southeast and California, Busch will be priced in line with Budweiser in New England. If the marketing there is successful, it will be expanded to other markets, including metropolitan Washington.
Test marketing later this year of an entirely new drink, which "could be in competition with certain soft drinks." Long would not describe the product further but said the advertising agency of Needham, Harper & Steers has been hired to begin marketing. Three Busch directors quit the board of St. Louis-based Seven-Up Co., when the new product first was revealed, because of a potential conflict. Seven-Up said it did not think the drink would be in the lemon-lime family, and market analysts expect Busch to offer a low-alcohol fruit-type drink similar to shandy, sold in Australia and Europe.
Possible introduction of a "stronger, dark" beer at ultra-premium prices, an entirely new market sector, and possible sales for an imported beer.
The light beer is obviously a key to the Busch strategy, because No. 2 Miller now dominates that sector with two-thirds of the sales for its Lite. Michelob Light will have about 134 calories, or 20 percent less than Michelob, but more than the 96 calories in most light beer.
Long said the popular attraction of light beer reflects a general trend toward lighter whiskies, wines and liquors. Light beers account for about 10 percent of overall industry volume, and Long predicted that share will increase to 20 percent in five years.
"There is more awareness of self in everything people do. If I do things lighter, it's better," said Long, describing the beer's appeal. Although introduced in the 1960s, light beer did not become popular until 1975 "when Miller opened the market for the beer industry," he readily admitted. "But that doesn't mean we were not ready for it."
Said chairman and president Busch, "Conseumer acceptance of Michelob Light has been so outstanding that we accelerated our introductory plans considerably in order to meet growing demand."
Busch earlier had introduced Natural Light in mid-1977, which now ranks second to Miller Lite, so the St. Louis firm now has two entries in the light beer race.
Long said the Busch strategy with Michelob Light is to seek "greater market segmentation," with a less-thin beer than most light beers but still with less calories than a traditional brew. Eventually, Michelob Light will be brewed at all the company's plants and sold nationwide. Overall, Busch capital spending this year will exceed $200 million (up from $157 million last year) and will total $1 billion over the next five years.