American beer brand Budweiser Brewing Company APAC will cut “thousands of jobs” this year to reduce operational costs by around 15 per cent, Bloomberg reported citing sources.
The cost cutting development comes amid weak consumer demand in China this year, the sources added, as per the report. China will bear the brunt of the reductions as it accounts for more than 80 per cent of the beer maker’s manpower.
Budweiser Slashing Operational Costs By 15%
This is not completely unprecedent, in 2024, Budweiser gave pink slips to around 4,000 workers or 16 per cent of its then 25,000 strong employee base, the report noted.
This year’s staff reduction would mean thousands more jobs are on the chopping block, the people added.
The company has been steadily reducing its headcount over the past few years, with the staff size shrinking about 20 per cent by the end of 2023 from more than 30,000 in 2017.
‘Optimising’ Operations Structure
“As we optimize our operations structure, we are dedicated to fostering innovation and building our workforce to drive our success,” a Budweiser APAC spokesperson said. “For over four decades, we have invested in China, we are confident in its growth potential and remain focused on our strategic priorities.”
Budweiser APAC’s downsizing highlights the predicament of global brewers in the world’s second-largest economy, where consumers are reining in spending amid an economic slowdown and property market slump. The group, controlled by Anheuser-Busch InBev, posted a net loss of $16 million in the fourth quarter, missing analysts’ estimate of a $6.72 million profit. For last year as a whole, profit plunged 15% while revenue declined 9%.
Rival brewers are facing similar challenges. Both volume and revenue dropped for Carlsberg in China last year.
Turnaround Efforts in Full Force
In an effort to drive a turnaround in China, Budweiser APAC has named Yanjun Cheng, a 29-year veteran of the company, to succeed Jan Craps who will step down in April after seven years.
Cheng will need to steer the company through multiple headwinds, including its declining image in the Chinese market. One of the group’s brands that was popular in Northeastern China was found to contain vomitoxin, which can cause short-term nausea, diarrhea and headaches, according to a report by Hong Kong’s Consumer Council last year.
The findings were highlighted by China’s official Xinhua News Agency, which also reported that Budweiser APAC repeatedly breached the country’s advertising laws. The group has been fined a combined 1.4 million yuan ($194,000) since May 2021 for the violations, according to the report.
(With inputs from Bloomberg)
