Penn Wealth Publishing

2013.02.03 Journal of Personal Excellence Vol 1 Issue 1

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Volume I Issue I 4 Harvesting Gold Creating & Defending Multiple Income Streams Principles of Leadership Why Budweiser is No Longer an American Icon One of the most fascinating ways to understand leadership involves studying a case in which a leadership void leads to a series of unfortunate, unintended events unfolding. Such is the case with Anheuser-Busch, and the fish that got away. While not protectionists by any means, we do like to support American companies when at all possible. If there was one industry which seemed safely in American hands a generation ago (at least on our soil), it would have been the beer business. Between Bud, Coors, and Miller, sales of beer in the United States were overwhelmingly domestic. But, alas, one by one the great American beer companies became the property of foreign entities. Using Budweiser for our research study, we find that a dearth of executive leadership can play a major role in why companies fail. Back in 2008, the Wall Street Journal ran a fascinating piece entitled ���AnheuserBusch: The Incredible Secret Story of the Fish that Got Away.��� At the time, many of us in the investment world were wondering how such a seemingly well-run company like Bud could have ended up in the mouth of a Belgian brewer named InBev. What we found was a combination of inept leadership in Washington and TFB (Trust Fund Babyism) at Anheuser. The inept leadership in Washington piece of the puzzle came in the form of the Fed/Treasury cabal allowing the U.S. dollar to sink from parity with the euro to the euro being worth about $1.60 in 2007/2008 when this deal was done. The specious argument made was that a weaker dollar allowed us to export more goods overseas, as those goods were cheaper to foreign pockets. Sure, that is true, but that also meant that American companies were a lot cheaper for foreign buyers. If parity had existed, it is doubtful the deal could have been done. The beginnings of the other factor, what we label as TFB disorder, take us back to a deep sea fishing trip over a decade earlier. While a stronger dollar would have made AB too expensive to buy, had Bud been able to purchase its Mexican partner, Grupo Modelo (think Corona), it would have had too much debt on its books for InBev to swallow. Back in 1993 when Bud was working on the deal to buy a minority stake in Modelo, trust fund baby and avid outdoorsman August Busch III set up a deep sea fishing adventure off the shores of Cabo San Lucas with Modelo executives in an effort to win their trust. Under a gorgeous bright blue sky on the first morning of the trip, Buschie snagged a large marlin. As he was fighting to reel the fish in, he was told that he had an important business call to take. Instead of finishing the job, he abruptly handed the line to a stunned Valentin Diez, a senior Modelo executive and a major shareholder. Busch returned from the call to announce that the trip had to end after the first day, but even that wasn���t good enough for him. After the Modelo executive continued to struggle with the line thrust upon him, August told the team that they had to move more quickly, as he needed to get back to shore. The big fish was given back up to the Pacific. Friends of Diez��� said he felt awkward and relegated. If this was how Busch does business, he wanted little part of it. Tensions remained from this fishing trip gone awry, and even though it was August Busch IV who was serving as CEO at the time of the InBev deal, AB might have been able to buy a controlling interest in Modelo had the relationship been friendlier between the two firms. It is so easy for someone born into a life of privilege and position to get drunk with that power. Many handle it adroitly, but the ones who believe that others are there to serve them, or that employees are simple pawns in their game of chess, will eventually receive their comeuppance. The bible speaks of the virtues of humility and the dangers of hubris. Auggie III, in our opinion, never learned that lesson; nor did his son. But we will save IV���s story of drunkenness, death, and intrigue for another time.

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