On Monday morning, May 15, Anheuser-Busch announced plans for a capital expenditure program that will total $2 billion by 2020. The program, among the largest in U.S. brewing history, is part of an ongoing investment plan that has been in effect since 2011, and that will total $4.5 billion in investments between 2011 and 2020.
A-B president and CEO João Castro Neves described the program as evidence of the global company’s “vote of confidence” in American brewing. The investments will focus on expanding and improving capabilities in its brewing, distributing, and packaging across its 21 brewing facilities and 20 distributorships across the U.S.
Neves noted that as a result of A-B's last capex announcement, the company created 2,500 new jobs from 2013 to 2016, a 19 percent increase in total headcount of A-B employees in the U.S. "We’ve also seen significant additions of employees at our craft partners. For example, at Blue Point and 10 Barrel full-time employees have doubled," he said.
In a statement released after the teleconference, A-B vice president of supply, Dave Taylor said, “We are focusing on investments which empower our employees to do what they do best — brewing the best beer. Ninety-eight percent of the beer we sell in America is proudly made here at our 21 breweries, using the highest quality ingredients.”
Of the $2 billion to be invested by 2020, $500 million will be invested in 2017 alone, including more than $200 million for brewery and distribution projects; $180 million for product packaging and innovation initiatives; and $58 million to improve and increase sustainability.
Common threads throughout the $500 million growth plan include expanding “cross brewing” capabilities, including with Elysian Brewing in the Fairfield, California, facility, where $15 million will be invested to foster production of Elysian’s flagship Space Dust IPA.
“The Fairfield brewery was traditionally a lager style brewery, so this allows us to produce Space Dust… [which requires] a style of brewing that really brings out a crisp, fresh hop aroma,” said A-B vice president of supply, Dave Taylor. He also said A-B will be “designing some proprietary equipment” that will allow the breweries to implement dry hopping during fermentation.
In addition, Neves told Men’s Journal, “We’ve been doing a lot at the Fort Collins brewery in Colorado, which has helped [cross brewing] with Golden Road, Elysian, and 10 Barrel.”
The 2017 growth strategy will also include collaborations with non-alcoholic beverage companies like Teavana, including a $10 investment to produce four new ready-to-drink tea brands at A-B’s Upstate NY facility throughout 2017, Neves said. The four new Teavana teas will be available at grocery stores in New York, New Hampshire, Vermont, and Montana.
According to the announcement, individual investments throughout 2017 will include:
● $82 million to enhance nationwide supply chain operations and build new distribution facilities in Los Angeles and Columbus, Ohio.
● $28 million at the Fort Collins brewery to expand production of aluminum bottle products and install dry hopping capabilities.
● $18 million at the Williamsburg, Virginia, brewery on new technology and equipment to maintain quality, and to install new labeling machines.
● $15 million to begin cross brewing capabilities at the Fairfield brewery through A-B’s Elysian partnership, including significant updates to brewery infrastructure.
● $13 million to the St. Louis brewery, including updates to the beechwood-aging tanks
● $12 million to the Cartersville, Georgia, brewery to install a new multi-packer to diversify packaging capabilities, as well as new programming and metering devices to increase energy efficiency.
● $11 million to expand aluminum bottling capabilities at the Jacksonville, Florida, brewery, as well as upgrades to improve energy efficiency
● $11 million to begin cross brewing capabilities at the Merrimack, New Hampshire, brewery alongside craft partners.
● $10 million in continued investments at the Los Angeles brewery to add water efficiency and treatment capabilities.
● $10 million to the Baldwinsville, New York, brewery to increase production of non-alcoholic product offerings, mainly Teavana, and to install a new multi-packer.
● $8 million to the Houston brewery to begin brewing Michelob Ultra Lime Cactus and to expand aluminum bottle production.
● $7 million to the Columbus brewery to support various improvements, including projects to conserve resources and to develop and integrate new products.
Sustainability efforts will include direct-distribution plans that will reduce A-B’s carbon footprint by 1.5 million C02 miles traveled, said Taylor. “By shipping straight to wholesalers, [there will be] less handling [and] better freshness.”
Regarding the possibility of future craft brewery buyouts or partnerships, Neves said, A-B is focusing on enhancing its current operations with the nine breweries in its High End portfolio. “We’re happy with where we are [...] there are no new announcements,” he said.