July 14, 2013

The A(nheuser) B(usch) C's of a merger

By LISA BROWN/St. Louis Post-Dispatch

ST. LOUIS - Five years ago this week, Anheuser-Busch Cos. agreed to be acquired by Belgian brewer InBev, creating the world's largest brewer and setting off ripples of worry as uncertainty loomed over one of St. Louis' most revered homegrown businesses.

Anheuser-Busch in an era of micro brewers
click image to enlarge

The St. Louis brewery has been a fixture of the city’s economic identity for generations.

Photos by Christian Gooden/St. Louis Post Dispatch

Anheuser-Busch in an era of micro brewers
click image to enlarge

Bottles of Bud Light Platinum move along during the packaging process.

In the years since the $52 billion deal was announced on July 13, 2008, much has changed at AB's corporate offices at One Busch Place.

The Busch family that ran AB for more than a century would ultimately exit the company whose beers had become iconic symbols of Americana, marking an end of an era.

Now, St. Louis is the North American headquarters for the combined AB InBev, responsible for U.S. and Canadian operations, and the company's world headquarters is in Belgium.

And cut loose to help pay for the massive merger: Busch Entertainment. In 2009, AB sold Busch Entertainment's 10 theme parks, including Busch Gardens and Sea World, to private equity firm Blackstone Group.

But doomsday scenarios of St. Louis losing its place as the epicenter for the company's U.S. operations failed to materialize. In 2011, AB said it planned to invest more than $1 billion in its U.S. facilities from 2011 to 2014, including upgrades to modernize operations at its St. Louis brewery.

AB InBev remains the largest brewer in the country, with its market share accounting for close to half of all U.S. beer sales. Bud Light remains the best-selling beer in the country.

This year, the brewer marked the 80th anniversary of its iconic association with Clydesdales, and the company says it's exploring ways to extend the horses' visibility internationally.

"There was a tremendous amount of concern that something bad for St. Louis was going to happen, like them closing the brewery or getting rid of the Clydesdales," said Glenn MacDonald, an economics and strategy professor at Washington University's Olin Business School. "The fear was that AB would be downsized to oblivion, and that clearly hasn't happened."

MacDonald said some of the changes made after the sale have helped solidify the company's long-term viability.

"It had the trappings of a family company before, and AB clearly did become a trimmer, more modern company," he said.

"In a way, AB being less efficient was probably a much bigger risk to St. Louis than InBev."

In January 2012, Luiz Edmond, president of North America for AB InBev, assumed leadership of the brewery's U.S. operations in St. Louis upon the departure of President David Peacock, a former head of marketing at AB who became president after the 2008 sale.

In front of more than 100 employees in May at a groundbreaking for a new 300-seat biergarten at the St. Louis brewery, Edmond said the company remains committed to investing in St. Louis.

"We guarantee you that this is just a first step in a three- or four-year project that will bring new news every year and will make this a real attraction," Edmond said of the new biergarten.

Referring to the Budweiser sign that's been atop the Bevo building since the 1940s, Edmond said: "We hope it'll be here for another 100 years."

After the merger, the combined companies went through an integration period followed by what executives call "optimization."

One of the changes after the merger included adding elements of Six Sigma _ a management philosophy that uses data to cut waste and make improvements _ throughout AB, even in human resources.

(Continued on page 2)

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