The global economy can do a lot of things to a man…but if you threaten to mess with his job AND his beer, that may just be the last straw. By many of the reactions - from TV and barstool talking heads to the 31,000 member Facebook Group protesting the deal - the InBev (INBVF.PK) purchase of Anheuser-Busch (BUD) is an unacceptable encroachment on American life, liberty and the pursuit of happiness. The reaction is not only emotional, it also stems from an underlying fear that the projected $1.5 billion in annual “synergies” saved by the acquisition is a euphemism for job cuts.

It is sad to lose the sense of pride and tradition that US ownership of Budweiser - a beer that’s as American as apple pie - brings. But there are some aspects of the deal that make the pint glass half full rather than half empty.

For starters, there is little overlap in the location of breweries. 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.

Instead, early reports are that they’ll leverage their marketing operations for reaching new markets - a great move for AB - whose domestic sales have slowly been chipped away by micro-brews, wine and other beverages.

Just as important to the bottom line is the new world’s #1 brewery’s power to leverage their massive purchasing power. Brewers have been feeling the rise in wheat, barley, hops, water, aluminum and distribution costs. So consolidating their sourcing and procurement operations in order to negotiate better contracts up and down their supply chain is a huge competitive advantage.

It’s extremely likely that we’ll see the new company implement a global spend management process that utilizes a mix of category expertise and technology to negotiate better contracts with vendors and drive “synergistic” savings to the bottom line. In fact, I wouldn’t be surprised to see something along the lines of Telefonica’s procurement model. After all, they’ve proven that procurement (even in a company that’s grown by acquisition) can drive  meet the needs of its internal customers across multiple time-zones, languages and borders.

The bottom line is, while there will be cost cutting measures, InBev has a growth-by-acquisition track record that proves they ‘get it’ when it comes to adapting to a new world economy - where dynamic supply chains are key to keeping costs down and effective marketing (which in the case of beer often plays on regional emotions and tradition) is imperative.

Maggie Sikora Frey is a Manager in Ariba’s Spend Management Services group.

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Maggie Frey

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