Dive Brief:
- Alcohol giant AB InBev’s Anheuser-Busch plans to close a distribution facility in Medford, Massachusetts, according to a Worker Adjustment and Retraining Notification (WARN) notice filed last week. The decision will lead to the loss of 193 jobs.
- The Bud Light brewer’s plant closure will take place during the first two weeks of November. The change is permanent and its operations will be moved to wholesaler Quality Beverage in the same region, the company said in a statement to Food Dive.
- The company saw beer volumes decline 1.3% in its most recent quarter, according its earnings report earlier this month.
Dive Insight:
The largest companies in the beer category are making strategic moves to cut costs amid soft consumer demand.
Simon Wuestenberg, the U.S. chief sales officer at AB InBev, said in a statement the company’s decision to shutter the facility comes after assessing its “operational footprint to ensure our entire system is set-up for long term success.” He said shifting operations to another distributor will help it continue to drive growth.
The move follows after a period of declining beer sales since early 2023, spurred in part by the highly publicized boycott of Bud Light. Last year, it laid off less than 2% of its corporate workforce and the company ceded market share in traditional beer to rivals like Molson Coors and Constellation Brands.
Despite the headwinds, CEO Michael Doukeris expressed optimism to investors about the long-term prospects for the industry on AB InBev’s most recent earnings call.
“We see some good premiumization in the industry. We see beer in terms of dollars consistently growing. And now in the last quarters, we see beer gaining share of value,” Doukeris said. “And we see that when you combine with the RTDs, there is a very good momentum there for the brewers in terms of capturing volume and dollars in the industry.”
AB InBev has also made strategic decisions to invest in growth outside its staple beer brands. Last year, the company spent $13 million on projects at its Cartersville Brewery in the Atlanta area, which produces its Kona Big Wave craft beer alongside hard seltzer and canned cocktail brands. It also announced a $22.5 million investment in August 2023 on upgrades to a Houston brewery.
Throughout the food and beverage industry, companies are choosing to reconfigure their production strategy as they deal with a tenuous economy amid years of ongoing inflation. In the last month, cereal giant WK Kellogg Co and beverage behemoth Keurig Dr Pepper both announced the closures of production facilities, each impacting hundreds of jobs.
