Jay Brooks has a lengthy piece up on his blog about how the new international beverage giant is unilaterally requiring its suppliers to wait four times longer for payment. Worse, they’re spinning it as “not unreasonable”.


A-B InBev Redefines Reasonable

Under normal circumstances, if a company has short term financing obligations — say, for example, to meet payroll — and they didn’t have enough cash in the bank, they’d draw on their working capital line of credit. But if they either didn’t want to do that or couldn’t do that, another way to create a de facto line of credit is to stretch their trade payables. That’s what the largest beer company in the world, and one of the five largest consumer product companies of any kind, appears to be doing, financing their short term working capital with involuntary interest free loans from their trade creditors, who have little choice but to either accept the new terms dictated to them, or stop doing business with them altogether. At another point in the interview, [the new president of Anheuser-Busch under InBev, Dave] Peacock says that the “goal is to be collaborative, not dictatorial,” which seems odd considering they’re dictating these new terms to suppliers. But in that quote, Peacock is discussing their distributors, who apparently can be treated differently than their suppliers. Peacock goes on to suggest that distributors simply needed to get to know InBev better since the beer business is such a “people” business, warning that there “should never be a situation where we’re just jamming things down their throat.” Is it just me? Isn’t that exactly what they’re doing with suppliers, taking new terms and jamming them down their throat?

Let’s see. Involuntary lines of credit from suppliers, over 1500 people downsized in the U.S., dumping assets hither and yon likely resulting in more people out of work, even twiddling with the supposedly sacrosanct Budweiser recipe. Tell me again how this merger is good for anyone except shareholders? Oh, wait, it’s not good for them either since the whole market has tanked.

At least television ad execs are balking at A-B InBev’s shenanigans. In an update, Jay shares:

Ad sales execs are defying an Anheuser-Busch InBev directive that would have them wait as many as 120 days to be reimbursed for airtime, telling the brewing giant to stick its ultimatum where the sun don’t shine.

Sources said all major broadcast and cable nets have condemned A-B InBev’s unilateral order, refusing to comply with what one sales exec called “a shakedown.” The brewer has yet to respond to the opposition, which began fermenting Feb. 5 after A-B InBev sent its media suppliers a letter spelling out the new payment schedule. The industry standard usually is 30 days.