Say It Ain’t So: Labatt Cuts Off Free Beer for Retirees
For decades now, big companies have cut retiree benefits to try to protect themselves from financial troubles. For many former workers those cuts took the form of lower pensions and pricier healthcare. However, few benefits cuts I’ve heard of are as downright heartless as this: Labatt, which, in 1995 became a subsidiary of Anheuser-Busch InBev, the world’s largest brewer, has announced that as a cost cutting measure it will be reneging on an agreement it made with retires back in the 1970 to give them free beer for life.
According to the New York Times, Labatt sent around a memo in October letting people know that the free beer perk would be gradually phased out over the course of the next two years. Needless to say, finding savings in a handful of cases of beer, when the brewer’s parent company made well over $8 billion in profits last year, is being seen as a morale killer. “It’s certainly not the way it was in the past, when there was fanatical devotion to the brand and the company,” David Bridger, president of the union that represents Labatt brewery workers in London, Ontario, told the Times. “Today it’s just a job.”
So just how much could cutting off old people’s free beer boost the $8 billion windfall for a conglomerate that has long engaged in aggressive cost cutting measures? The precise figure is difficult to discern, but here are some relevant numbers to consider. The Times suggests that former employees who were able to make it to Labatt’s Ontario brewery were walking with about eight cases a year – or the equivalent of about half a beer a day. Meanwhile, retirees in other areas were eligible for more—a free case every week. And while the exact number of retirees receiving the free beer benefit was not available, the brewery has approximately 3000 current employees across Canada. For a bit of perspective, according to USA Today, the brewery sold the equivalent of nearly 9 million cases worth of Labatt Blue alone in 2012 (Labatt sells a number of lesser known beers like a shandy and an ice beer as well as making all of Canada’s Budweiser).
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For the record, current employees will still get free beer – for now – so it’s not like the brewery is giving up on free beer entirely and a spokesman for Labatt called the decision to end the retiree program a “reluctant” one.
But importantly, as one Labatt retiree – Larry Innanen, a former executive vice president and general counsel for the brewery, no less – told the Times, taking away the free beer has a tangible meaning. “It’s a loss to a class of former employees,” Innanen was quoted as saying. “It means something, it’s material to them.” Yeah, it’s their damn beer!
My guess is that those retirees will be looking for a new brand of beer to drink at this point.