Anheuser-Busch InBev and PepsiCo to Buy Office Supplies Together

Discussion
Oct 14, 2009
George Anderson

By George Anderson

Anheuser-Busch
InBev and PepsiCo have reached a deal to jointly purchase goods and services
in the U.S. including “information
technology hardware, office supplies, travel and facilities services,
transportation, and maintenance and repair supplies” in an effort to
reduce expenditures.

The
plan, according to a press release, is to save money in areas of procurement
so the companies can then reinvest those dollars where they can drive
growth. A team of individuals from each company will join together
to determine procurement needs and develop a purchasing plan to maximize
savings.

The
arrangement between the two companies is not the first time they’ve
worked together. AmBev, a Anheuser-Busch InBev business, has the exclusive
rights to bottle and distribute Pepsi in Brazil.

Discussion
Questions: How much benefit are Anheuser-Busch
InBev and PepsiCo likely to derive from this deal? Do you see this
as precursor to deals between major brand companies in other areas
such as sales, marketing and distribution?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

6 Comments on "Anheuser-Busch InBev and PepsiCo to Buy Office Supplies Together"


Sort by:   newest | oldest | most voted
Roger Saunders
Guest
11 years 6 months ago

Strategic alliances that can bolster revenues and/or reduce costs, make sense, provided those alliances don’t create a cumbersome bureaucracy that takes the respective organizations off their primary objectives.

SPEED is one of essential elements to successful execution in today’s business environment. Keeping team’s FOCUSED is another. If package goods firms or other enterprises can always hold these elements in mind, while driving to the overall objective of increased revenues/reduced costs, a winning hand can rake in some chips.

Given cultural and operational differences of companies, this strategy probably has a limited number of large companies positioned to take advantage of it. Smaller companies are the likely firms to capitalize on it.

David Zahn
Guest
11 years 6 months ago

While not exactly the same situation, it is somewhat similar to what IRI and Nielsen are attempting to do with their Panel Data by reducing some of the costs required to sustain and maintain separate universes of panelists.

As long as there is no illegality, collusion, or other law-breaking going on, it seems that the opportunity to cut costs, pool resources, and manage expenses is smart business. In terms of likelihood of this becoming a trend, it is entirely likely that where these opportunities arise, we will see more of this.

Dennis Serbu
Guest
Dennis Serbu
11 years 6 months ago

I would suspect something else is going on here. Given the size and scale of either of these companies, if they are not currently getting the best possible pricing on said commodities, something is terribly wrong. In terms of technology purchase (outside of hardware), usage and application are so specialized that I would run, not walk away from a deal that required me to make any compromises.

Eliott Olson
Guest
Eliott Olson
11 years 6 months ago

“For lack of a nail, a shoe was lost, for lack of a shoe, a horse was lost, for lack of a horse, a rider was lost, for lack of a rider, a battle was lost, for lack of a battle, the kingdom was lost. All for the want of a horseshoe nail.”

[Benjamin Franklin, Poor Richard’s Almanack]

For lack of a pencil the order was lost….

Jonathan Marek
Guest
11 years 6 months ago

I agree with GMROI. There must be something else going on here–there just can’t be that much cost savings from this, given the existing scale of these businesses. It feels like those old online procurement models circa 1999-2000; sounds great to consultants and analysts but with no real business benefit…unless there is more than meets the eye on the product development, marketing, or distribution sides of the business.

Bryan Larkin
Guest
Bryan Larkin
11 years 6 months ago

In the early 2000s, hundreds of “eMarketplaces” arose from the coming together of a few companies in the same industry wanting to reduce their costs around purchasing–especially commodities and MRO items. Commerce One and Ariba were two of the largest players in this space.

Technology, process and cultural issues doomed many of those industry marketplaces. AmBev and Pepsi seem to be pursuing a similar goal, but without the third party driver (C1/Ariba) hawking s/w to them. There may be operational advantages they can create (not sure how much) but I agree with others above that better pricing seems a bit questionable.

I wonder if the two will form a new entity to purchase and distribute goods with the intent to sell those services to others in the same space? Or will they focus on supply chain execution excellence as a way to help improve competitiveness?

wpDiscuz

Take Our Instant Poll

How likely are we to see other large companies in consumer packaged goods join together in purchasing deals similar to Anheuser-Busch InBev and PepsiCo?

View Results

Loading ... Loading ...