Brewery expansions reflect global focus
Anheuser-Busch, Coors revamp Virginia operations to meet heady competition

by Donna C. Gregory
for Virginia Business
November 2006

Editor’s note: Virginia Business takes a close look at the challenges facing four food and beverage manufacturers that have undergone recent expansions.

Two of the nation’s top beer-makers are hoping multimillion dollar expansions at their Virginia breweries will restore the fizz to an industry that’s gone flat in recent years.

Anheuser-Busch Cos. Inc. recently completed a five-year, $200 million modernization and redesign at its Williamsburg plant while Coors Brewing Co. is in the midst of adding brewing capability to its packaging plant in Elkton. That two-year, $250 million project is expected to go online this March.

"It’s all about dealing with change, and all companies have to do that," says Brian J. McNelis, Anheuser-Busch’s senior plant manager in Williamsburg. "We’re trying to put as much excitement in the brewing industry as we can."

Meanwhile, Tim Williams, vice president and plant manager of Coors Brewing Co.’s Elkton plant, says changes there reflect the company’s efforts to adapt to a highly competitive market. "This allows us to reduce our costs of production and distribution," he says.

In recent years, domestic beer sales have stagnated in the face of competition from wine, distilled spirits and imported beer. The Beer Institute, an industry trade group, reports that per capita beer consumption among U.S. adults has dropped slightly, from 30.6 gallons to 30 gallons a year, since 2003.

In the face of these market conditions, companies such as Anheuser-Busch are trying to create global brands. "Most people don’t think of a brewery as internationally competitive, but it is because of imports and consolidation in the industry," says Brett Vassey, president and CEO of the Virginia Manufacturers Association.

Anheuser-Busch and Coors are expanding their Virginia facilities in order to streamline operations and offer consumers more choice. "They reflect a common theme: Manufacturers who have gone from a labor-intensive model to a technology-intensive model," says Vassey. "[Many beer companies] are transforming themselves in that way – just to compete. It’s a constant investment in innovation and trying to keep or grow their market share."

Anheuser-Busch
With its modernization project, Anheuser-Busch’s Williamsburg plant can now brew, package and ship more than 200 brand and container combinations including the company’s star sellers: Budweiser, Michelob and Bud Light. "The brewing process has not changed, [but] technology allows us to manage that process much more effectively," says McNelis. "The beer brewing, packaging and shipping process [is] all connected through technology."

The modernization included the addition of a state-of-the-art brewing control room, three high-speed bottle lines with quick change parts that allow for easy conversion between brands and containers, and a new learning center to train employees to operate the more automated systems.

In addition to streamlining production, the modernization also has allowed Anheuser-Busch to cut its work force. The plant now employs about 900 employees compared with 1,000 before the project.

"It made us much more efficient from a cost point of view, and it enabled us to manage the complexity that customers demand. Our customers today want more choices than ever before," says McNelis. "Product conception to marketplace is much quicker today. The modernization/redesign has already accomplished what we intended it to do."

One of the Williamsburg plant’s greatest challenges as it becomes more automated will be the same one faced by other manufacturers: finding skilled employees to replace experienced workers who retire. "The numbers of candidates entering [manufacturing] are not equal to the number leaving," says McNelis.

To ensure a steady stream of qualified electrical and instrumentation technicians and computer controllers, the Williamsburg plant is partnering with Thomas Nelson Community College to begin a maintenance technician development program that will combine both classroom and on-the-job training.

Anheuser-Busch has also developed a new on-site training program through the plant’s learning center where employees can become certified to run specific line equipment.

"We’ve certified that process and now we know each employee gets trained the same way," says McNelis.

Coors Brewing Co.
When Coors finishes adding a brewery to its beer packaging facility in Elkton, the plant will be able to brew 6 million to 7 million barrels of beer annually, roughly matching the Rockingham County facility’s packaging capacity. Like Anheuser-Busch’s project, the new brewing installation will be highly automated, says Williams. "Other operations will effectively remain the same."

But, despite adding an entirely new production process to the plant, Williams estimates that its work force of more than 400 workers will grow by only 10 percent.

Coors hasn’t had any difficulty in finding qualified workers to fill new positions. It’s already finished hiring for its brewing operation, reports Diana Jennings, plant communications manager. "All of the new brewing positions were filled with people who were currently employed by Coors, and then where we were left with openings, we were able to pull from a pool of interested applicants."

However, the Elkton plant will have to look outside of the Shenandoah Valley to fill "sensory" positions, adds Jennings, since beer tasting requires such a specific skill set.

Adding brewing capability is part of Coors’ strategy to reduce its production costs by $5 per barrel over the next two to three years. "We anticipate that this build-out will achieve significant savings and financial returns and bring brewing capacity much closer to our important East Coast markets and distributors," says Leo Kiely, president and CEO of Coors. "The build-out will include two brew lines, fermentation and aging equipment, a new rail spur and several new structures to house controls and related processes."

Coors’ decision to expand its Elkton facility was twofold. "From a transportation point of view, Elkton is well-centered on the East Coast," says Williams. "[Another reason] is the quality of the water that we get from the aquifer here. It emanates from the mountains. It is pristine and good brewing water."