SAVE THE DATE!

This is an unprecedented development! While AB closed its smallest brewery in Tampa way back in 1995, now it will close or sell 3 out of its 12 Anheuser Busch brewing facilities, closing Fairfield, CA, Merrimack, NH and selling Newark, NJ in one fell swoop. AB operates 100 facilities (mostly craft), it sez. Yet AB website lists just the 12 much larger AB facilities. It's the "end of an era," a NJ media outlet opined, referring to Newark as brewing center. But these big changes also pave way for a potentially better future operationally. AB gaining mkt share this yr for the first time since InBev bought it, and its recent BeatBox acquisition gives it an even stronger position in fast-growing RTD space (see below). Some version of these latest moves hadda happen eventually. AB had delayed the inevitable, as its business declined massively in US. But AB also rips off the proverbial band-aid at a time when it's doing better, though still not growing volume. AB Declined Over 40 Mil Bbls in US Since 2008 AB US shipments peaked at 107 mil bbls in 2008, including exports, the yr InBev bought Anheuser Busch. And it has declined every yr since, except 2012. In total, it dropped 41 mil bbls since '08, falling to 66 mil bbls by 2024, INSIGHTS estimates. It's down another coupla mil bbls in 2025. Even with more efficient plants, fewer workers, larger variety of products and shorter runs, given AB's colossal overall drop, it's kind of amazing that AB never had to close a major brewery in ABI era until now. Recall, Molson Coors closed 2 in the past decade, Eden, NC and Irwindale, CA.Why These Facilities? Size, Utility, Value, Mkt Share Merrimack is AB's smallest brewery and had become increasingly "irrelevant," said a knowledgeable source. Newark brewery sits on very valuable real estate, which AB explored selling to Port Authority at least a decade ago (reportedly for hundreds of millions). So Newark sale "always teed up, waiting to happen," source added. Goodman Group, a property development co, purchased Newark with "plans to repurpose the site." In recent yrs, Newark brewery became a "ghost town," said another source, often used for warehousing, producing RTDs, not so much for making beer. Back in 2007, it still had 7.5 mil bbls/yr capacity and 800 employees on its own. AB's Fairfield, CA brewery sits between SF and Sacramento. But AB has another much larger brewery in Los Angeles. Given AB's huge declines in Pacific region, 2 breweries in state likely unnecessary. In each of NJ and CA, AB once had 50 share or more. But in 2024, AB at 25.6 share in CA and 19 share in NJ.From BMI Archives: August III Acknowledged Two Breweries Most Likely to Close in 1999 If Declines These were always the most likely breweries to close, according to one important source: former ceo August Busch III, way back in 1999. In lengthy "dialogue" with Teamsters at annual shareholder meeting that yr, after Teamsters charged that AB "threatened" to close Merrimack and Fairfield, August acknowledged that those 2 breweries would be first to close if a strike and/or boycott hurt volume and mkt share.AB's 2024 Agreement With Teamsters Allowed for Closures; 475 Workers Will Be Offered Jobs Elsewhere In early yrs after ABI formed, it knew it would save $2 bil/yr thru other cuts but wanted to maintain labor peace. So co agreed with Teamsters not to close any facilities. It renewed that commitment to Teamsters in 2 more successive 5-yr agreements (2014 and 2019). But by the time Feb 2024 came around, agreement could no longer be so definitive. Faced with imminent strike, AB reached an agreement that gave Teamsters "every single item they need and deserve," according to Teamsters at time, including $2500 signing bonus, immediate $4 per hour increase and more. But while AB made commitment to "job security," it did not say it would not close a brewery. Teamster statement following AB announcement yesterday elaborates that present "agreement ensures that even if breweries close, employment, wages, and seniority are protected for all of our members &mdash; benefits that would never be afforded to workers who do not have a strong union contract." AB said: "We will support the approximately 475 full-time employees currently working at these three facilities by offering all of them a full-time role elsewhere in our U.S. operations," including relocation stipends and new location skills training. Co will offer severance pkgs to those who don't relocate.AB Invested $2 Bil in Facilities Over Last 5 Yrs; Financial Effects of Closings, Sale Price Not Detailed AB said these moves came after "thorough review," and "over the last five years we have taken steps to update and modernize our U.S. manufacturing operations, investing nearly $2 billion in our 100 facilities across the country." Co will now be able "to invest even more in our remaining operations" and portfolio, it added. Financial impacts of these sweeping changes are not made public at present time. Even with inefficient capacity utilization in US, ABI North America EBITDA was $4.8 bil in 2024 with a 32.7% margin.

AB Closing 2 Breweries, Selling a 3d, Out of 12 AB Breweries; Unprecedented Change, Pointing to the Future

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