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Anheuser-Busch InBev approves $500M U.S. investments

May 16, 2017
Food & Drink

Anheuser-Busch InBev said Monday that it would ramp up its U.S. investments in 2017 to make its beer fresher, save on shipping costs and lower the company’s environmental footprint as it grapples with nimbler craft brewers.

The global beer giant and Budweiser maker said it would invest $500 million in U.S. 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 in part 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 market-research 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. “We’re making those investments to cope with all this additional complexity.”

Dave Taylor, vice president for supply, said that “less handling” means “more freshness.”

The moves come amid a global cost-cutting campaign for AB InBev following its $104 billion mega-merger with SABMiller. The combined beer maker said in 2016 that 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 that the company had added about 2,500 U.S. jobs over the last four years for a total of about 17,500.

Among the investments is a $28 million expansion of AB InBev’s brewery in Fort Collins, Colo., which will increase production of aluminum bottles and add dry hop capability.

“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 American-style 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.”

The investments come amid debate in Washington over President Trump’s proposed corporate tax reform and border tax. Neves said the latest moves were “done regardless of that.”

But he said AB InBev was poised to benefit from the proposed overhaul, in part because 98% of the beer it sells in the U.S. is made here.

“Maybe more to come” if the tax overhaul is “great for American workers,” Neves said of AB InBev’s investments.

By Nathan Bomey

Source: USA TODAY

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