Brewer increases three year cost cuts to $2.25mil
Anheuser-Busch InBev, now the world’s largest brewer, continues to cut back hard on costs. The brewer today hiked its three-year cost savings target to $2.25 billion from $1.5 billion.
The takeover last November has the bloated cost structure of the U.S.’s biggest brewer to slice into and its fearsome reputation for cost cutting to ensure its tough targets are met.
The Belgium-based ABInBev moved quickly into cost savings mode with 1,400 job cuts already announced in the United States and Britain, and it now says $250 million of cuts were made in 2008, $1 billion are due in 2009 and the rest in 2010 and 2011.
“InBev was always a ruthless cost cutter but it is the early timing of the cuts that came as some surprise and shows it is determined to get to grip with costs at the old Anheuser Busch empire,” said one industry analyst.
Originally AB had looked to cut costs by $1 billion under its own ‘Blue Ocean’ plan, but that was quickly raised to $1.5 billion after the InBev takeover and it is now up to $2.25 billion with half those costs made by the end of this year.
…Rice, barley, real hops, beechwood and aging time soon. Watch the Great American Light Lager degrade further into commodity status even as the savings are reinvested in marketing to convince drinkers it the same timeless quality of light american lager it’s always been. This is just the beginning of the Brito juggernaut that’s about to be unleashed on legacy AB and the Red, White and Blue distribution network. While “Belgian” headquarted, InBev’s corporate culture was adopted from AmBev of South America. That culture is strictly and absolutley one of wealth transference to shareholders. AB distributors better start looking for new revenue streams because your real good thing is about to come to an end gang. Watch and see.
AB-InBev Q4 profits down 95%. I thought that brewing concerns were less susceptible to recession.
Tlangle1,
That is a VERY interesting and, I think,apt assessment of the coming evolution of ABINBEV. In our region, the Coors/Molson/Miller distributor is one of the only ones in the nation that has consistently beat AB in local market share. It’ll be very interesting to see how this dynamic is affected in the next couple of quarters.
Prost!
Dave
A quote from the beer wars preview
“this may be the end to the age of the dinosaurs”
Dinosaurs being the massive corporate beer companies. There will always be a market for cheap beer. But industry stats definitely tend to show evidence of a large continual surge in craft preference in the US. We are heading into unique times and NO one product is recession proof but staying in the black is always better than the alternative. Providing quality can be upheld.
I am 24 and going through college I was part of the “cheap beer market” until I got a job related to the industry and realized the amazing opportunities that are available. I want to thank each and every brewer out there that has made such amazing quality beers. I cannot envision the craft movement ever hitting a plateau.
One beer that comes to mind that just sounds like it would never taste good is Left Hand Brewery Milk Stout and it is by far one of my favorite beers. I always get made fun of by friends and family for having a creative palette towards my taste in beer. I got sick of the typical big box lite beers, I love the craft beers(hence the name) I have not found one yet that is not full of flavor.
Keep up the good work ladies and gentlemen, if the big boxes keep fighting over who can make the classiest commercials they will continue to lose sight of what matters and that is quality beer.