In bid for freshness, AB InBev brews up $500M investment
Anheuser-Busch InBev said Monday it would ramp up its U.S. investments in 2017 to make its beer fresher as it grapples with nimbler craft brewers.
The global beer giant and maker of Budweiser said it would invest $500 million in brewing, distribution, packaging, sustainability and technology, up from a typical amount of $400 million to $450 million.
The investments include new distribution facilities in Los Angeles and Columbus, Ohio, costing $82 million, to reduce the amount of time between brewing and shipping. That’s aimed at bolstering freshness as the industry shifts toward small craft brewers.
The number of U.S. breweries has soared, rising from 963 in 2010 to 4,414 in 2017 and projected to increase to 8,223 in 2022, according to marketresearch firm IBISWorld.
AB InBev’s U.S. sales have fallen between 0.5% to 1.5% annually over the last several years, AB InBev CEO João Castro Neves told reporters Monday.
“The market continues to be very competitive and much more fragmented,” he said.
Dave Taylor, vice president for supply, said “less handling” means “more freshness.”
The moves come amid a global cost-cutting campaign for AB InBev following its $104 billion megamerger with SABMiller. The combined beer maker said in 2016 it would shed 3% of its global workforce, which totaled about 220,000 employees when the merger was announced.
Neves declined to give details about the effect of the company’s investments on American jobs. But he said it was a “huge vote of confidence” in “the future of American brewing.”
He noted the company had added about 2,500 U.S. jobs over the last four years for a total of about 17,500.
“The company’s Budweiser, Bud Light, Natural Light and other major brands have struggled to maintain relevance among many U.S. consumers, who have transitioned away from lagers and light Americanstyle pilsners in favor of craft beer styles that have been popularized by U.S. microbreweries,” IBISWorld analysts said in a recent report.
“However, the company remains an industry powerhouse and, as a result of its massive economies of scale, continues to yield the highest operating margins in the industry.”