Anheuser-Busch to cut work force 10% Brewery also plans an earnings charge of $565 million

September 23, 1993|By New York Times News Service

With the beer market flat and many beer drinkers searching for less expensive brands, the Anheuser-Busch Cos. announced yesterday that it would take a $565 million charge against earnings and cut its salaried work force in the United States by 10 percent.

The moves, part of an extensive program to reduce costs and improve efficiency, follow what has become a pattern among large consumer product companies when buyers have more choices than ever and consumer confidence has not returned to freer-spending ways of the 1980s.

While it remains the world's largest brewer, with 44 percent of the domestic market -- its brands include Budweiser, Budweiser Light, Michelob, Natural Light and Busch -- Anheuser-Busch has crafted a strategy to save $100 million through 1994 and up to $500 million by 1997, while pepping up sales.

Jerry E. Ritter, the company's chief financial officer, said that the changes were not being made as a safeguard against a possible "sin tax" to help pay for the administration's health care plan presented by President Clinton last night.

Mr. Ritter said that he did not expect funding for health care to include a tax increase on alcohol products. In its lobbying efforts, he added, the company made it clear to the administration that the last tax increase on beer, a jump to $18 a barrel from $9 in 1991, drove up the price of Anheuser-Busch products 11 percent and led to the loss of 60,000 jobs in the brewing industry.

"We feel we presented a very good argument with the administration," Mr. Ritter said.

Within the "restructuring and reorganization" part of Anheuser-Busch's strategy, the company intends to eliminate approximately 1,200 salaried jobs in the United States, all through attrition and early retirements, by the end of next year.

The retirements will be offered to employees who are 53 and older. The company's 33,000 unionized employees, including 9,000 who work for the brewery, are not affected.

Further, the company said that all salaries would be frozen during 1994, and its food businesses -- Campbell Taggart, the country's second-largest maker of frozen baked goods, and Eagle Snacks -- would be moved to St. Louis, where Anheuser-Busch headquarters are located, from Dallas. About half the 475 corporate employees in Dallas would be offered a chance to relocate; the others would be let go.

The company also said that the board of directors approved the one-time earnings charge of $565 million for the third quarter of this year. Last year, the company earned $917.5 million. All the changes were announced after the close of the stock market yesterday, and thus did not affect the company's stock, which lost $1.125 a share on the New York Stock Exchange, closing at $45.

As the changes are implemented, Anheuser-Busch officials stressed, efforts to promote the company's premium brands, such as Budweiser and Bud Light, would be intensified.

Also, the company intends to forge ahead with the introduction of and marketing support for new products, such as Ice Draft from Budweiser, which will be available for the first time next month on the West Coast.

"This comprehensive effort will make Anheuser-Busch more competitive for the global marketplace of the 1990s and beyond," August A. Busch III, chairman and president, said in a statement. "By significantly reducing the corporation's cost, by broadening our line of premium products and by aggressively supporting our brands in the market place, we will be better able to provide products at a competitive price."

Price increases in the future, he added, would be "moderate." Competitive pricing is behind the moves. In a pinched economy for nondurable goods, it's a buyer's market.

And while micro-breweries are enjoying some vogue with beer drinkers these days, and some imports, such as Heineken, remain popular, the mass-market choices have expanded enough to let consumers be price-picky.

"The thing Anheuser-Busch has to deal with -- and the industry in general -- is this period of several years with a sluggish economy and the impact of a retroactive tax that is going to hit early next year," Emanuel Goldman, an analyst for Paine Webber in San Francisco, said.

"With another period of extreme sluggishness," he said, "there would be further trading down by consumers and the continued inability of the company to increase price. Anheuser-Busch's response is just reflective of what's going on throughout the . . . consumer landscape."

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