Apparently c. 1850 there were over forty breweries in St. Louis, thanks to the sizable population of German immigrants. That is a highly competitive field that AB had to muscle into when they began operations in 1852. What led to their expansion and success as opposed to one of the other numerous breweries in the city?
Between roughly 1830 and 1860, beer brewing in St. Louis went from one or two breweries that burned down every so often to one of the city's dominant industries--but "Anheuser Busch" was not yet among them! The owners of "Bavarian Brewing" had a sense of the German-ness of the St. Louis beer market (in terms of manufacturing style but also what we might call the forerunner of cultural kitsch marketing) but not so much how to make beer that people actually wanted to drink. Eberhard Anheuser bought the company out of bankruptcy in 1860 and renamed it after himself, but he was mostly the money. The enormous success of Anheuser and then Anheuser-Busch in the 19th century rests almost entirely on his son-in-law Adolphus Busch, who went to work for his father-in-law after the Civil War.
Busch fixed the most important problem first, which was that the company's basic beer recipe had tasted wretched. But he wasn't just paying attention to innovations in brewing coming out of his homeland of Germany. Almost immediately after the War, Busch with Anheuser Brewing and a few Milwaukee brewers were pioneering the use of refrigerated railroad cars to transport their beer to farther-away markets. Better positioned in St. Louis, Busch pretty much cornered the southern market on "quality" beer. His 1873 introduction of pasteurized beer allowed an even greater reach. The creation of Budweiser shortly after that, marketed as a premium beer (...it was a different time...) made what was now known as Anheuser-Busch the single biggest brewer in the country by 1900.
Anheuser and Busch (this was Busch's game, really) put most of the money back into the company, some of it in ways that would later prove essential to the company's survival. They seized (well, bought and operated) the means of production from the ground up--the coal mine whose coal operated their plant; the farms that grew their hops; Busch owned a dominant share of the company that made his special railroad cars and that made the newfangled glass bottles. Oh, yeah, and Busch basically founded a bunch of taverns and bars, offering to pay liquor licenses in exchange for the bars to only serve Anheuser-Busch products.
But Busch's original role in the company had technically been in sales, and indeed, his marketing genius helped make the company synonymous with "beer." Owning the railroad car company and the glassmakers meant branded products everywhere. He commissioned a popular artist to paint a Custer's Last Fight--not for his own residence (we'll get to that) but to distribute copy after copy after copy to saloons across the country. For the tavern owners, it added some Wild West, rough masculinity ambiance. For beer drinkers, the giant ANHEUSER-BUSCH BREWING ASSOCIATION written across the bottom was the most unsubtle of messages. Busch was a relentless promoter of his company and its star beer, Budweiser. He always carried with him branded pocket-knives, cards, and other 19th-century career fair-style swag to distribute to everyone he met. And boy, did Adolphus Busch meet People. I'm going to borrow James Neal Primm's description of this, because it is awesome:
Picturing himself as a merchant prince, he looked and lived like one, at Number One Bush Place on teh brewery grounds, at the Waldorf in New York, on his private railroad car (the Adolphus), and at his palatial homes at Pasadena, New York City, and Langenswalbach on the Rhine.
He was a famous figure in Berlin, where he consorted with the Prussian aristocracy and consulted with Otto von Bismarck about teh spread of German cultural influence and the common interests of the Fatherland and those of German descent throughtout the world.
Between 1865 and 1900, Anheuser-Busch succeeded through good beer, good distribution, and ceaseless marketing. But with A-B the largest brewer in the country, and brewing the largest industry in St. Louis (with tobacco second--good God, St. Louis), the Brewing Association was watching the gathering forces of Prohibition very nervously. In his last years at the head of the company, Busch struggled to rebrand Budweiser as a force for temperance, a quality beer that was a fun social activity and actually prevented the dangers of worse alcohol. He even tried to invoke "German wisdom" and name-dropped Bismarck in a series of newspaper ads decrying Prohibition as a violation of personal liberty.
Prohibition passed anyway, and appeals to German-ness went WAY WAY WAY out of style with World War I. But even while A-B's involvement in subsidizing saloons cost it (and other brewers) their essential livelihood, the determination to be part of the production-marketing-retail at every level was A-B's salvation.
Pretty much alone among St. Louis brewers, A-B (now in the hands of Busch's son, the first August Busch) managed to eke it way to the repeal of Prohibition by selling either beer ingredients or beer spinoffs--hops, ginger ale, beer so weak it didn't even count as beer (thus being legal). Of course, some of A-B's ability to succeed here was that it had so much farther to fall than anyone else, but a lot of it was due to the long-term investment at all level of production and distribution, the rapid de-Germanification of the company pretty much in 1914, the ultimate repeal of Prohibition, and doing whatever it could to get by until Prohibition was repealed.
So those are the two parts to the story: how A-B became the biggest brewer in the U.S. in the 19th century, and how it managed to survive Prohibition when most of its would-be competitors did not.
Further reading: