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Anheuser-Busch plans pre-tax charge of $565 million.

In a concession to the lackluster beer market, Anheuser-Busch has announced that it will take a $565 million pre-tax charge to help fund a corporate revamping.

A-B plans to reduce its salaried workforce by 10%, while increasing marketing spending and introducing new products.

The company said that it expects the charge to cause a third quarter loss. After the announcement, Anheuser Busch shares dropped $1.125, or 2.4%, to $45.

Analysts said that the move could be traced to the gradual decline of the Budweiser brand and the deep discounting prevalent in the U.S. beer market. Analysts noted that poor economic conditions have made sub-premium brands more popular, reducing profit margins for A-B and others.

August Busch III, chairman and president, announced that future price increases would be moderate, "given current economic conditions." Busch said, "Our premium beer must be affordable for our customers."

A-B announced that it will cut 1,200 salaried jobs by the end of next year, mainly through early retirement plans and attrition. A pay freeze for salaried workers will also be enacted in 1994.

The brewer said that the restructuring will save the company more than $100 million a year beginning in 1994.

The company also said that it will speed up its brewery modernization efforts, and reported that a redesign of operations at 13 breweries "will result in...savings of $300 million a year by 1997."

The company also noted its plans for increased marketing support for premium brands.

The company pointed to the strong early performance of Ice Draft and said that it will add "at least one other major new product to the marketplace in 1994."
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Publication:Modern Brewery Age
Date:Oct 4, 1993
Words:276
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