The maker of Budweiser is investing $2 billion to make its beer ‘more sophisticated’
The world’s largest beer company, which makes Bud Light, Becks and Stella Artois, is investing $2 billion in American brewing operations over the next four years. (Spencer Platt / Getty Images)
The world’s largest beer company, which makes Bud Light, Becks and Stella Artois, is investing $2 billion in American brewing operations over the next four years.
Anheuser-Busch, which has been aggressively buying up craft breweries to make up for its flat sales, said the investment is part of an ongoing effort to expand in the United States, where craft beer sales have eclipsed Budweiser sales for four years running.
The money – which includes about $500 million in investments this year – will go toward building new distribution facilities in Los Angeles and Columbus, Ohio, and to improve existing breweries in Houston, St. Louis and Fort Collins, Colorado. Although the money will not be used to acquire additional craft breweries, executives said it would be used to expand brewing facilities for craft beer brands the company already owns.
"This is a vote of confidence in the future of American brewing," Joao Castro Neves, president and chief executive of Anheuser-Busch, said in an interview."We are doing our part to make the beer industry more sophisticated, complex and compelling to our consumers."
The investment comes five months after Belgium-based Anheuser-Busch InBev purchased SABMiller, the maker of Fosters, Miller and Pilsner Urquell. The $107 billion deal brought together the world’s two largest brewers to create a combined company with roughly 500 beer brands and an estimated $55 billion in annual sales.
Now executives are saying it’s time to reassure Americans that the company remains focused on the U.S. market, where its customers are increasingly opting for locally produced craft brews over mass-produced brands."It was important to double-down on the U.S. market after the dust settled from the SABMiller acquisition," Neves said. "We are starting to see upticks [in sales], but we definitely have not turned the corner yet."
Neves said the company’s latest investments were not motivated by President Trump’s pro-America business policies – "Beer is bipartisan," he wrote in an email – and did not say whether the company was receiving any tax breaks or incentives related to the investment. Almost all of the beer the company sells in the U.S. – 98 percent – is made in its 21 American breweries.
Last summer Anheuser-Busch attracted its share of ridicule when it replaced the Budweiser logo on beer bottles and cans with the word "America." The show of patriotism was meant to win over millennials, but instead drew attention to the fact that the brand is owned by a European company. (A recent survey found that 44 percent of 20-somethings have never tried Budweiser.)
"Frankly, Budweiser calling itself ‘America’ is the most un-American thing I’ve observed in quite a while," Will McCameron, co-owner of Brewery 85 in South Carolina, wrote in a blog post. "They’re doing it because they’re losing market share to craft beer faster than the Golden State Warriors imploded in the 2016 NBA finals."
"Budweiser is about as American these days as a successful Green Party or ample paid maternity leave," added beer writer Tom Acitelli in The Washington Post. "So many other, smaller – and when it comes to flavor, better – beers scream ‘America’ much more loudly."
Earlier this month, Anheuser-Busch announced it had bought its 10th craft brewery: Wicked Weed Brewing in Asheville, North Carolina. Other recent acquisitions include Karbach Brewing in Texas, Devils Backbone Brewing Co. in Virginia and Blue Point Brewing Co. in New York.
"They want to send a very strong signal that even though they’re the biggest beer producer in the world, they remain committed to the U.S.," said Robert Ottenstein, an analyst for Evercore ISI. "It’s a very important market for them, so this isn’t a surprise."
Craft brewers like Bryan Brushmiller, who owns Burley Oak Brewing Co. in Berlin, Maryland, say it’s become harder to stay afloat as Anheuser-Busch gets bigger.
"There’s definitely a monopoly," said Brushmiller, who opened the brewery six years ago. "They’re taking over distribution and, whether they mean to or not, they’re hurting smaller breweries like us."
It’s become increasingly difficult, he said, to find hops and barley as larger companies buy entire fields at discount prices. It’s also become more challenging, he said, to compete with regional breweries that get acquired by the likes of Anheuser-Busch.
"All of a sudden, you’ll walk in and the IPA on tap is half the price," he said. "Once they’re part of a corporation, they can offer lower prices. It’s just basic business."
In all, Anheuser-Busch plans to have invested $4.5 billion in the U.S. between 2011 and 2020. But will that be enough to win over Americans again? Eric Shepard, executive editor of industry publication Beer Marketer’s Insights, says it’s too soon to tell.
In 2016, he estimates, Anheuser-Busch shipped 13.2 million barrels of Budweiser in U.S., compared to 23.4 million barrels of craft beer. A decade earlier, the numbers looked starkly different: 24.2 million barrels of Budweiser, and 7.7 million barrels of craft beer.
"Mainstream brands have been challenged for well over a decade now," he said. "Craft continues to grow and Bud continues to decline. Whether Anheuser-Busch can get those sales back or not, I don’t know."