Budweiser Brewing Co APAC plans to lay off thousands of employees this year as part of its cost-reduction strategy in response to waning consumer demand in China, according to sources familiar with the matter.
This new wave of job cuts is aimed at lowering operational costs by approximately 15% this year, following a prior reduction of 16% of its 25,000-employee workforce last year, as reported by one insider. This year’s layoffs are anticipated to eliminate thousands more jobs after 4,000 were already released last year, according to anonymous sources discussing sensitive information.
The majority of these job reductions will affect China, which accounts for over 80% of the company’s workforce.
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In recent years, the firm has been steadily downsizing its staff, with an approximate 20% reduction by the end of 2023 compared to over 30,000 employees in 2017.
“As we refine our operational framework, we are dedicated to fostering innovation and improving our workforce to secure our success,” stated a representative from Budweiser APAC. “We have invested in China for over four decades and remain optimistic about its growth potential while concentrating on our strategic goals.”
Budweiser APAC’s layoffs reflect the challenges faced by global brewers in the world’s second-largest economy, where consumer spending has contracted due to an economic slowdown and a decline in the property market. The company, under the ownership of Anheuser-Busch InBev, reported a net loss of $16 million in the fourth quarter, missing analysts’ expectations of a $6.72 million profit. Over the past year, profits decreased by 15% and revenues fell by 9%.
Other rival breweries are facing similar challenges, with both volume and revenue declines reported for Carlsberg in China last year.
To tackle the challenges in China, Budweiser APAC has appointed Yanjun Cheng, a company veteran with 29 years of experience, to succeed Jan Craps, who will step down in April after serving seven years in the position.
Cheng will encounter several challenges, including the company’s declining reputation in the Chinese market. A report from Hong Kong’s Consumer Council indicated that one of the group’s brands, previously popular in Northeastern China, was found to contain vomitoxin, a substance associated with symptoms like nausea and diarrhea.
This issue was also reported by China’s official Xinhua News Agency, which disclosed that Budweiser APAC has a history of violating advertising regulations in the country. Since May 2021, the group has faced fines totaling 1.4 million yuan ($194,000) for these violations, as noted in the report.
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