AB InBev Offers Severance Packages to High Earners in South Africa

Austin Ray

THE GIST
Anheuser-Busch InBev has offered a voluntary severance package to South African employees in an attempt to cut costs following its $100 billion takeover of SABMiller. According to Johannesburg’s Sunday Times, the offer specifically targets high earners of a “certain management” level, with insiders telling the publication at least 60 people have been targeted thus far. Other reports are suggesting the offer has been made to as many as 1,000 employees.

WHY IT MATTERS
Since AB InBev’s takeover of SABMiller was approved in September, the company has been in divestment mode, shedding assets all over the world—including in South Africa, where it sold off SABMiller’s stake in Distell Group, a wine, cider, and spirit maker, for $645 million. And given an August report that detailed the beverage giant’s plans to cut 5,500 jobs in the three years following the merger as part of a $1.4 billion savings strategy, this news seems doubly inevitable.

In South Africa, though, there does seem to be some legal framework in place preventing the company from being as aggressive as it might otherwise be. (For instance, this offer is on a completely voluntary basis.)

Reuters reports: “As part of the merger conditions, AB InBev was required to maintain the number of employees in SABMiller’s South African operations for five years after the date of the merger and not implement forced retrenchments.” 

For that reason, Katishi Masemola, general secretary of the Food and Allied Workers Union in South Africa told the Sunday Times, “I’ll be writing them a letter” in light of the severance package news.

“I'm going to tell the company that in terms of the tribunal ruling, even if they cut the fat on top, they need to increase the jobs at the bottom in line with maintaining the same number of jobs, as undertaken to the competition authority,” Masemola wrote.

In response, Robyn Chalmers, communications director for AB InBev Africa and SAB assured that the company would keep in compliance with the arrangement. “No employee will be forcibly retrenched,” she told the Times. “This process will not interfere with the commitment on job numbers, as different positions will be created and announced in due course.”

The speed with which the company has resolved to trim the fat also mirrors its strategy from 2008, when InBev took over Anheuser-Busch. At the time, one executive told CEO Carlos Brito “to just rip the Band-Aid off,” according to the St. Louis Post-Dispatch, “to spare workers the anguish of uncertainty.”

It remains to be seen how many jobs will be lost—and created—in South Africa (and elsewhere), but one thing is certain: the ripple effects of this merger, which in effect puts nearly a third of the world’s beer under one ownership umbrella, will likely still be shaking out for years to come.

—Dave Eisenberg

READ MORE
AB InBev offers voluntary severance in South Africa [Reuters]
Beer giant AB InBev trims the fat at SABMiller [Sunday Times]