InBev asking for Busch park vendors to accept net 120 payment terms

Wow. 120 days is a LONG time in small business terms. This means the vendors will need to get longer credit terms themselves to purchase raw materials, which will eat into their profit margins rather dramatically. And of course, any of them on shaky ground won't be able to get credit at all. It seems like this is going to hurt folks.

What's most asinine to me about it is that it seems like an arbitrary, "this is what we do in the rest of the world" move. Kinda like when Cedar Fair came in and changed the season pass structure at Paramount Parks.

I will gladly pay you in 120 days, for a hamburger today!

Yeah, I don't think this is a good move.

Jeff said:
What's most asinine to me about it is that it seems like an arbitrary, "this is what we do in the rest of the world" move. Kinda like when Cedar Fair came in and changed the season pass structure at Paramount Parks.

Not asinine at all. It's ruthless, but it's hardball business.

Cedar fair made the mistake of implementing radical price/terms changes on their Customers. InBev in unilaterally altering terms on their suppliers. It's like Wal*Mart. When you're the big fish you extract savings everywhere you can. And InBev is famous for it

You may not like it, but it works. InBev has already implemented these terms with the vendors for the AB beer business, so they're not just picking on the parks business.

And make no mistake, there is no "asking" about it. Those are now the payment terms. And if you don't like it, InBev will find a new supplier.

Wouldn't this be a contract renegotiation or ammendment? Can the suppliers tack on a late fee or surcharge?
I wouldn't be surprised if all of the vendors looked into legal action if there was a contract.

technically, yes. In real life, no.

Here's how it plays out. For those vendors without iron clad contracts, they are now at 120 days. They can protest, but those checks will flow 90 days later than previously. They have the option of not shipping anything else, or not accepting any new purchase orders. Any vendor that chooses to stop accepting further orders, will in essence, have decided that they no longer wish to sell to InBev. That won't be a problem for InBev as they will find another supplier who will be willing to sell under those new terms.

For those with Iron Clad contracts, the checks will still flow in 120 days. You can't sue for paying late, only for lack of payment. Even then, the process to "perfect" your claim takes time (notices, formal demands, etc), and all that time is built in to InBev's plan of stretching out their vendors. If you actually get to the point of cutting them off, you might get your payment before 120 days, but most likely it will be within 75-105 days, and you will have foregone any future business with them, when it comes time to renegotiate your contact. They have LONG memories, and will extract retribution when it comes time to renegotiate. They will impose demands for price reductions, and other terms favorable to them, when it comes time to sign the next contract.

Any vendor with real clout will bitch starting at day 31, there will be some reference to InBev's notice, which the vendor will say is unilateral and non-binding, and there will be some back and forth, all the while, no checks are flowing. Eventually the two groups will have a pow-wow, where the terms will move somewhere north of 30 days, perhaps not all the way to 120.

Only a vendor with something that InBev must have, and can't get elsewhere, will be able to get anything other than 120 days. You would be amazed at how few items that actually is.

I once worked for a supplier of InBev in South America. This is their standard practice and they are experts at it. So, the parks may run out of some "branded" product as they migrate suppliers. For Example, the company that supplies the "shamu" plush dolls, may not agree to the 120 day terms, and may decide to not accept any further orders. InBev will immediately look for another supplier, and with the lead time, they my actually run out of shamu plush (or Sea World napkins, or Kraken key chains) for a couple of weeks. However, they will eventually find someone willing to take those terms, and they will have replacement product on the shelves. Unless they are the one and only supplier of Shamu Chow, everyone is about to bend over and take it from InBev.

Again, it's not "fair", but it's how big business operates these days. Don't like it? don't buy from InBev, Wal*Mart, etc. (not advocating such, just saying that InBev isn't alone in this practice, with Wal*Mart absolutely being the most ruthless company that most buzzers will run into).

Against my better judgement Im going to reply on this last post..

Im not exactly sure I would compare this stiuation to what Wal*Mart etc are doing. There is a slight difference between these situations.

Wal*Mart didnt get bought out by someone to only change relationships that had been built by them for years to only unload this "wal*mart" to pay off their loans after relationships are potentially soured with vendors.

And this doesnt just extend into plush toy suppliers.. This goes all the way to services on the enviornmental side as well as maintenance/safety etc. Anyone who provides a service to Busch, specifically BGE which I know about, is affected by this..

In doing so its requireing the vendors to put up or get out. The very same vendors who know the park well and every nook and cranny to their service. The thing that gets me is the Vendors could have technically objected to this change and possibly negotiated this, however InBev mailed the letters to the venders with less than 10 business days to respond to these changes. If there were no responses, InBev considered this an "acceptance" to the terms.

My biggest issue is its fine if they stay with InBev and have to "suffer" along with them but the parks have sale potential thus the changes implimented by InBev will carry over to the potential new company, requiring yet another change potentially and if its a good vendor from BEC hopeful renegotiation to get them back if these changes are good.

Now what its doing is it will invariably cause them to lose good vendors or acquire new (or even old vendors) who may also "retaliate" the change in payment with higher priced services. Either way it a no win for BEC as they are a casualty of war in this.

You are exactly right, and it doesn't only apply to plush vendors. I used that only as an example, one that I thought most of the readers here could immediately grasp.

I agree with you on all points. I will add however, that most large companies like this have decided that extracting better terms trumps a vendor with long history/experience, etc. i don't agree with it, but I'm just pointing out how the world works. As for the retaliation with higher prices next time around, doubt it.

InBev (like Wal*Mart) continuously renegotiates, and each time, the first thing they ask for is a price cut. Regardless of what's happening in the real world, they expect you to be able to reduce your cost (to InBev), and they don't care how you do it. In Wal*Mart's case specifically, that's why everything went off shore. It's the only way their suppliers could meet Wal*Mart's continual demand for lower cost products.

Again, I'm not saying it's fair, I'm not defending it, just pointing out how the real world works.

CreditWh0re said:
Again, I'm not saying it's fair, I'm not defending it, just pointing out how the real world works.

Fair warning. Doing that around here makes you a bad guy. ;)

CreditWh0re said:
As for the retaliation with higher prices next time around, doubt it.

Its happening.. Just because you dont see it, doesnt mean its not happening. Of course its not worded as retaliation, but to go with new vendors you run the risk of having to pay a higher price (happening).

There are also noted older vendors that feel forced to change pricing on services due to this net change. "We pay later... You pay more."

Of course not everyone is or will do this.. But its out there.

I always thought that it was the black hat that made you the bad guy, Gonch. ;)

The black hat doesn't hurt.

I worked at a company that was taken over
They changed the term for our customers
we used to be net 30 and statements would go out at
end of month.Now we are net 20 and statements go out when product delivered.

We had customers who would wait till first week of month to order so they could in effect get net 60.We have lost some of those customers but they are the ones that would call 3 or 4 places to get cheapest pricing on a single 10.00 item.
We tell people that the new company takes Credit cards
so with net 20 call at 20 days and give CC # and you still have net 50

Does inbev let the store they deliver beer to pay net 120
I don't think so. That should be the terms what you are will to do to your customers you should do with your vendors. Ask at ticket booth for net 120 for your park tickets.

I think suggesting that it's simply the way the world works is oversimplifying things. When I got into this Web site nonsense ten years ago, ad agencies would do net 90. Niche publishers like me weren't going to stand for it, and the agencies all changed over time because they'd be left with crappy product otherwise. You get what you pay for (or what you don't pay for in a timely manner).

It may be the way the world works, but that doesn't make it right. I could possibly understand wanting to go from net 30 to net 60, but going to net 120 is a huge jump and it's going to hurt a lot of suppliers. It might even knock some suppliers out of the picture, especially because there's no telling who will own the Busch parks in 120 days. The parks might be buying stuff that might never get paid for if there's a change in ownership. As tough as things are in this economy, a customer going from net 30 to net 120 might cause my boss to turn down the business. There's a lot of risk involved, especially if you're a small company that is used to a certain kind of cash flow.

Seems to me this is just an example of big business being a bunch of jerks, not unlike the evil Walmart empire that pushes people around until they get their way. But that's another rant for another time...

Think of this as the opening move in a negotiation. If suppliers tell InBev to pound sand, IB will look to other suppliers. If they can't find anyone who can supply an alternative on the price and terms they want, they'll either have to pay a higher price, or offer better terms.

They are being a bunch of jerks, no doubt about it---but that's business.

As an aside, this is why I try to patronize local, smaller business whenever I can. Unfortunately, my local market closed last month---they couldn't get enough business to stay afloat. It was a pretty sad day, and I've had to shopt at a much less pleasant alternative.

I tend to support the smaller, local businesses because I don't want to see them disappear. I'll avoid places like Walmart at any cost (I have stories of when I've done just that). I understand the need to make the most money possible but I don't see why some businesses see the need for it to come at such costs. I've said it before and I'll say it again- companies have a responsibility to the communities they serve. There are no laws against taking a dump on the little guys but it's irresponsible. There are ways to make money and not appear selfish for doing so. This InBev thing seems ridiculously selfish... almost to the point of being shameful.

I'm sure a company will agree to those terms, but it will probably be a company in China that makes the stuff for next to nothing and can deal with not getting paid until 120 days have passed. But how does that serve our economy? And these companies that force suppliers to agree to such terms don't usually pay on time anyway.

This type of thinking ends up hurting quality. I was forced out of a job working for a vendor at HP a while back. From what I understand, the service we provided isn't up to the same level.

But, I think that is a concious decision made by the higher-ups. Then again, I'm not sure if customers will notice a Shamu doll that falls apart after a year over the previous version that falls apart after two. Usually your kid moves on to new toys and Shamu is at Goodwill.\

Edit: But they *might* notice when they recall Shamu for having lead-based eyeballs.