How Goose Island sale to Anheuser-Busch changed craft beer is detailed in new book

The story deserved a book.

That book, “Barrel-Aged Stout and Selling Out: Goose Island, Anheuser-Busch and How Craft Beer Became Big Business” reaches bookstores June 1. The Goose Island story starts small: one man’s idea for a second career in the nascent American brewing industry during the mid-1980s. It winds up telling a story far larger than its own — the story of craft beer: innovation, struggle, wild success and a complicated crossroad.

Life has been anything but simple for Goose Island as part of the world’s largest beer company. Here is where the brewery’s story began.

Excerpted from “Barrel-Aged Stout and Selling Out: Goose Island, Anheuser-Busch, and How Craft Beer Became Big Business” by Josh Noel, to be released June 1. Copyright 2018 Chicago Review Press, $19.99.

On a Thursday evening in 1986, as a spring storm pounded the Dallas-Ft. Worth airport, John Hall sat in an airplane on the rain-glazed tarmac and did something he would recount for the rest of his life. He reached for a magazine.

John was forty-four and had grown from a low-level sales grunt to one of the senior-most executives at Container Corporation of America, a corrugated box manufacturer housed in a sloping high rise in downtown Chicago. John had a fine view of the skyline from his fifty-fourth-floor corner office, but he spent much of his time on the road. He was headed home from a few days in Ft. Worth and Houston, visiting two of the plants he managed. But the plane wasn’t moving, and the rain wasn’t letting up. There was talk of tornadoes. He needed distraction. Tired and ready to be out of his suit, John pulled a magazine from the seatback pocket ahead.

He thumbed through the pages until landing on a story about a tiny brewery 100 miles north of San Francisco, opened three years earlier by a pair of friends who thought their home brew might be good enough to appeal to a broader audience. It was. Hopland Brewery was California’s first brewpub and just the second in the nation since the repeal of Prohibition in 1933. It had become a destination for thirsty travelers headed north on California’s fabled Highway 101, with a simple set of directions: “Take the Golden Gate Bridge out of town for two hours; the brewery is on the right.” Hopland Brewery made four hundred barrels of beer during its first year — less than what the largest brewers might pour out in a day.

That tiny brewery 2,000 miles from home stirred something in John on that Dallas tarmac. He’d loved beer since the age of fifteen, when he and his childhood buddies frequented the Waterloo, Iowa, bars that knew better than to ask the ages of their patrons. Because John’s growth spurt didn’t come until his later teens, he had to strain to see over the bar as he dropped a quarter and asked for whatever lowbrow Midwestern lager was on tap. Old Style. Grain Belt. Gluek’s Stite. It didn’t much matter. Young John Hall liked beer.

Older John Hall liked beer, too. He’d grown into a stocky man, not quite six feet tall but thickly built from near-daily workouts. He wore an extra layer around the middle from a life of white-collar comfort, and his hair began fleeing in his twenties, which left him bald on top with a fringe of brown circling the back and sides of his head. He believed in respect and clarity and decorum, and though he wasn’t the type to close down a bar, he was able to have three or four pints with virtually anyone before heading home to read that day’s Wall Street Journal. His kids called him “Encyclopedia” because he seemed to know everything.

As a vice president at Container Corporation, he’d traded the cheap lagers of his youth for the beers discovered on the other side of the Atlantic: endlessly drinkable English bitters, deftly layered Belgian ales, and crisp German lagers. European beer looked, smelled, and tasted different from anything John knew at home. A hefeweizen in Bavaria filled his nose with the tang of lemon, the richness of banana and clove, and arrived in gorgeous, sloping half-liter glasses that felt weighty and dignified in his hand. He could never understand why the genius that flowed from the average European tap barely existed in the United States.

Beyond a love of beer, a scrappy, young California brewery resonated with John because of a simple truth after twenty years in the corrugated box industry: he was bored. Corporate finance had been good to him. He’d climbed from a fresh-from-business-school assignment that initially disappointed him — salesman at Container’s plant in Sioux City, Iowa — to a lofty perch overseeing a thousand employees at eight plants from the Chicago headquarters. He’d become the $2 billion company’s youngest vice president, met Vice President George Bush at the White House, and done well enough to buy his family a condo in Vail. But he couldn’t fathom being a cog in someone else’s operation for another twenty years.

John had already survived one takeover of Container Corporation, when Mobil oil bought the company in the early 1970s; he watched a bunch of executives cash unfathomably large checks on their way out the door. He didn’t want to work for an oil company but gritted his teeth and earned his way to the top. A second takeover was ahead, by another box company, and John had no interest in navigating it. Buyouts led to jobs cuts, efficiencies, and changes in culture. He was assured he would survive but was uninterested. He craved a smaller operation where he was the boss and could make the decisions that would lead to success or failure. “If I’m going to work for an asshole, it’s going to be me,” became his go-to line. The sale would be his chance to cash in his Mobil stock and leave with a seven-figure nest egg.

John had considered a run at acquiring Container Corporation, but he couldn’t raise the cash. He weighed buying a label company in Kansas City — it was heavy into digital imaging, which struck him as the future — and a printing company in Mississippi. He hired a firm that brokered sales of small and medium-sized businesses to find a fit. Nothing fit. And then he reached for that magazine. It struck him immediately. A brewery. A brewery was the answer.

———

When John Hall was born in 1942, the United States was home to nearly a thousand breweries. By the time he began drinking in those Waterloo bars in the late 1950s, the number was down to two hundred. As he read that magazine article, in the mid-1980s, there was scarcely more than one hundred.

That plummeting figure, and the creative stagnation of a once-vibrant industry, could be traced to a cultural shift that took root decades earlier.

In the years following World War II, families grew; suburbs did too, and tastes homogenized. The United States became an engine of production and consumption, and that was particularly true for how the nation ate and drank. Fresh and local was traded for processed and prepackaged, cheaper and faster, familiar and ever more abundant. Labels became the language of food and drink. Bread was Wonder. Soup was Campbell’s. Breakfast was Kellogg’s. Beer was Budweiser.

Like most brands that rose to prominence during the postwar years, the nation’s largest beer company had started small. Bavarian Brewery was founded in 1852 by George Schneider on a plot of land just south of downtown St. Louis, a literal stone’s throw from the Mississippi River. Before the end of the decade, Schneider had defaulted on a $90,000 loan, which sent control of his brewery to Eberhard Anheuser, a German immigrant and prosperous soap manufacturer.

Anheuser soon joined forces with his son-in-law, Adolphus Busch, who owned a wholesale brewing supply store. Before long, the two men renamed the brewery for themselves: Anheuser-Busch. In the 1870s, the partners were approached by Busch’s friend Carl Conrad to brew a recipe inspired by a Czech style of pilsner called Budweis, which wowed Conrad during his European travels. He sold the beer, which he called Budweiser, as a premium product in the United States. Between the advent of railroad shipping and Conrad’s dogged sales efforts, Budweiser became a national sensation. When Conrad declared bankruptcy in 1883, Anheuser-Busch took control of the prized brand. Touting the beer for its time aged with wood from the beech tree — done not for taste but to aid filtering — Budweiser became the company’s engine. Twenty years later, Adolphus Busch created a brand that buoyed Anheuser-Busch even further, a premium beer available only on draft meant to reach a high-end drinker. Busch called it Michelob.

Fueled by its two core brands, Anheuser-Busch became one of the nation’s largest breweries, surpassing one million barrels of production in 1901. It doubled that total during the next forty years while cementing its position among America’s leading brewers. The growth from there was staggering; thanks to homogenous postwar tastes, Anheuser-Busch churned out thirty-seven million barrels of beer annually by the early 1960s. Once a decidedly local undertaking in neighborhoods from coast to coast, beer drinking became about the brands that looked and tasted the same in Idaho as in Iowa, Flagstaff as in Ft. Lauderdale. Though it continued to tout its St. Louis roots, Anheuser-Busch opened large breweries across the country: Newark in 1951, Los Angeles in 1954, Houston in 1966, Columbus in 1968, and on and on with a regional unfolding that ended with its twelfth brewery, in 1993, in Cartersville, Georgia. Along the way, an ice-cold Budweiser became the American standard. Anheuser-Busch marketers tried to personalize the experience — or make it humorous, or the embodiment of masculinity — while brewers and their automated systems churned endless waves of beer to an airtight distribution network reaching seemingly every corner bar and convenience store. American beer drinkers had been conditioned to believe they were choosing Anheuser-Busch’s beer, but that was only half true; Anheuser-Busch had left them few other options.

A handful of other large breweries hung around to battle the St. Louis goliath. One was Schlitz, a Milwaukee brewery that was the nation’s top beer maker for much of the first half of the twentieth century. Through the 1950s, it ran neck and neck with Anheuser-Busch for national supremacy. But Anheuser-Busch surged ahead during the 1960s, amid a wave of industry consolidation, and never relented. In a bid to keep up, Schlitz turned to shortcuts during the 1970s: flavor additives, gel to combat haze, and a cheaper, high-temperature fermentation process instead of the traditional time-intensive lagering method. In a matter of months, the reengineered Schlitz destroyed the goodwill it had spent a century building. During the 1970s, Anheuser-Busch accounted for one-sixth of the beer sold in the United States; by the 1980s, due in part to Schlitz’s colossal errors, it was up to nearly one-third.

Stepping up as chief rival was Miller Brewing, which had an almost identical origin story: founded in the mid-nineteenth century (1855) by a German immigrant (Friedrich Muller) who took over a failing midwestern (Milwaukee) brewery (Plank Road Brewery), which he renamed for himself and slowly turned into a giant. Owned briefly in the 1960s by a Maryland conglomerate, Miller Brewing landed in the hands of cigarette titan Philip Morris, which turned Miller into a formidable brand with the introduction of its lighter-calorie — or “lite” — beer in the early 1970s, a recipe bought from bankrupt Chicago brewery Meister Brau. Equally important, Miller employed retired sports stars to promote the beer in television spots in which a good-natured argument unfolded: Did the beer “taste great” or was it “less filling?” (The tagline only flaunted its lack of character: “Everything You Always Wanted in a Beer. And Less.”)

Anheuser-Busch followed in the early 1980s with Bud Light and several iconic advertising campaigns of its own, which usually relied on charming, anthropomorphized animals or women in bikinis. The major brewers tracked each other like sleuths, analyzing competing beers in laboratories and tweaking recipes as necessary. When one dropped the bittering, the other followed. By the mid-1980s, the American beer industry amounted to a war: Which of two companies could make the less-flavorful beer and most effectively advertise that flavorless beer on television? Sales grew wildly, but in every other way, a once-vibrant industry bottomed out: no flavor, no variety, and no competition. In 1950 the nation’s top-ten brewers made 38 percent of the beer. By 1980 the top-ten brewers made 93 percent of the beer. Bud and Miller alone accounted for nearly 50 percent of the nation’s sales — a figure that would inch toward 70 percent during the decades to come.

———

John Hall was never a fan of the companies that had stifled American beer. As a young man, he embraced blue-collar Midwestern brands, particularly Old Style, brewed amid the bluffs of the upper Mississippi River in La Crosse, Wisconsin, about 130 miles northeast of Waterloo. His friends drank Budweiser, but it never fit him. It was too obvious. The difference between what was inside cans of Budweiser and Old Style might have been negligible, but the difference on the outside felt like everything. Old Style’s blue shield, red ribbon, and the words “pure genuine” meant he was different. Budweiser meant he was like everyone else.

Stirred by that small brewery in California, John knew he was still different. Anheuser-Busch and Miller had slugged their way to the bottom, but that only meant opportunity. The few surviving breweries largely made the same flavorless lager. But not Hopland Brewery. And that meant there was room for more.

As John would learn, there was more. The world of craft beer was small but scrappy. (Most people called it microbrew at the time, but the term craft beer is widely pegged to 1986 — just as John Hall was discovering the industry.)

The nation’s forefather craft brewery, Anchor Brewing, belonged to Fritz Maytag, who, like John Hall, was a child of means from small-town Iowa. Maytag had graduated from Stanford in 1959 with a degree in American literature, then studied for a couple years in Japan before dropping out of graduate school to return to San Francisco. On a whim, he bought the faltering Anchor brewery in 1965, which made uneven beer and seemed likely to close in the midst of the national beer malaise. Maytag tweaked the recipe of its trademark steam beer and slowly rehabilitated his investment. More breweries followed: New Albion, in Sonoma, California, started by a former US Navy cadet who discovered the joys of home brewing while stationed in Scotland; Sierra Nevada, of Chico, California, launched by a home brewer who had wrestled with whether to buy a bike shop instead; and Boulder Beer Co., Colorado’s first brewery, which was started by a team that included two University of Colorado physics professors. Beer was becoming an industry of second acts. It was what people did for love after staggering around in matters far more practical.

The movement was a slow return to national form. Before Prohibition mostly killed US brewing in 1920, the country had been home to thousands of small breweries. When selling alcohol became legal again, in 1933, the industry recovered quickly: 857 breweries operated within a decade. But for the next thirty-seven years, Anheuser-Busch, Schlitz, and Miller fought it out at the top with a handful of others as the number of American breweries dwindled. The county’s entry into World War II killed nearly 40 percent of the beer industry and homogenizing tastes did the rest. The bottom came in 1978, when the nation was home to just eighty-nine breweries owned by barely forty companies. (Anheuser-Busch owned nine of the breweries.) Big, bland beer was winning, and more than one industry analyst predicted fewer than ten American beer companies would remain by the year 2000.

But then came the worst thing to ever happen to Big Beer: House Resolution 1337, “An Act to amend the Internal Revenue Code of 1954 with respect to excise tax on certain trucks, buses, tractors, et cetera, home production of beer and wine, refunds of the taxes on gasoline and special fuels to aerial applicators, and partial rollovers of lump sum distributions.”

Home brewing became legal.

California senator Alan Cranston sponsored the key amendment in 1978 after a group of home brewing constituents lobbied him to overturn an antiquated law that taxed the production of beer brewed at home for personal use. The resolution took effect February 1, 1979, and allowed a nation to discover fresher, fascinating alternatives to the handful of beers that had strangled generations of taste buds.

As Ken Grossman, founder of Sierra Nevada Brewing Co., wrote in his 2013 book, “Beyond the Pale,” home brewing woke a sleeping giant: “We wanted to share our beer, our hoppy, dark flavorful creations. Our friends loved our beers; certainly we could find other people who would as well.” Grossman was inspired to go professional by a visit to Anchor Brewing and a tour given by Fritz Maytag. He was taken with Maytag’s model of choosing not to compete with cheap light lagers, but instead sell premium products at premium prices. Maytag had embraced innovation and risk, which led Anchor in 1972 to become the first American brewery in decades to brew a porter or, three years later, to release Old Foghorn, a thick, boozy barleywine. In 1981 Grossman followed with his own piece of the revolution, introducing an unlikely flagship: a pale ale that would differentiate him in the market. Sierra Nevada Pale Ale showcased the very ingredient Big Beer had suppressed for decades: earthy, piney, floral hops. What’s more, they weren’t bitter old-world hops; they were American hops, bright, dank, fruity, and grown in the Pacific Northwest.

Following Sierra Nevada’s lead, the US brewing industry slowly chugged to life:

Brewing, to John Hall, seemed just risky enough to be fun but sensible enough to be practical. Drinking in America had become an increasingly intimate experience. California wine had matured into a force during the 1970s. A Seattle coffee company called Starbucks had just opened its first store in Chicago — its first in the United States beyond its home market. People were becoming more deliberate about how they ate and drank; John figured beer was ready to assume its place in the conversation. Homogeny and facelessness helped Budweiser and Miller become giants, but they had no true relationship with the consumer; it was all image and trickery. John would sell something new. The challenge was no different than when he had been a fresh-faced twenty-three-year-old business school graduate driving the long, flat highways of Iowa and Nebraska. The measure of a man was whether he could sell something. For his second act, John Hall would sell beer to Chicago.