As a native Missourian, InBev’s hostile takeover of Anheuser Busch in the 2008 was less than thrilling.
I’ve lived in the Illinois suburbs of St. Louis for about four years now. Busch Stadium, the Clydesdales and Grant’s Farm were tangible reminders of the brewing family that put St. Louis on the map. Finding out one of the city’s top corporate stewards would be Belgium-owned and Brazilian-run was a shot to the gut.
For most (at least those not directly employed by AB InBev), the shock gradually lessened. Cardinals’ games still featured our beloved brands with the familiar logos. That’s why BusinessWeek’s latest report, The Plot to Destroy America’s Beer, has dredged up the fresh taste of bile.
This article highlights a premise farmers have known for years. Cutting costs and failing to invest in your greatest assets are surefire paths to unsustainable growth. Skipping on fertility and treating quality on-farm help poorly will cost you. You may save a buck or two this year, but it will eventually come back to bite you.
“The Plot to Destroy America’s Beer” points out numerous cuts InBev has made in the years following the acquisition. Several jarring ones include cutting 1,400 jobs and selling off $9.4 billion in assets (Busch Gardens and SeaWorld). Frustrating, sure, but not the most alarming of cost-cutting measures.
What concerns me the most is the numerous instances where AB InBev has tinkered with tried-and-true recipes. Take Budweiser, they’ve saved $5 million per year by contracting a cheaper blend of hops. And, whole grain rice is no longer a requirement. AB InBev is perfectly happy to buy broken kernels.
Here’s another one. They’ve reduced the alcohol content of Stella Artois, Budweiser and Beck’s from 5% to 4.8%. Certain countries, such as England, tax brewers based on the alcohol content in a beverage. Oh, and their age-old beech-wood source for brewing Budweiser? The relationship with the supplier has been severed, replaced by the lowest bidder.
The result of all this cost-cutting means beer sales have fallen in traditional markets, namely the U.S. Budweiser’s market share has fallen 13% from 2009 to 2011 in the U.S. Of course, cost-cutting and an increase in international sales mean the company has increased its profitability. Still, just like forgoing nutrient applications, it will catch up with you.