Anheuser-Busch: Operations Management & Supply ChainApril 21, 2015

Operations 3302*01

Johnna Fieldman, Tom Gabelmann, Christina Quiles, Chelsea Sirois

Table of Contents

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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-is-

an-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 Anheuser-

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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 Beverage-

Brewers 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, Anheuser-

Busch 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 vertical-

integrated 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). Anheuser-

Busch 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. Anheuser-

Busch 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,

Anheuser-Busch/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 glass-

forming 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 Anheuser-

Busch 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 Anheuser-

Busch 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 Anheuser-

Busch 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 Anheuser-

Busch’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 Anheuser-

Busch 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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