What if I could sell beer where there is less competition? What if I could ship beer to the west?
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I'm Stephen's sidekick and business partner, Dave Young. Before we get into today's episode, a word from our sponsor, which is, well it's us, but we're highlighting ads we've written and produced for our clients. So here's one of those.
[Frank Gay Ad]
Dave Young:
Welcome to the Empire Builders Podcast. Dave Young alongside Stephen Semple. And there's a chance that this might just become a beer podcast.
Stephen Semple:
There you go. That would be kind of fun.
Dave Young:
There's so many people that have built beer empires, right?
Stephen Semple:
Yes.
Dave Young:
And so when you told me that we're going to be talking about the king of beers.
Stephen Semple:
The king of beers.
Dave Young:
I'm thinking, "Ah, no, we've already done Sleeman's. They're not the King of Beers. Colonel Pabst wasn't a king." So obviously we're talking about Budweiser.
Stephen Semple:
That's right. Is it?
Dave Young:
Is that right? Isn't that the king of beers?
Stephen Semple:
That's right. That is the king of beers.
Dave Young:
Okay.
Stephen Semple:
Isn't it amazing you can sit there and say, "King of Beers," and everybody understands it's Budweiser. Right?
Dave Young:
And I don't know that they've said that. Have they said that out loud? Anytime-
Stephen Semple:
Yeah. I believe-
Dave Young:
They still say-
Stephen Semple:
I think it's been a while since they've done it, but I remember they used to do the king of beer ads and they would take the cap and they would, remember, turned it around and-
Dave Young:
Oh, yeah.
Stephen Semple:
The top so it would look like a little crown. Remember how brilliant those were? Yeah. I don't think I've seen a king of beer add for a while, but in my heart, when I hear king of beers, I still think Budweiser.
Dave Young:
It's stuck. It's stuck.
Stephen Semple:
Yeah. Yeah.
Dave Young:
Then it's Clydesdales. All kinds of things. Boy, they've been a powerhouse. If we're going to talk about an empire, let's find out how this one was built.
Stephen Semple:
And if you think about it, the best selling beer in the United States is Bud Light and Budweiser's number three. So when you're number one and number three in a beer category in the US, that's big man. And what we know is they sell huge amounts of beer around the world. You go anywhere in the world, they're there. So they're massive. And Budweiser was introduced in 1876 and today there's 18,000 employees working for Budweiser. And in the 1800s, beer was actually a really big deal. Wells, the water was often bad. People drank beer because it was fermented and boiled and frankly, it was safer to drink beer than water.
Dave Young:
And not so full of alcohol that it would just mess up your day.
Stephen Semple:
Right. Right. Yeah. Absolutely. And at the time, beer was served just a few miles from where it was made. Was very local, it didn't have good shelf life, didn't travel far. And one of the biggest places for brewering was St. Louis. St. Louis had an enormous number of breweries. In fact, at the time, there was one brewery for every 600 people in St. Louis.
Dave Young:
That's all right.
Stephen Semple:
So it started off being owned by Eberhard Anheuser who had immigrated from Germany in 1857. And he owned several businesses including a really successful soap maker. And in fact, the beer business for him was a sideline and it was really struggling. It was not actually doing that great. Well, you think about it. How much competition did he have? A lot.
Dave Young:
A lot.
Stephen Semple:
Right?
Dave Young:
Yeah.
Stephen Semple:
Right? So he had this beer business and it was kind of struggling and basically Eberhard wanted to unload this side hustle. And so he approached his son-in-law, Adolphus Busch, and he said, "Hey. I want you to take this over. I want you to run this thing." Now here's the funny thing is, Adolphus Busch didn't like beer. He knew nothing about beer and he didn't like beer. He didn't drink beer. And now he's taking over this brewery, which is kind of funny because people listening to the podcast will have heard ads for one of our client's mother's Brewery who, the founder's Mom doesn't like beer. So it's kind of funny. So we've heard this story before.
He was a business person and the first thing he looked at is he said, "St. Louis was a really important railway hub." So he wanted to explore how to make beer in St. Louis and sell it somewhere where there was less competition 'cause there's all this competition in St. Louis bought big railway opportunity. And he's looking at the West, which is opening up, and he says, "Boy, if I could ship beer to the west, he'd be the only game in town," and this would be awesome. So he invented the refrigerated freight car. So they created and invented the refrigerated freight car using ice. And so he has to borrow money to pioneer this new refrigeration system. He also decides he wants to reformulate beer. He wants to change it to taste to something more American and also using more American product and American grains and corns and things like that than-
Dave Young:
So what was it before?
Stephen Semple:
It wasn't corns before. It tended to be other products, right.
Dave Young:
Okay.
Stephen Semple:
But he also sort of felt like to him, he wanted to make something American.
Dave Young:
Okay.
Stephen Semple:
Right? So he brought in Carl Conrad who wanted to make a version of beer called lager. So lager hadn't been being made in America. But instead of creating the European lager, he decided to put an American spin on it because basically all the Europeans were restricted by the Bavarian Brewing Act. Like they all worked on that act. And he decided, "Screw that. This is America. We don't have to be governed by that act."
Dave Young:
We don't have that. We don't have those rules. Yeah.
Stephen Semple:
We don't have that rule. So he wanted to use American ingredients. And he came up with an American twist on a beer recipe he found in Budějovice, Czechoslovakia.
Dave Young:
There we go.
Stephen Semple:
There we go. The origin of the name, Budějovice, Czechoslovakia. So they named the beer Budweiser. So in 1876, a bud is born.
Dave Young:
A bud. Just a little bud.
Stephen Semple:
Just a little bud. And they started shipping it far and wide and they were the first to ship refrigerated ale and sales surged and then they fell. And he was like, "What the heck? Why did they fall?" And at the time, beer was sold out of a barrel. So they would barrel the beer and they would ship it. And what they found is it was being watered down.
Dave Young:
And we're talking literally a wooden barrel.
Stephen Semple:
Literally a wooden barrel like you would ship a whiskey. That was how they were shipping the beer. And what was happening is the bars would water it down or they would fill the beers with these other cheaper beers. So there is no way to ensure quality control. And this really bothered them because he's like, "We're making this American beer and it's this new taste and it's different and it's all these other things and we really need to control this." So he decides he's going to bottle beer. Had never been done before. In fact, bottling of liquids had not been done. And there would be a label and there would be a cap, but it was going to be a big investment because it was a novel idea because basically they were going to have to figure out how to pasteurize things.
And he had been reading Louis Pasteur's work. But what he also realized is if we pasteurize this and we bottled it and we capped it, it would make the beer even further shelf stable so they could ship it even further.
Dave Young:
Oh. Wow.
Stephen Semple:
So they could ship it further and control the quality and control the branding.
Dave Young:
And do you even need to refrigerate it if you're shipping it in a bottle?
Stephen Semple:
I believe it still needed to be refrigerated. Yeah.
Dave Young:
Okay.
Stephen Semple:
But not to the same degree. And so they built the bottling facility. They built a bottling facility. You know what?
Dave Young:
That's no small feat and-
Stephen Semple:
Actually when you think about it, no, you wouldn't have to refrigerate it when you bottle it. That's right. No you wouldn't need to.
Dave Young:
I think Coors, one of their big things, I don't know if it still is, but it was refrigerated all the way from the factory to the store. It's not a big issue to this. The fact that he built a bottling factory.
Stephen Semple:
Yeah and it was the first mass produced bottled drink of any kind in the world. And this became so successful that Adolphus Busch was made partner and that's now how it became Anheuser-Busch Brewing Company.
Dave Young:
Stay tuned. We're going to wrap up this story and tell you how to apply this lesson to your business, right after this.
[Empire Builders Ad]
Dave Young:
Let's pick up our story where we left off and trust me, you haven't missed a thing.
Stephen Semple:
So the thing I found really interesting about this, so first of all, again, how often do we see this? It's somebody from outside. This guy was not a beer drinker. Didn't like beer, didn't drink beer, was handed this thing. And then he looks around and he goes, "Wow. There's just way too much competition in this market. Where can I go?"
