ST. LOUIS, Mo. – Expect “Blue Ocean” to get deeper, and Budweiser’s reach to get wider.

In a conference call Monday morning, victorious executives from InBev laid out their plans to expand cost-cutting already underway at Anheuser-Busch Cos., and to build the world’s dominant brewer around its new flagship brand: Budweiser.

InBev chief executive Carlos Brito, hours removed from the announcement of a $52 billion deal to buy the iconic St. Louis brewer, told analysts Monday morning the merged company, to be known as Anheuser-Busch InBev, will be the leading provider of beer in the world’s five biggest beer markets and the third-largest consumer products company in the world. It will be 62 percent larger in terms of revenue than its next-largest brewing rival, SABMiller.

Brito said Budweiser has unlocked potential in countries where the beer is not widely available, because even there, drinkers are aware of the beer – thanks to Anheuser-Busch’s globe-spanning advertising of the World Cup and Olympics.

And, he pledged, InBev takes the same “no-compromise” position toward quality that Anheuser does.

“Consumers can be assured that we will continue what makes Bud the great American lager,” he said.

That push will begin in St. Louis, which will remain the company’s North American headquarters, Brito said. He pledged to maintain the company’s heritage, specifically mentioning Grant’s Farm and Clydesdales and the Pestalozzi Street brewery.

But changes are inevitable, and will begin with a deeper cost-cutting plan than the one A-B unveiled last month, when it was still trying to fend off InBev’s advances.

That plan – known as “Blue Ocean” – to cut $1 billion in expenses over two years, will be expanded to a $1.5 billion effort over three.

The approximately $500 million bump-up in savings will include about $360 million from greater leverage with suppliers, more aggressive production efficiencies and “elimination of corporate overlapping functions” – which will likely lead to some job losses.

Brito said he has no plans to cut Anheuser-Busch’s marketing spending – one area the axe is widely expected to fall.

“One of the things we like about Anheuser-Busch is its marketing expertise,” he said.

In a brief statement at the start of the call, Anheuser chief executive August Busch IV stressed that the deal was “friendly” and the best move for his company’s shareholders.

“Carlos Brito is a strong leader,” he said. “I respect him and he has my firm backing.”

Busch will not have an executive role with the new company, but will take a seat on InBev’s board, as will one other current or former member of A-B’s board. Brito said he hopes to close the deal by the end of the year.

Issues still to be sorted out include Anheuser-Busch’s half-ownership of Mexican brewer Grupo Modelo.

In the short term, the deal will prevent Anheuser-Busch from “effectively disrupting” its main competitor in the U.S. – the combined operations of Miller and Coors, wrote analyst Mark Swartzberg of Stifel, Nicolaus. MillerCoors will benefit in the short term, he wrote.

Another thorny issue is A-B’s network of distributors, who have exclusive license to sell the beer and are a key link in its retail network. Brito side-stepped a question about whether InBev would cut back on the network, though some analysts have said greater efficiency there would be one way to reduce costs.


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