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Friday, May 24, 2024

Brewing Up New Possibilities?

As the primary West Coast presence for Anheuser-Busch, eyes turned to the brewery on Roscoe Boulevard in Van Nuys and what may happen there now that the century-old brewer will merge with Belgian beer maker InBev. After a quick courtship that included a spurning of InBev’s original offer, the leadership at St. Louis-based Anheuser-Busch this month accepted the $70 per share in cash offer making the total deal worth $52 billion. InBev, distributor of the Stella Artois and Beck’s beer brands, has a reputation for cutting costs to reduce expenses, a move expected as it combines operations with its new American partner. Buried in the company press release announcing the merger and obscured by corporate-speak about synergies and best practices and “rationalization of overlapping corporate functions” gives a clue to what’s coming. So what does that mean for the Van Nuys brewery? Probably not much. Van Nuys (referred to as the Los Angeles brewery at the AB website) is the larger of the two beer-making operations in California, with three times the capacity and three times the brands of the facility in Fairfield up north. Attempts to reach plant manager Gary Lee were not successful. That InBev has no production capacity in the U.S. bodes well for the Van Nuys plant as it’s a natural if additional lines are needed, said Bruce Ackerman, president of the Economic Alliance of the San Fernando Valley. What InBev is getting for its billions is the well-known Budweiser and Bud Light brands and penetration into the U.S. market for its own beers, Ackerman said. “To do anything to adversely impact that would be a silly move once they laid out that kind of capital,” Ackerman said. This has been a month of big announcements in the U.S. beer industry. The day after the InBev/Anheuser-Busch merger, MillerCoors chose Chicago as the site of the headquarters for the joint venture between those two breweries. That Illinois kicked in $18 million of its own money goes to show how lucrative it is to have a beer company. The U.S. beer market is the second highest in the world by volume (China is the first) with sales of 2.93 billion cases in 2007. The Beer Institute forecast a 1.9 percent increase this year. A study by the institute and the National Beer Wholesalers Association found that the brewing, packaging, distribution and sales directly and indirectly contributed nearly $190 billion to the U.S. economy in 2006. The industry created 1.7 million jobs that paid almost $55 billion in wages. The Van Nuys brewery employees 800 workers and has a payroll of $100 million. When it celebrated its 50th anniversary in 2004, the plant had more than 1,000 employees. In years past, unions workers on the lines filling cans, bottles and kegs were allowed “beer breaks” and could take bottles off the line to have with lunch. Later the perk was changed to two free cases a month. With the capacity to fill 12 million barrels a year, which far outdoes the 4.4 million barrels per year at the Fairfield plant. Upping that figure wouldn’t be difficult if it proves necessary after the merger.

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