Anheuser-Busch ups savings goal

16 July 2008
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17 July 2008

US brewer Anheuser-Busch is "expanding and accelerating" its cost savings plan, and now aims to save $1 billion (£506 million) by 2010.

The announcement of the firm's "Blue Ocean" savings project follows the rejection of a takeover by Belgium-based brewer InBev as "inadequate and not in the best interest of shareholders".

"The value InBev proposes to offer assumes cost reductions Anheuser-Busch can achieve independently," said CEO August Busch IV. "Our management team is in the best position to determine how to reduce costs and enhance efficiency most effectively.

"We needed to break from our conservative culture, where changing how we operated was sometimes feared."

The plan aims to achieve $750 million (£380 million) savings by the end of 2009. The company, whose products include Budweiser, expects 12 per cent of the savings to come from supply chain efficiencies, with the rest through process improvements, reduced material costs and better energy management.

However, Randy Baker, the firm's CFO, said the brewer was not expecting the price of ingredients to fall before 2009, and "beyond that is anyone's guess". Busch added there had been rapid cost inflation in the firm's production processes and it would continue to be higher than its projections.

Despite the rejection of its bid, InBev claimed its offer of $65 (£33) a share would still provide "unmatched economies of scale in a period of rapidly escalating commodity prices".


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