InBev’s delayed pay brews controversy
TEXT OF STORY
Kai Ryssdal: InBev, the giant beer conglomerate that bought Anheuser-Busch last fall, reports first quarter results tomorrow. So we’ll know how much the company’s bringing in. About the same as last quarter probably. Analysts say revenue’s expected to be fairly flat. But there is some controversy brewing over what InBev pays out. And when. Marketplace’s Janet Babin reports now from North Carolina Public Radio.
JANET BABIN: Most of us have to pay our bills within 30 days. If not, we get slapped with hefty interest charges and late fees. But Anheuser-Busch InBev has decided payment due will now mean, pay in up to four months.
The longer pay cycle lets the company collect more interest while creditors are left hanging. Dave Peacock is President of Anheuser-Busch.
Dave Peacock: In an uncertain economy, we’re not a customer that is a risk of not paying, we’ll always pay.
But 120 days can seem like never to strapped suppliers and distributors. Most are too thirsty for business to balk.
But a backlash is mounting. One supplier in St. Louis — home of Anheuser-Busch — has banned AB InBev products at company functions. And Belgium’s economy minister is investigating whether AB InBev’s pay period is illegal.
Ann Gilpin is an analyst with Morningstar. She says InBev took on too much debt when it acquired Anheuser-Busch last year for $52 billion. She says InBev’s management team is wielding a machete to cut costs.
Ann Gilpin: They’re very ruthless, not only with how they run things internally, but how they deal with suppliers and how they deal with their distributors.
But vendor relationships are delicate. Gilpin doesn’t expect other firms to adopt the longer pay period, unless they too, are desperate to pay down debt.
I’m Janet Babin for Marketplace.
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