Beer Deal's 'Synergies' Don't Just Mean Layoffs

InBev’s acquisition of Anheuser-Busch has stirred fears that massive layoffs are in the offing for Busch employees. Those fears are only heightened when the amount of “synergies” (cost savings) is mentioned. The companies say the deal will enable them to save $1.5 billion a year.

Surely, there will be some layoffs. But maybe not all that many, says Maggie Frey, writing for the blog Supply Excellence.

She notes the near-total absence of overlap in the location of breweries between the two companies. “And in an era when labor costs, exchange rates and fuel prices have led to a resurgence of ‘nearsourcing’, we’re certainly not on the verge of seeing a somewhat perishable, expensive to ship product moving to a highly centralized production model.”

Rather, the synergies will come in marketing and supply-acquisition.

Busch, given its slumping domestic sales, needs all the global marketing it can get.

But big savings will also come from the combination of the companies’ “massive purchasing power,” Frey says. Given the rising costs of wheat, barley, fuel and other commodities, “consolidating their sourcing and procurement operations in order to negotiate better contracts up and down their supply chain is a huge competitive advantage.”

It would be interesting to see some numbers put on all this – even theoretical ones. But Frey’s fundamental argument makes sense. For all the complaining and patriotic chest-thumping surrounding this deal, it may end up being the best possible thing that could happen to Busch, and most of its workers.