A-B cuts ties with Beechwood chip supplier
Not long ago, a TV commercial showed some of the communities that supply materials and ingredients for Anheuser-Busch’s beer. Barley stalks waved in Montana, and hop vines glistened in Idaho. Beechwood chips for Budweiser come from Millington, Tenn. The narrator intoned: "It’s the people and places that make Budweiser the great American lager. Some things aren’t meant to change. Some things never will."
But now, Millington’s tie to Anheuser-Busch is about to be severed. The brewer’s drive for efficiency has led it to part ways with the city’s Beechwood Corp. The company will stop production within a week, ending a 62-year run as a supplier to Anheuser-Busch. Nine employees will lose their jobs.
"Not a happy situation," said Tom Urani, 61, a St. Louis businessman who bought the company 15 years ago.
Since the 1980s, Beechwood Corp. has shared Anheuser-Busch’s business with Beech Manufacturing, based in Frohna, Mo. Both companies supply chips that help yeast ferment and age Budweiser and Michelob beers, a process that dates back to the 1800s.
After Urani sent a letter to the Post-Dispatch claiming that his company had been "summarily dismissed" as an A-B supplier, his phone buzzed with calls from television and radio stations. His complaints made their way onto KMOX, where Dave Peacock, president of Anheuser-Busch Cos., called in to defend A-B.
The effort to be more efficient — and trim suppliers when necessary — would have happened whether or not A-B was purchased by InBev, said Peacock. "We have a long history of efficiently purchasing quality goods," he said.
Peacock told the Post-Dispatch that Urani had "planted the seed" that A-B should choose one supplier. "He didn’t care about his competitor going out of business," Peacock said.
Urani acknowledged that he suggested that A-B might be better off going to a single supplier — but only in a process that included a buyout for the displaced supplier. Things didn’t work out so cleanly.
"They took half my idea," Urani said payday loan.
The drama began about a year ago, when Anheuser-Busch asked Beechwood Corp. for price quotes on various volumes of chips. In some cases, the volumes were only 40 percent of Beechwood Corp.’s typical output. Urani told the brewer that overhead and various costs would make the low levels of activity unsustainable.
Rather than having a supplier work on half-strength or lower, Urani suggested the brewer give one firm all its business and buy out the other one.
A-B followed up, requesting bids for the full volume of its beechwood chips — an amount worth $3 million to $4 million per year. Beech Manufacturing and Beechwood Corp. sent in their bids. The answer came back — Beechwood Corp. was out. Anheuser-Busch would buy at least the same amount of beechwood chips as before, but they would come exclusively from Missouri.
Both Urani and Peacock say Anheuser-Busch followed its contract. It was a simple decision, said Peacock: Both suppliers provided high-quality chips, but Beech Manufacturing’s bid was better. (John Angelbeck, listed in state records as Beech Manufacturing’s president, could not be reached for comment.)
Urani finds the end hard to reconcile with Beechwood Corp.’s long relationship with Anheuser-Busch. Back in the 1940s, Anheuser-Busch gave the little company’s founder $10,000 to help get the chip operation running. Beechwood Corp.’s business was smaller than a rounding error at One Busch Place, but the relationship was important nevertheless, because beechwood aging is one of Budweiser’s main selling points.
For decades, A-B exercised tight control over the Tennessee supplier, prohibiting it from selling chips to other companies.
"They were difficult to deal with, but fair," said Urani.
"With InBev, it’s all gone. You’re not family. You’re the guy who got outbid by a nickel or two."