Budweiser Brewing Co APAC Ltd is planning to cut thousands of jobs in a move to shrink costs due to weakening consumer demand in China.
China will also bear the brunt of the job cuts with it accounting for over 80% of the group’s workforce, according to a Bloomberg report.
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The reason for the weakening demand in China is that consumers are reducing their spending due to an economic slowdown and property market slump.
The layoffs are part of the company’s target to cut costs by about 15% this year.
The plan comes after the beer maker had laid off 16% of some 25,000 employees last year, and it has also been steadily reducing its headcount over the past few years, with the staff size shrinking about 20% by the end of 2023 from more than 30,000 in 2017, according to the report.
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This comes after the brand, controlled by Anheuser-Busch InBev, posted a $16 million net loss in the fourth quarter, completely missing analysts’ estimate of a $6.72 million profit, according to the report.
On top of this, profits plunged 15% while revenue declined 9% for the entire year as a whole.
Budweiser is not alone as well. Rival brewer Carlsberg also saw a drop in both volume and revenue in China last year.
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Another prominent challenge is a battered image after one of the group’s brands, popular in Northeastern China, was found to contain vomitoxin, which can cause short-term nausea, diarrhoea and headaches, according to a report by Hong Kong’s Consumer Council last year.
On top of this, China’s official Xinhua News Agency, had also reported that Budweiser APAC repeatedly breached the country’s advertising laws. It subsequently got fined a combined 1.4 million yuan ($194,000) since May 2021 for the violations, according to the report.
