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

janfrederick said:
This type of thinking ends up hurting quality.

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.

Exactly.

And I'd argue that thanks to the Wal-Marting of America people expect low prices so it may be a necessity to drop quality to sell product.

My guess is people would rather pay less for the Shamu that falls apart in a year than pay more for the one that lasts.

Rob Ascough said:
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?

It doesn't and that's a huge problem.

Goes back to the Wal-Marting of America thing. People expect low prices...our economy suffers for the very reason you describe...people want lower prices...

...begin vicious circle.

I guess my point is, I don't blame the big evil spooky businesses because I believe the market drives their decisions. It's the consumer mentality that forces these decisions.

Rob Ascough said:
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?

Well, InBev is as much a part of "our economy" as China is. That's the problem with having an American staple owned by a European company.

Foreign ownership is irrelevant. We can't keep living in a bubble and think that the whole sandbox doesn't matter. The only thing that serves our economy is making better products that are a better value at the consumer end. In the bigger picture, we need those characteristics and the innovation to start completely new markets before anyone else does.

See, I don't think the American consumer responds to 'value' as much as price.

In an ideal world your approach makes sense. This is not an ideal world and I think the American consumer wants the lowest price regardless of the 'cost' of getting it.

We want to have our cake and eat it too. Something has to give.

You're absolutely right that companies like Walmart have changed expectations. Then again, it becomes a case of which came first, the chicken or the egg?

A factory closes and leaves the large part of a city unemployed. Those people are without work and need to cut back on how much they spend. Walmart comes into town and gives them the chance to buy lots of stuff at very low prices. But wait! Didn't stores like Walmart- in their never-ending quests to lower costs- force factories out of business, thus resulting in lots of people being out of work and needing low-cost items? A vicious cycle indeed.

Quality definitely takes a nasty hit. When you eliminate certain companies willing to function as your supplier, you usually end up dealing with other companies that are forced to supply an inferior product in order to reach certain prices and maintain the business. That means cheaper Shamu plushies but it also means lousy food and lousy employees, and those will surely impact all customers. It begins that vicious cycle.

I absolutely don't believe that Americans have rejected everything but price. We have a local chain of restaurants here that are more or less under ten bucks for everything, and the food is actually good. They opened a store here in town that's always busy while countless others have come and gone, including fast food. Even Applebees, which sucks, can't sustain that.

And then you have Apple, which analysts have been poo-pooing for years because everything is too expensive or whatever. Tens of millions of iPods, iPhones and MacBook's later, they're still growing. Why? Because value and quality do matter. The trap is that too many businesses try to compete on price when there's an opportunity to compete on value and quality.

That's why Target can co-exist with Wal-Mart. They can't win on the pricing front, but they unquestionably have nicer stuff.

I think it depends on your economic situation. I'm fortunate enough to be able to shop at Target because I don't mind paying more to avoid Walmart, but I understand some people have to shop Walmart because they have no other alternatives. Price is important but a lot of people are willing to pay a premium for something nice. It's why people pick Outback over Applebees... iPods over generic mp3 players... Acuras over Hondas. And yes, there are plenty of examples of quality going far beyond what you expect from the price you pay.

Good examples, Jeff.

Jeff said:
That's why Target can co-exist with Wal-Mart. They can't win on the pricing front, but they unquestionably have nicer stuff.

Target exists, but in a minority sense. I'm not saying everyone puts price first, but I totally believe an overwhelming majority do.

Interesting story I happened to see today - Wal-Mart America and Target America

Aside from the obvious correlations between what groups prefer one over the other, I think the article has a point in the end. People who prefer value to price may be forced to choose price in the near future.

I do think that lately price gets you more customers than value and that's only going to become truer until things get better.

Maybe the company who makes the Shamu dolls doesn't have much leverage, but I'd think the barley, malt and hops vendors might have a little more pull. I wouldn't say it's cut and dried that replacement vendors would step up in case the existing vendors decide they don't want to wait 120 days. Cash flow is cash flow. A lot of small businesses rely on credit to meet expenses-- credit that has been harder to get. I don't know if the bragging rights to say you provide this or that to Anheuser offsets the fact that you're waiting 4 months to be paid for your product or service that "passed through the system" a long time ago.

Rob, I don't know what Targets you shop at, but have you looked at any labels or boxes while you're there? Wal-mart's not the only retailer filling their shelves with overseas crap. Even "upscale" retailers do it, and have been since before Wal-mart even made it out of Arkansas. Sure, Wal-mart's been lowering the bar, but the "high road" these other stores claim to be taking is only a few centimeters above Wal-mart.

Forgetting for a moment the beer component, local vendors serving the amusement park aren't going to be the kind of large scale vendors that help make suds. If you've got some local painters or carpenters or someone maintaining their vehicle fleet, I can tell you right now that there is no long line of alternates lined up behind them if they don't want to play ball. And more to the point, these smaller local vendors can't afford to wait to get paid.

I think we agree on that, Jeff. If I were a vendor, I would automatically increase my invoices by 5-10 percent and call it a surcharge. By the time 120 days passes, the value of the billed amount has decreased because of inflation. What if there's some sudden increase in energy or some other cost? It's basically anticipating 4 months of finance charges.

The vendors' expenses don't stop during those 120 days either. There's pay periods, along with the withholding-- try not paying that for 4 months-- plus every other expense a business has to deal with. I spend too much time now tracking down delinquent clients to find out how and when they're going to pay what they owe.

In today's environment, who'd want to deliver 20,000 hotdogs to Busch Gardens today knowing you won't be paid until June or July?

The answer is, probably not many companies. The only companies that would probably be willing to accept that kind of risk are ones that are so desperate for the business, there's no telling what kind of stupid deals they'd be willing to make. Like I said, demanding such outrageous terms means that IB is going to eliminate a large portion of the businesses willing to work with them, and the remaining options might be pretty scary. Whatever the case, the consumer doesn't win in the end because he/she is unlikely to see a drop in price but may very well buy a product that is a drop in quality.

I think that may be true initially, Rob, but I don't think that is something that would have to last over time. As Gonch points out, the consumer gets to be the driver here. If people stop buying the products because the quality is so low, IB will eventually have to do something about what they sell. That means they need to attact vendors who provide better products.

The question is, does anyone care about the quality of those 20,000 hot dogs?

This kind of tactic scares me. Anybody heard of a company called Peanut Corporation of America? I bet they're the kind of company willing to go 120 days if it means they get the business.

And Ensign Smith nails it once again.

Here is a link to a great video presentation showing the growth of Wal*Mart as a virus. You know, watching a pathogen spread from patient zero, until it takes over the country:

http://projects.flowingdata.com/walmart/

I used Wal*Mart in my original comment on this thread, but someone else mentioned that Target (and others) aren't much better. That's extremely true. I certainly wasn't picking on Wal*Mart, although they deserve a lot of what is thrown at them.

One of the reasons that Americans have accepted low price instead of good value, is that the prices have dropped so low that many things are truly (to Americans) disposable. I'm still stunned when I go to Target/Costco/name the Big Box Retailer, and can get X product for $0.xx cents. Case in point, tea lights at Target, over one hundred for $2.00. Work your way backwards from $2.00, take out Target Profit, transportation from China, packaging costs, etc and you're looking at an almost negligible price for an individual candle/tea light. Same thing for electronics, clothes, shoes, paper, etc. Think about what you paid for school supplies 15 years ago. Now think of how ridiculously cheap things are like scissors, erasers, pencils, glue, etc. Prices are so low (thanks to offshore manufacturing, and high tech manufacturing processes), that quality can arguably relegated to an afterthought.

unfortunately, Americans see a lot of things as disposable (not meant to last 15 years), where as our Grandparents would be incensed at the idea of something not lasting a long time.

I noticed that the quality of the food and goods at BGW during my visit last summer was exceptional. Busch parks treated their customers very well, and It's very likely that that is over. IB is screwing the parks up, and after they are sold, it'll be very difficult to gain Busch's level of quality back.

By biggest hope is that the parks get sold back to the Busch family, and that they can keep or regain the quality.

That would be the best thing. If things continue like this, I fear that some of the best parks in the country are going to be ruined. There is no good news coming out of the Busch parks since the sale to InBev. I would like to see the Busch family regain control of the parks and maybe that will happen since I don't see many other companies showing a serious interest in the parks.

Carrie M. said:
If people stop buying the products because the quality is so low, IB will eventually have to do something about what they sell. That means they need to attact vendors who provide better products.

But that will only happen if they back off their demand for net 120, and I don't see that happening because if the way they seem to be forcing this down everyones' throats. The company obviously has one motive here, and it's not the consumer or the quality of the product.

The question is, does anyone care about the quality of those 20,000 hot dogs?

I don't know about you, but I want the highest-quality beaks and tails possible!

I work in the Trucking Industry, and Anheuser Busch is one of our customers that we do business with. Their terms of payment hasn't changed in our industry yet. Still 21 days from the date of invoice. The industry standard is 30 days from the date of Invoice. I'll let you know when it changes. :)

CreditWh0re said:
One of the reasons that Americans have accepted low price instead of good value, is that the prices have dropped so low that many things are truly (to Americans) disposable. I'm still stunned when I go to Target/Costco/name the Big Box Retailer, and can get X product for $0.xx cents. Case in point, tea lights at Target, over one hundred for $2.00. Work your way backwards from $2.00, take out Target Profit, transportation from China, packaging costs, etc and you're looking at an almost negligible price for an individual candle/tea light. Same thing for electronics, clothes, shoes, paper, etc. Think about what you paid for school supplies 15 years ago. Now think of how ridiculously cheap things are like scissors, erasers, pencils, glue, etc. Prices are so low (thanks to offshore manufacturing, and high tech manufacturing processes), that quality can arguably relegated to an afterthought.

Yes! Yes. Yes indeed.

Read it one, twice and thrice. This is truth.

Have Americans really come to willingly accept this as the truth, or have way too many cheap products been shoved down their throats and forced them to accept this as the truth.

I won't even go into what all that mean as far as the environment is concerned... how many landfills are filled with disposable scissors, Christmas lights and microwave ovens.