Anheuser-Busch: Operations Management & Supply Chain
April 21, 2015
Operations 3302*01
Johnna Fieldman, Tom Gabelmann, Christina Quiles, Chelsea Sirois
Table of Contents
1
About
Anheuser-Busch:
Company
History
&
Vision…………………….…………....……….....3
Competition………………………………………………………………………………………..5
Service……………………………………………………………………………………………..8
Capacity, Planning, Distribution & Forecasting…………………………………………………..9
Productivity & Manufacturing……………………………………………………………….......13
Site & Location Analysis………………………………………………………………………...15
Workforce Management………...………...……………………………………………………..17
Concepts & Techniques of Value Analysis to effective Cost Control…………………………...18
Modern Trends………………………………………………………………………….……......20
Ethical Issues……………………………………………………………………...……………..23
Total Quality Management……………………………………………………………………....28
Human Resources, & Finance……………….…………………………………………………..29
Works Cited……………………………………………………………………………………...33
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About Anheuser-Busch
Company History
In the world of beer, one company stands out amongst the rest: Anheuser-Busch.
Headquartered in St. Louis, Missouri, Anheuser-Busch produces the world’s most popular beers,
Budweiser and Bud Light, as well as many other popular brands. With control over 47.6% of
U.S. beer sales, it should come as no surprise that Anheuser-Busch is an operational force to be
reckoned with. A network of 600 wholesalers and 12 breweries scattered across the United States
helps Anheuser-Busch produce and distribute their many popular brands including Corona,
Busch, Bass, Rolling Rock, Shock Top and many more (About Anheuser-Busch, 2015).
Anheuser-Busch was founded in 1879 as the Anheuser-Busch Brewing Company by
Adolphus Anheuser and his father-in-law Eberhard Busch. Eberhard Busch was a German soap
manufacturer who settled in St. Louis, Missouri and entered the brewing business by purchasing
a Bavarian brewery which he changed the name to E. Anheuser & Co. in 1860. Adolphus Busch
met Anheuser through the brewing business and soon was married to Eberhard’s daughter Lilly,
forging the two brewing families together. Adolphus had previously made great strides in the
brewing world; he credited as the first American to apply pasteurization to beer to prevent
spoiling. He also invented the use of artificial refrigeration and refrigerated train cars in order to
keep beer cold during transport. One his most important accomplishments were the creation of
the first American Lager, which he named Budweiser – the same beer we have today. Budweiser
became the first national beer of the United States (History, 2015).
Over the next century Anheuser and Busch’s brewing empire began to grow. Surviving
the Great Depression and prohibition brought along the creation of their metal cans – an
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innovation that still exists today – and in the wake of World War II, the company diversified its
corporate structure to include can production, real estate, entertainment, and industrial products.
In the following years, four additional breweries were opened to boost production and expand
their vertical and horizontal integration. By 1974, Anheuser-Busch had retained the title of
leading U.S. brewery. In 2008, Anheuser-Busch merged with InBev to form Anheuser-Busch
InBev, which is now “the world’s largest brewer and one of the top 5 consumer goods companies
in the world” (History, 2015). Anheuser-Busch is currently a wholly-owned subsidiary of
Anheuser-Busch InBev but remains operating under the name Anheuser-Busch (History, 2015).
Vision
Anheuser-Busch’s vision is uniquely comprised of a list of principles that guide them towards
remaining the “Best Beer Company in a Better World” (Our Company, 2015).
“Our 10 guiding principles for our dream, our people and our culture provide a
roadmap to our employees as we work in conjunction with wholesalers, retailers, consumers and
partners for our dream to be the Best Beer Company in a Better World” (Dream-People-Culture,
2015).
The 10 guiding principles are divided up into three categories: dream, people, and
culture, which set the company standards for customer service, quality, and work ethic. The
dream category details Anheuser-Busch’s desire for everyone to work towards a central goal of
becoming “the Best Beer Company in a Better World.” This general statement is the foundation
for all of their other categories, which focus more on operational goals for the company’s
success. The second category is People, states that their employees are their “most valuable
assets” of their company. Anheuser-Busch says that they are “judged by the quality of their
teams,” which is why they place a large emphasis on their employee’s characters and work ethic.
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The dedication of their employees and organizational culture is paramount to their success (Our
History, 2015).
Culture is a large part of Anheuser-Busch’s vision. They place a large focus on the
culture of their operational mindset in order to achieve their best products and services. While
there are many tenets under their company culture, a select few stand out. Anheuser-Busch
firmly lives by the rule that “the consumer is the boss,” and that it is their responsibility as a
company to provide excellent service and products to the satisfaction of the customer. Because
of this, they state that they are “never completely satisfied with [their] results,” which drives
them to work hard and continue to innovate in all areas of business. As a result, “focus and zero
complacency guarantee lasting competitive advantage” (Company Vision, 2015). Cost
effectiveness is high on their list, as they state that they “manage [their] costs tightly,” in order to
remain efficient as possible and promote growth. Lastly, Anheuser-Busch’s view on
responsibility extends far beyond their upper and middle management. They encourage everyone
to take responsibility for the success and losses of the company personally. Their “everyone-isan-owner” mentality helps to minimize error and increase pride in employees’ work and success.
As a result, Anheuser-Busch has remained the world’s largest brewery since 1974 (History,
2015).
Competition
Despite Anheuser-Busch’s leader status, they have some formidable competitors in the brewing
industry. For the sake of this comparison, we will be comparing Anheuser-Busch’s parent
company Anheuser-Busch InBev to their direct global global competitors; since Anheuser5
Busch’s domestic competitors are subsidiaries of larger parent companies. According to industry
research, Anheuser-Busch InBev’s direct competitors include Carlsberg Breweries, SABMiller,
and Heineken NV. Anheuser-Busch InBev, along with its competitors, is apart of the BeverageBrewers industry according to Yahoo Finance. In this particular comparison, the focus is on
alcoholic beverage companies and not soft beverage companies as well.
The first competitor is Carlsberg Brewery, or Carlsberg Group, which is a brewing
company founded in Copenhagen in the late 1840’s. This large-scale brewery mainly services the
European and Nordic market, standing as the leading brewery in the Nordic region of Europe.
The Carlsberg group provides more than 446 different beer brands across Europe, including the
popular Kronenbourg brand seldom seen in the US. Like Anheuser-Busch, Carlsberg is known
for innovations to the beer world, like the “crown cork” or metal cap that we see today on beer
bottles. And while Carlsberg is not a direct competitor of Anheuser-Busch in the United States,
they are in competition with Anheuser-Busch’s parent company Anheuser-Busch InBev.
Headquartered in Belgium, Anheuser-Busch InBev competes on a more global market –
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providing over 200 brands like Corona, Leffe, Stella Artois, and Hoegaarden in addition to
Budweiser (Heritage, 2015).
The second of the three competitors is SABMiller plc. SABMiller was founded in
Johannesburg, South Africa in the mid 1800’s as the South African Brewery, but later expanded
to acquire the United States’ second largest brewing company Miller Brewing Company in 2002.
This acquisition engaged their switch from servicing developing beer markets to the US beer
market. SABMiller’s subsidiary and joint venture MillerCoors is likely Anheuser-Busch’s
closest competitor, as the second largest beer brewing company servicing the US, headquartered
in Chicago and Milwaukee. SABMiller offers over 200 different beer brands from all over the
globes just like Anheuser-Busch InBev. Both Anheuser-Busch InBev and SABMiller compete in
the US as the largest breweries on American soil, with SABMiller in second place with 28% of
the market share for beer (SABMiller: About Us, 2015).
The third competitor is the Dutch brewing company Heineken N.V. Started in
Amsterdam, Heineken now offers many local European and Eastern brands as well as global
brands such as Strongbow, Sol, Amstel, and Heineken. While Heineken has 19 breweries and 9
joint ventures in the United States, they are most competitive with Anheuser-Busch InBev,
competing on the global beer market around Europe and the Far East. They have an incredibly
large global presence encompassing 70 countries, giving them a large presence in the European,
Asian, and Asian Pacific beer markets. Like Anheuser-Busch, they are environmentally focused
on reducing water waste and promoting safe consumption of alcohol. (Heineken: About Us,
2015).
Service
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Anheuser-Busch’s focus on service is one of the many engines that drive their success.
Their “unwavering commitment to quality and spirit of innovation are at the foundation of
Anheuser-Busch’s history and continue to be the defining characteristics of [the] company and
[their] people” (Commitment to Quality, 2015). At the production brewing level, AnheuserBusch pledges that they use only the best raw materials, which consists of ingredients like rice,
barley, and hops, utilized by their team of professional brewers who are responsible for making
sure the beers are tested for quality along each step of the brewing process. Additionally,
Anheuser-Busch takes on an environmentally conscious operations strategy, focusing on the
efficiency of water and energy use, as well as the implementations of alternate fuel sources and
waste recycling.
When it comes to customer service, Anheuser-Busch lives by one motto: the consumer is
the boss. This is one of the main points of the company’s mission statement, and what drives
many aspects of business, specifically their service. Anheuser-Busch seeks to provide its
consumers with the best possible customer service, giving them many forms of contact to
representatives, suggestion platforms, and interactive experiences at their various operational
locations. Consumers have the option to call or email a customer service representative through
information listed on their website where they also provide nutritional information about their
various brands. An individual of legal drinking age with a nutritional question can simply log
onto their nutrition site and retrieve the information they desire. Anheuser-Busch strives to create
a positive and lasting relationship between their breweries and the consumer, by providing an
excellent level of service. In the event that there is a consumer issue, Anheuser-Busch is ready to
remedy the situation by providing excellent customer service to clients.
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Capacity, Planning, Distribution, & Forecasting
Planning & Forecasting
Much of Anheuser-Busch’s success is attributed to their operations strategy, specifically
in the areas of capacity, planning, distribution, and forecast decision-making. Due to their
historical market presence, Anheuser-Busch has honed and developed a carefully verticalintegrated operations strategy over the years. “Anheuser-Busch operates 12 breweries across the
U.S., manages agriculture facilities, and is a major manufacturer of aluminum cans;” thus
placing the majority of their supply chain within the company (Operations, 2015). AnheuserBusch has a very straightforward facilities strategy that perfectly meshes with the products they
provide.
Forecasting and planning are a large part of what makes Anheuser-Busch so efficient and
successful. Forecasting is defined as “the art and science of predicting future events,” and is
considered to be an input towards planning (Schroeder et Al., 2013). By being able to accurately
forecast their future demand needs, Anheuser-Busch is able to implement better planning to
ensure future success. Planning uses the predicted forecast to make many of the operations
decisions; from the capacity decisions like location, to the amount of warehouse space, and many
other supply chain decisions. One of the ways that a company approaches forecasting is by
looking at their own historical prices and those of their competitors. Since the founding of
Anheuser-Busch, they have been a market leader and the national beer of the United States -maintaining that position for over 150 years. Anheuser-Busch’s forecast is likely consistently
accurate in predicting their overall future demand; with minimal changes when it come to new
products or newly-supplied regions of the world. Their accurate predictions help them to
constantly increase their overall efficiency in each of their supply chain areas. By creating a
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vertical supply chain strategy, Anheuser-Busch is able implement excellent planning for which
they can predict the majority of the outcomes.
Capacity
There are many factors that go into the capacity planning at Anheuser-Busch. Since
Anheuser-Busch has control over the agriculture, brewing, and packaging aspects of their supply
chain; they have had to create a strong facilities strategy in order to keep their many plants
running at capacity. With so many sectors of their supply chain ‘in-house,’ Anheuser-Busch has
had to make many long-term facilities decisions. Facilities decisions are defined as being the
longest-term capacity planning decisions, and determine the physical restraints placed on how
much product will be produced (Schroeder et Al., 2013). Anheuser-Busch has organized their
facility capacity into a solid strategy that accounts for many functional areas.
The locations of Anheuser-Busch’s many facilities facilities were decided as a capacity
decision. Since they are responsible for their own agriculture, brewing, and packaging,
Anheuser-Busch needed to choose locations for each of their plants that would maximize cost
and production efficiency. The majority of Anheuser-Busch’s agricultural processes are carried
out in Midwestern and Pacific Northwestern states. The Midwest is known as being America’s
farmland, where the majority of our agriculture and livestock is grown and produced. Therefore,
when planning where the most cost and location efficient sites, the Midwest was clearly the best
choice. Midwestern states were also the most strategic locations for Busch’s raw materials since
they are easily accessible by freight for transport around the country. In general, farming in the
Midwest is much cheaper than importing raw materials from other parts of the country or outside
of the United States; and by keeping all of those costs within Anheuser-Busch, they are able to
cut costs and have greater control over their level of output.
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Facility size and type is an extremely important factor in Anheuser-Busch’s capacity
planning. Because of their large presence in both the United States and global beer markets,
having facilities designed to maintain their demanded level of output is crucial. Additionally,
each of their facilities are designed to carry out specific functions. Anheuser-Busch has twelve
breweries across the United States in addition to their agricultural centers and packaging plants.
These breweries, which span to every corner of the US, each supply product a different segment
of the country and/or other countries. Each of their breweries average around one million square
feet and measure their own capacity output on a daily or weekly basis. The sizes of each of these
breweries are perfectly matched to Anheuser-Busch’s demands schedule. The historical demand
for Anheuser-Busch products was largely considered when designing the breweries, leading to
their large plant sizes and mix of products. Since each of the factories are responsible for
producing a different mix of Anheuser-Busch products, each factory is product-focused for
producing certain kinds of beers.
In addition to their breweries, Anheuser-Busch has process-focused facilities as well.
These process-focused facilities are mainly confined to their packaging operation. AnheuserBusch Packaging Group (ABPG) is a subsidiary of Anheuser-Busch that packages all of their
products. By creating this company to handle most of their packaging needs, Anheuser-Busch is
able to help “manage the supply, quality and cost of packaging materials” (Packaging
Operations, 2015). This capacity decision not only allows them to be cost efficient, but it allows
them to increase their capacity and profits through their subsidiaries.
Distribution
Anheuser-Busch has a large network of more than 500 wholesalers across the country
through which they distribute their products. In addition to their wholesale partnerships,
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Anheuser-Busch has thirteen wholly owned distributors in various cities around the country. By
pairing with so many different distributors around the country, Anheuser-Busch has many
different outlets to place their large outflow of products. This ensures that they move their
inventory efficiently and are avoid backup of products being held in warehouses. Wholesalers
are responsible for the distribution to the consumers in their areas. The thirteen wholesalers
owned by Anheuser-Busch are strategically placed in largely populated areas of the United
States – which allows Anheuser-Busch to directly observe the final stages of the supply chain for
future forecasting and planning improvements.
Productivity & Manufacturing
In addition to the twelve different breweries across the United States, AnheuserBusch/InBev is responsible for managing various agricultural facilities and operations, aluminum
can production and manufacturing, and packaging.
Agricultural Operations
Anheuser-Busch contracts and produces barley elevators, hops, malt plants, wheat and
other various ingredients necessary to the brewing process within the United States. Raw
materials for Anheuser-Busch come from a subsidiary company, Busch Agricultural Resources,
Inc. Busch Agricultural Resources, Inc., is specifically responsible for producing, processing,
and distributing malted barley, hops, and rice. (Agricultural Operations, 2015) In addition to the
production and distribution of raw goods, Busch offers agricultural research service. The
company operates rice milling facilities in both Arkansas and California. Barley elevator
services are operated in the western and midwestern United States. Barley seed processing is
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handled in numerous plants across Montana, Idaho, and Wyoming. Barley research is conducted
in Colorado; and rice research is conducted in California. Malt plants are also owned by Busch
and are operated in Wisconsin, Minnesota, and Idaho. (Bloomberg, 2015) Agricultural
operations are strategically located across the continental United States in order to ensure the
cheapest means of transportation and operations within the initial stages of alcohol production.
Packaging Operations
Another subsidiary, Anheuser-Busch Packaging Group (ABPG), produces, distributes,
and recycles various packing materials from aluminum cans to glass bottles for U.S. beer
operations. ABPG helps to manage supply, cost and quality of packaging materials for the
parent company. The subsidiary consists of four different corporations: Metal Container Corp.;
Anheuser-Busch Recycling Corp.; Longhorn Glass Corp.; and Eagle Packaging, Inc.
Metal Container Corp. supplies Anheuser-Busch with more than 45 percent of U.S beer
cans. In addition, MCP supplies 55 percent of domestic lids. (Packaging Operations, 2015)
However, operations at MCP go beyond manufacturing cans and lids for Anheuser-Busch.
Operations also produce cans and lids for PepsiCo, Coca-Cola, and Hansen Natural Corp. among
others. (Packaging Operations, 2015) Can production plants are located in Missouri, Florida,
California, New York, and Colorado. Lid production plants operate in Oklahoma, and
California.
Longhorn Glass Corp., located in Jacinto City, Texas, supplies Anheuser-Busch with
glass bottles for the Houston brewery. As of 2011, Longhorn Glass Corporation’s facility
underwent a $40 million dollar upgrade, which helped bolster the capacity of production. As a
result, manufacturing increased approximately 8.5 percent from 70 million bottles a year.
(Packaging Operations, 2015) In addition, improvements were noted to increase production on
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one line by 100 bottles per minute. Longhorn Glass Corp now operates one of the fastest glassforming machines in the world.
Wholesaler Operations
Approximately 94 percent of beer sold by Anheuser-Busch/InBev was sold in retail
chains from more than 600 independent wholesalers in 2006. (wikinvest, 2007) To adequately
control the distribution and selling of alcohol, the Company has a formal contract/agreement
signed by each wholesalers. The agreement (Equity Agreement) specifies the territory in which
the given wholesaler can sell product, the brands that the wholesaler can sell, performance
standards, procedures related to distribution rights, and various circumstances in which
distribution rights may be revoked and terminated. Wholesalers are required to use controlled
environment warehouses and actively monitor inventory. (wikinvest, 2007) The quality control
and assurance are thereby protected, giving Anheuser-Busch a distinct competitive advantage.
Anheuser-Busch strategically uses regional VP’s, sales directors, key account and regional sales
managers, and other personnel to provide both marketing and sales planning assistance to its
various wholesalers located nationwide. The 12 breweries located across the continental United
States are strategically placed to help serve the distribution system.
Site & Location Analysis
AB InBev, Anheuser-Busch’s parent company operates globally; however, as noted in
Productivity/Manufacturing, Anheuser-Busch has 12 breweries and over 600 wholesalers as part
of a subsidiary, Wholesales Operations Division (WOD). Strategically located across the
continental United States (and Hawaii), Wholesale Operations Division provides seamless
distribution and coverage nationwide. The Company is comprised of a multitude of subsidiaries,
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which all provide AB with a near perfect control over supply chain management. AB, is
headquartered in St. Louis, Missouri. Its United States headquarters also serves as InBev’s
North American division headquarters. Brewing operates in 11 states, at 12 locations: St. Louis,
MO; Newark, NJ; Los Angeles, CA; Houston, TX; Columbus, OH; Jacksonville, FL;
Merrimack, NH; Williamsburg, VA; Fairfield, CA; Baldwinsville, NY; Fort Collins, CO; and
Cartersville, GA. (Brewery Information & Tours, 2015) With agricultural production of barley,
wheat, rice and others located in ID, WY, MT, AR, WI, and CA, Anheuser maintains optimum
growing conditions. Agricultural operations occurring in the Midwestern United States are
essential to the complex supply chain. The Company needs to provide raw materials in the
simplest, cheapest means necessary to its 12 breweries. Having breweries no more than 1500
miles from agricultural operations helps to keep transportation costs by freight as low as
possible.
ABPG, the Company’s packaging subsidiary group has locations in MO, FL, CA, NY,
CO, OK, and TX. Having bottle, can, and lid production located nationwide also safeguards
operations. The lead time to produce, and sell AB’s various goods is kept at a constant low.
Time management at the various locations owned by AB is flawlessly handled. Throughput time
at AB’s bottle production plant holds steady at 100 bottles every minute. With wholesalers in
every state, not including those owned directly by AB, time required to transfer finished goods
from bottling/can sites and locations to environmentally controlled warehouses, storage facilities,
and retailers are swift.
Workforce Management
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Anheuser-Busch InBev seeks for the highest quality product to be delivered to their
customers for their customers ultimate satisfaction. To obtain high quality the company must
emphasize an importance of proper employee selection, workforce training as well as the process
control (Schroeder, 2013). As Anheuser-Busch InBev is a largely run corporation, there is a
multitude of employees functioning throughout the business setting. The company’s
management team is split into three corporate levels. At the head sits the chief executive officer
of Anheuser-Busch InBev, below him are the executive board of managers. These managers each
have a chief residency within their own specialty. Specialties including legal, finance,
technology, people, procurement, sales, supply, marketing, strategy, as well as growth
(Management Structure, 2015). The third level management rank in as Zone Presidents, covering
each of Anheuser-Busch InBev’s contributing countries. These Zone Presidents are hosted to be
in charge of their select breweries within their assigned sector. These sectors are located as areas
around the world. North America’s Zone President, Joao Castro Neves is to be in charge of the
12 withstanding breweries within his North American sector. He controls the management
functions along with their top management operations (Management Structure, 2015).
To emphasize the proper selection of employees the management teams account for the
talent, as well as performance of their employees. Depending on what talents employees obtain
and which performative level they function at, determines their position within the AnheuserBusch InBev company. As an example of this there is a team of “expert brewmasters” that work
alongside one another in the Research Pilot Brewery (Commitment to Quality, 2015). Amongst
the talented scientist that work within Anheuser-Busch InBev, each working officer, and
manager obtains their own specific sets of talents as well as their own high levels of
performance.
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Unfortunately, management is a struggling area for Anheuser-Busch InBev. According to
the Global Data’s 2014 Strategic Analysis Review of Anheuser-Busch InBev, one of their only
weaknesses was limited management layers. “It has limited management layers and as a result,
the decisions are always taken by a few members, which might be detrimental to the company”
(Global, 2014). As the large company continues to grow its levels of management remain
stagnant. With new innovations and ideas the workforce management needs to continue on the
upkeep of maintaining their quality of production.
Concepts & Techniques of Value Analysis to effective Cost Control
Anheuser-Busch InBev as a corporation has obtained the knowledgeable ability to search
for and maintain the best alternatives for their designs, processes, as well as operation systems,
all while controlling their costs. From the beginning of the Anheuser-Busch InBev industry there
has been “commitment to quality” for their customers. The quality Anheuser-Busch InBev
promises includes the variety of “the finest raw materials, including barley malt, hops and rice”,
derived from 17 different locations and research labs. The company also stands by “Their team
of expert brewmasters, who are responsible for tasting beer, every day at every stage in the
brewing process”, which includes a 7 step thorough and timely process to ensure every batch is
just right (Commitment to Quality, 2015).
With an accordance to this high quality product as well as it’s function, Anheuser-Busch
InBev must maintain the costs of such fine quality. The cost saving concept as stated by the
company
“Our simple cost-connect-win model reduces non-working funds that do not create revenue,
enabling us to reinvest those into directly supporting our brands and sales and marketing
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capabilities.” - (Cost-Connect-Win, 2015)
Due to their long term advantages, people, are the main focus in the center of the circle.
With this notion in mind the cost challenges the business are to reduce any indirect spending,
thus allowing the savings to obtain a connection with the consumers, to finally win and maintain
a sustainable and healthy profit (Cost-Connect-Win, 2015).
Most costs for Anheuser-Busch InBev come from suppliers, distributors, as well as
packaging. Through years of analysis and working with corresponding corporations AnheuserBusch InBev has found a way to maneuver around these costs while increasing the quality of
their products. As mentioned earlier Anheuser-Busch InBev gets the finest quality ingredients
from their 17 different suppliers. While owning much of the land for some and partnering up
with others Anheuser-Busch InBev has been able to maintain a costly budget from their
ingredients (Operations, 2015). As for distribution Anheuser-Busch InBev “owns and operates”
15 distribution centers across the US (Operations, 2015). By purchasing and operating these
centers Anheuser-Busch InBev is eligible to save money on a distribution middleman. Also the
disbursement of the centers allows greater coverage of distribution statewide, thus AnheuserBusch InBev is given the eligibility to only uphold the 15 centers it operates. The techniques of
buying and or partnering with companies that Anheuser-Busch InBev is affiliated with has been
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a major cost contributor, and one that has been able to maintain and uphold the high quality
product Anheuser-Busch InBev is known for.
Modern Trends
The global beer market is set to grow 2% in this current year (2015) due to China’s
recovery from a sharp slowdown in the beer market. According to beer market specialist Plato
Logic China is lead in beer consumption (Reuters, 2015). In 2014 the market grew less that 1%
because of decreases of insufficient increases in consumption in four out of the five largest beer
markets. These troubled markets are China, Russia, U.S, and Germany. Brazil was able to evade
the decrease thanks to welcomed consumption growth from the World Cup.
Leading to this current year there has been an overall decrease in beer consumption. To
illustrate this decrease Gallup has charted the alcoholic preference of adults in America. The
figures were collected through phone interviews, the past year’s data being collected July 7-10th,
2014 (Saad, 2014).
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The consumption of beer in the U.S alone has decreased from 47% in 1992 to 41% in 2014.
When the poll was conducted to years ago it recorded 39% of adults preferred beer so there is a
bit of hope instilled that it will continue to rise.
Although beer consumption as a whole has decreased, within the market craft beer has
gained popularity. Over the years there has been rapid growth in sales for craft beer however it
still only accounts for 19.3% of the market share (Brewers Association, 2015). Craft beers are
defined as being made in small, independent, traditional breweries. The annual production must
be lower than 6 million barrels, less than 25 percent is owned by an industry member (like
Anheuser-Busch), and whose alcohol volume derives from its ingredients and their fermentation
(Craft Beer, 2015).
The creativity and individuality of craft beers has seemed to grasp the attention of the
Millennials, the more present generation. The popularity of domestic beers like AnheuserBusch’s Budweiser is still held by a majority of the baby boomers, having hit their peak in
dominance in the 1970s. It is almost obvious that most alcohol sales come from a younger
demographic (the millennials) because due to age the boomers don’t drink as much as they used
to.
In order to catch the attention of this younger general it is essential to commercialize in
new revolutionary ways. Anheuser-Busch themselves exclaimed that “Millennials in particular
are searching for experiences and involvement in the development of brands, and digital is
playing a major role.” Commercializing and innovations in the Beer Market must cater to this
demographic in-order to continue their success, after all this generation is the future. The
Millennials spend more time on social media than any other information outlet.
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It is equally important to understand what Millennials value more than Boomer had. This
generation is considered to be more health conscious. Beer is notorious for containing a lot of
calories. The average pint of Ale holds about 163-228 calories while a glass of standard dry red
or white wine is 175-187 calories. They are around the same ballpark but in abundance calories
in beer add up to be more. This may offer insight into why alcohol preferences have altered.
Quentin Fottrell illustrates this alteration with statistics of alcohol preference in relation to ages:
Beer drinking among 18- to 29-year-olds fell from 71% in the years 1992 to 1994, to
41% from 2012 to 2013, according to a separate 2013 survey by Gallup; sales of liquor rose from
13% to 28%, and wine rose from 14% to 24% over the same period. In a separate 2013 survey by
Mintel, 80% of respondents ages 22 to 24 said they drink liquor, while just 69% said they drink
domestic beer. And 66% of respondents ages 25 to 34 said they drink liquor; 58%, beer.
Ethical Issues
Although Anheuser-Busch is an alcoholic beverage company they pride themselves on
their efforts to be socially responsible. Their dream is to build a company that “will stand the test
of time,” including molding their beer company that brings people together in efforts to make a
better world. They have divided their efforts into different concentrations; alcohol responsibility,
community, and environmental responsibility. It is also important to examine lawsuit that may
challenge the reputation of Anheuser-Busch’s morality.
Alcohol responsibility
Anheuser-Busch and their wholesalers have contributed approximately $980 million to
programs and campaigns that work to prevent underage drinking and drunk driving. Examples of
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these investments are their own Know When to Say When campaign started in 1892, the
notorious Designate a Driver campaign, and the Global Be(er) Responsible Day promotion . In
2011 A-B was proudly the first alcohol-beverage company to set goals pertaining to the subject
of responsible drinking. The six goals that were to be met by 2014 are as follows:
1. Reach at least 100 million adults with programs developed by subject matter experts
that help parents talk with their children about underage drinking
2. Provide ID-checking materials and other educational information to at least half a
million bars, clubs, restaurants and grocery stores to help them prevent sales to minors
3. Provide training on responsible alcohol beverage sales to at least 1 million bartenders,
waiters, grocery store clerks, and others who serve and sell alcohol
4. Reach at least half a billion legal-age consumers to increase awareness of the
importance of using a designated driver or safe ride home
5. Invest at least USD 300 million in advertising and programs to help remind and
educate consumers about the importance of responsible drinking
6. Celebrate Global Be(er) Responsible Day annually to promote the importance of
responsible drinking among our employees, retail customers and consumers
In their fourth quarter report of 2014 Anheuser-Busch was pleased to announce that they
had successfully achieved every goal they had set. By September 18, 2014 A-B had already met
the majority of their goals and were preparing for their 5th annual Global Be(er) Responsible Day
(GBRD) where 155,000 of their employees and additional advocates would rally the next day to
inform the public of the influential role bartenders, servers, sales clerks, and etc. play in
promoting responsible drinking (Sustainable Brands, 2014). On Global Be(er) Responsible Day
A-B released a beer commercial that doubled as a promotion for responsible drinking. The
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commercial depicted a relationship between a dog and his owner, the owner leaves on a outing
with his friends where it is assumed they will drink and it shows the dog waiting for him. The
dog becomes nervous with the passing time and the words “For some, the waiting never ends.”
Just as your heart begins to sink the owner return exclaiming that he stayed the night at his
friends as to not drink and drive. The point is to remind everyone that there is always someone
waiting for you and to think of consequences before being irresponsible.
Community
In A-B’s Annual Report the effort made in contributing to communities where they do
business is made clear. Not only does the company supply career opportunities in those areas,
they also donate funds as well as volunteered hours toward efforts like Project HOPE and
programs. Project HOPE is a program based (but not limited to) in China that donates medical
equipment and provides educational classes on medical conditions like diabetes and HIV/AIDS
(Project HOPE). Along with offering support A-B became one of the founding members on
Together for Safer Roads (TSR). Ten global companies of various industries have joined to raise
awareness and improve road safety. Across the world road collisions is the primary cause of
death in 15- 29 year olds. This coalition plans to educate drivers on safety measures and to
provide support in vehicle advancement (Anheuser-Busch Inbev, 2015).
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Anheuser-Busch InBev is also actively engaged in its Better World Project Partnership
with Enactus, “A community of student, academic and business leaders committed to using the
power of entrepreneurial action to transform lives and shape a better more sustainable
world”(Enactus). Through this partnership they have challenged colleges across the country to
innovate new approaches to promote recycling in local bars and restaurants. Those whose ideas
were chosen were awarded $1,500 to activate their program (News Room). The reason
Anheuser-Busch InBev is so passionate in this program is because by supporting students in their
entrepreneurial efforts they allow leaders to emerge as to ensure a brighter future.
Environment
Not only is Anheuser-Busch InBev promoting recycling and environmental awareness
through entrepreneurs they also operate their brewers in a “green” fashion. Since 2007 they have
used 40% less water at their breweries and plants. One in six beers is brewed using renewable
fuels as to not be wasteful of resources. In all their breweries recycling is highly enforced and as
a result 99.6% of resources are recycled. Being mindful of the environment A-B has explored
alternative ways to power their locations like wind turbines, solar panels, and hydropower
systems. They have also been able to use fuel generated from landfills for their gas needs.
Despite the many achievements already reached in respect to environmental responsibility A-B
pushes to further reduce their environmental fingerprint. In the past two years they have
compiled eight more goals they plan to reach by 2017, these goals include:
1.
Reduce water risks and improve water management in 100% of our key barley-growing
regions in partnership with local stakeholders;
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2.
Engage in watershed protection measures at 100% of our facilities located in key areas in
Argentina, Bolivia, Brazil, China, Mexico, Peru and the United States, in partnership with local
stakeholders;
3.
Reduce global water usage to a leading-edge 3.2 hectoliters of water per hectoliter of
production;
4.
Reduce global greenhouse gas emissions per hectoliter of production by 10%, including a
15% reduction per hectoliter in China;
5.
Reduce global energy usage per hectoliter of production by 10%, which is equivalent to
the amount of electricity needed to light about a quarter of a million night football matches;
6.
Reduce packaging materials by 100,000 tons, which is equivalent to the weight of about a
quarter of a billion full cans of beer;
7.
Reach a 70% global average of eco-friendly cooler purchases annually; and
8.
Reduce carbon emissions in our logistics operations by 15%
Most of these goals are merely a continuation of increased effort in areas they are already both
concerned and involved in except for number eight. For the first time they set a goal to reduce
carbon emissions in logistics operations by using alternative fuels, smart driving tools, more
efficient trucks, and by collaborating with our supply chain partners (Anheuser-Busch In Bev,
2015).
Discrepancies in Ethics
While most of the research made on this company would corroborate its positive moral
standing, there has been a few lawsuits that suggest unethical behavior. In 2014 their former vice
president of communications and consumer relations, Francine Katz began trial after five years
of battling on the behalf of her claim that in 2009 she faced discrimination on the bases that her
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base salary, bonus, and stock incentives were much lower to her male colleagues. Katz
ultimately lost this case because the jury proclaimed there wasn’t enough conclusive evidence to
be sure that her salary was affected by her sex (Bruce, 2014). The question here is where they
really innocent or did they did lucky? Due to no continued legal action it would be unjust to
continue to assume guilt.
Another lawsuit that struck controversy and possible hypocrisy is that of Pine Ridge
Reservation against Anheuser-Busch InBev. The suit accusing them of encouraging the illegal
purchase, possession, transport and consumption of alcohol on the reservation. A-B allows their
product to be sold in liquor stores in a deserted town of Whiteclay, Nevada which borders a dry
indian reservation, specifically the Pine Ridge Reservation in South Dakota (Williams, 2012). As
one could imagine this case was dismissed in court being high circumstantial but when you
consider the very campaign that Anheuser-Busch InBev promotes you can’t help but wonder
why they didn't pull their product from the store or administer one of their programs in this town
that desperately needs it. This lawsuit arose toward the beginning of their efforts to accomplish
their goals. Being aware of the lack responsible drinking in this specific area it only seems
logical that at least one of the liquor stores would have been one of the 1 million sales clerks to
be provided training on responsible alcohol sales. I understand that you cannot save everyone but
there isn’t even a shred of evidence suggesting that Anheuser-Busch InBev even made an effort.
Programs like these allows Anheuser-Busch InBev’s dream to become a reality. As a company
they make the a better tomorrow.
Total Quality Management
A complete commitment to quality was establish by Adolphus Busch, the companies
founder. The philosophy of quality that is held by Anheuser-Busch InBev consists of 3 main
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components. The first being that “a steady growth over a long-term period (years and decades) is
more important than quarterly earnings.” The second value is the “importance of customers.”
Lastly the third theme is “quality control means doing things the right way, even if it is the most
expensive way of producing beer” (Rammes, 1993).
The first component is described in the fourth quarter report heading Building a
Company that Will Stand the Test of Time. Anheuser-Busch InBev is determined to raise a
company that “creates value for their shareholders for the next 100 years.” Part of this mentality
includes never being satisfied, constantly in search for new ways to gain satisfaction and exceed
expectations; which leads into the next value, customer importance. The customer is at utmost
value being the motivation to uphold the other two themes. Without the consumers there would
be no market to thrive in. With the third theme Anheuser-Busch InBev can uphold or exceed
consumer standards building a relationship. The relationship allows for the support needed to
remain prosperous in the long-term.
To promote these values a high-quality workplace is maintains for its employees
since the company believes that empowered employees enable Anheuser-Busch In Bev to
produce a quality product. In addition to the encouraged employees the 7-step brewing process,
brewmasters role and the taste of the American-Style Lager that Adolphus Busch perfected in
1876 “have stood the test of time” (Brewing Process, 2015). The brew master controls and
influences every step of the 30 to 60 day process. The Brew master could be considered the
manager, the overseer. What makes a great beer is the complementary efforts of the brew master
and their employees. In July 2010, Anheuser-Busch launches the AB InBev Global Management
Trainee Program. This intensive ten-month programs allows the recruited talent to harness all
aspect of the business (Our People, 2015). This allows for a knowledgeable head to lead the rest
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of Anheuser-Busch’s talented employees. Throughout the process the beer is tested five times to
guarantee satisfaction from the consumer.
Human Resources, & Finance
Human Resources
Anheuser-Busch InBev is affiliated with a strong Human Resources department. As any
Human Resource department should, it is a job that “makes sure everyone is set to their right
capabilities” (Schroeder, 2013). According to writer Roger Schroeder, human resources is
designed to hire, train, and guide management to follow the company’s given operations.
Anheuser-Busch InBev is a company that is dedicated to their consumers, among the AnheuserBusch InBev website there is a page, Dream-People-Culture, which provides 10 Principles of
their sought out dedication to improve the company as well as the quality for their consumers.
Third on the list of the 10 Principles states “We recruit, devolve and retain people who can be
better than ourselves. We will be judged by the quality of our teams” (Dream-People-Culture,
2015). The human resource department of Anheuser-Busch InBev is responsible for that goal to
be met. Without the proper training and positioning, the quality would not be at it optimal value.
Finance
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The financial report for Anheuser-Busch InBev is shown through their consolidated
income statement noting the profit for the years of 2013 and 2014. It follows
(Annual Report 2014).
As the income statement for Anheuser-Busch InBev states there was a drop in profit over
the last year. This is most likely due to the rise in small craft breweries. Writers for
craftbrew.com state within an article for light lager (most of Anheuser-Busch Inbev products)
that, “The tastes of individual beer appreciators are evolving. Small and independent craft
brewers are rising to dominate the local level. And among large global brewers, we’re seeing
diversification” (Herz, 2015). This article was posted on the Craftbrew site in response to the
Anheuser-Busch Inbev 2015 Super Bowl commercial. The commercial focuses on beer drinkers
“drinking beer brewed the hard way”(Herz, 2015). The recent spike in local craft breweries has
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put a toll on “macro-breweries” or as Anheuser-Busch Inbev likes to call themselves. As writers
at craftbrew state “with the group of small and independent craft brewers now collectively
producing more beer. Things are definitely changing” (Herz, 2015).
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