Anheuser-Busch has announced it will be investing $1 billion into US supply chain and domestic production efforts over the next two years. This move will strengthen American operations and help the beverage giant compete in the hard seltzer race.
Anheuser-Busch also notes the investment will help generate more American jobs, modernize production lines and jumpstart sustainability innovations. $450 million of the funds will be spent annually on domestically-grown raw materials, including hops and barley.
This news is coming on the heels of a significant financial turnaround for the beverage giant. After reaching lows of $35 last march, Anheuser-Busch InBev stock has rallied, reaching a current price of $71 a share.
At the center of this investment is major funding towards RTD production capabilities. Over $50 million has been allocated to bolstering the company’s hard seltzer brands, suiting up Anheuser-Busch to play hard bowl in the crucial spiked seltzer market.
An rep noted that “A significant portion of our hard seltzers are sold in ‘sleek’ cans. As consumer demand grows and we have to up our supply, we must upgrade our production capabilities so that we can produce more sleek cans. In addition, producing flavor ‘variety packs’ requires modern technology and we are increasing the number of production lines across our facilities that have this ability.”
$100 million will go to new canning lines to expand production capabilities, presumably to have the ability to create enough sleek cans to keep up with consumer’s insatiable demand for hard seltzer.
The rep notes that “Our portfolio approach to seltzers will be critical to long-term success.”
Currently, Anheuser-Busch houses Bud Light Seltzer, BL Lemonade Seltzer, BonV!V, Natty Seltzer, and Michelob Ultra Seltzer. On the horizon, the brand will shepherd Travis Scott’s new hard seltzer line CACTI to market.
The hard seltzer scene is a $3-billion industry. Over 2020, the hard seltzer and RTD category saw unprecedented growth. 2021 is set to continue that trajectory.
Drinks market analysis firm IWSR noted that over the last few years the hard seltzer sector has boomed, growing by 346% in 2017, 246% in 2018, and 214% in 2019. The category is expected to grow 157% in 2020, with the IWSR expecting total volume consumption of RTDs (led by hard seltzer) in the US to surpass that of spirits consumption over the year.
Though Anheuser-Busch does have several hard seltzer brands in its portfolio, it lacks the mega-brands; the White Claws, the Trulys. CACTI should grow into a breadwinner quickly thanks to Scott’s cosign.
The brewing giant has taken a big hit over the last few years, impacted by the perfect storm of the beer sector’s slowdown and the market-distorting winds of Covid-19, plus unfavorable foreign exchange and high commodity costs. CACTI, combined with this significant investment, angles Anheuser-Busch to compete more actively in the hard seltzer market.
As the beer sector continues to slump, a pivot to hard seltzers will be critical for the beverage giant—Anheuser-Busch’s revenue dropped from $54.9 billion in 2017 to $52.3 billion in 2019.
Changing consumer preferences is largely to blame for this stumble. Increasingly health-conscious consumers are shying away from beer. Add on the widespread shutting of restaurants and bars, plus the cancellation of sporting events and festivals, and the beer industry has been left in limbo.
Anheuser-Busch has doubled down on ‘beyond beer’ products to help the company acclimatize to the seismic shifts in the beer world. Last year, the brand acquired Babe Wine, and is working hard to grow the Social Club, Cutwater and Bon Viv brands.
A further $100 million of the $1 billion investment will go towards sustainable initiatives, including solar panel installments and water treatment.
But most of the investment is a play to catch the attention of local drinkers. A new campaign was a beacon of hope to the aftertimes.
$450 million of the investment will be spent on domestic purchasing annually, including American-grown rice, hops, barley and corn. Anheuser-Busch owns and operates approximately 120 facilities in 27 states and employs 19,000.
“Right now, our big dream is the recovery of our country. It’s the reopening of our neighborhood restaurants and bars, it’s cheering on our favorite teams and gathering together in person,” said Michel Doukeris, President and CEO of Anheuser-Busch, in a statement. “We are here to find a better way to lead a safe and strong recovery, and we’re starting by investing across our U.S. supply chain to protect the industry and the millions of people who rely on it for their livelihoods. These investments are immediate and happening now.”
The Link LonkFebruary 04, 2021 at 11:34PM
https://www.forbes.com/sites/katedingwall/2021/02/04/anheuser-busch-invests-1-billion-into-us-supply-chain-boosting-hard-seltzer-capabilities/
Anheuser-Busch Invests $1 Billion Into US Supply Chain, Boosting Hard Seltzer Capabilities - Forbes
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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