The just-drinks interview - Alain Beyens
This month's just-drinks interview is a double-header, featuring two prominent executives from major international brewing groups operating in Europe. First, Olly Wehring discusses the challenges facing InBev in Central and Eastern Europe with the brewer's zone president Alain Beyens. Look out for part two on Friday when Olly talks with Alan Clark, managing director of SABMiller's Europe division.
After 18 years in the trenches of the Western European beer market with InBev, Alain Beyens moved to Moscow in July of this year. As zone president for InBev in Central & Eastern Europe, Beyens now seems to have an easier job on his hands. But the region will still present him with new challenges, not least attempting to match the impressive performances the area has posted in the past few years.
Alain Beyens only moved to Russia this summer and, like any other westerner, is finding the culture clash quite a challenge. "Personally, it's a difficult decision," he concedes. "It's not the easiest place to move to as a Belgian!"
Moscow is a tough city to get acclimatised to, especially if, like Beyens, you're used to the luxuries, the tolerable winters and the friendlier faces that Western Europe has to offer. In business terms, however, Beyens seems delighted to have made the change. "Business-wise, I'm very happy to have this experience," he adds. "After 18 years in Western Europe, coming to this part of the world, this growth model for me is completely new, and therefore very exciting."
For Beyens, there is one very clear difference between the beer markets of Western Europe and those in the centre and east of the continent. "Simple," he says. "They grow! For a Western European, this is quite a different experience."
Beyens also believes the history of the region makes innovation far more attractive. "Consumers are more open to innovation here. Over generations they haven't seen a lot of new things so they're very responsive. The availability of innovations is helping to drive the growing economy."
But doesn't this support for the novel make brand loyalty non-existent in the markets of Central and Eastern Europe? "We do invest a lot in building our brands and, as you say, in a country like this where, 20 years ago, brands were not really a notion that they had, it is about building brands," Beyens says. The company invests a lot in its Klinskoe and Siberian Crown brands in Russia, for example.
"In these markets, people are open to brand communication, and it's through consistent brand communication that you build up brand loyalty. The best way of doing this is through the classic mix of going above-the-line and below-the line, sponsoring platforms and going and talking to the consumer.
"You could say in a different way that consumers are no different. They have a different history over recent generations, but they are responsive to brand communication. If I were to ask people in Moscow what their favourite brand is, they will name one that they prefer as a beer brand. They will have brand loyalty and then it's up to us to build the right brand communication that really plugs into the consumer's mind and makes them loyal to our brands."
Beyens disagrees with the suggestion that CEE merely follows trends set in Western Europe, and that the market is easy to capitalise on as it follows in the footsteps of its neighbour. "It's different," he replies. "If you go more to the west of CEE, you would see that the on-trade is much more developed, for example in Czech Republic or Croatia." In the east, however, Beyens points out that the on-trade is not as advanced. "The growth of an economy means more people have money to spend and these people head more towards the on-trade. Now, if you talk about Russia, people in the summer will go to a kiosk, buy a beer and four or five friends will share their beer on a bench in a park - you could define that as the on-trade of Russia. You have outlets emerging but it's new in this market."
Even so, Beyens believes InBev is well placed in this area - and has the right man in place. "It's going to be a battleground," he concedes, "but InBev has a lot of experience in the on-trade. I'm used to markets where you have 50%-plus on-trade market."
Turning more specifically to InBev in the region, Beyens is relishing the challenges the different countries will present him with. "The exciting part of this role is that I have countries going from Montenegro to Russia with everything in between," he says. "There are countries like Czech Republic and Croatia, which are pretty close to the Western European type of markets. I wouldn't say I was unhappy with any markets. We have challenges in all our markets, but none of them is easier or more difficult than another. They each have their individual challenges and issues going forward, but we are driving our business in each of them with programmes in place to outperform the market growth."
Yet there are gaps in Inbev's presence in some of the region's nation states, most notably in Poland. "We are not present (in Poland) for historical reasons. In the buyer and seller process, we didn't get into a deal." Cue the text book corporate take on the situation. "Of course, if there was an availability in the market, we would always look at opportunities - like we do with any opportunity - and then we will take a decision going forward if it is a relevant opportunity, like we do in line with every market."
And what of the importance of the region to InBev as a whole? In the first six months of this year, CEE contributed 18% of total volume for the brewer and 9% of EBITDA. "I would not say that InBev's emphasis will be on a zone," Beyens says, "but the emphasis will be on all the zones we operate in, to drive these businesses to sustainable, profitable growth."
I touch briefly on InBev's competition in the region, suggesting that Baltika's integration plans in Russia could prove a challenge and InBev's position as only third (behind SABMiller and Baltika) in the country's on-trade segment must be disappointing, but Beyens is loathe to dwell on such matters. "I don't have a habit of commenting on our competitors," he says, "but I think we as a company have everything in our hands to outperform the market consistently. We will have to stay alert and ahead of the competition. To me, it's irrelevant if that's Baltika, Heineken or anyone else. We at InBev always have to make sure that we're ahead of the competition."
As our time together draws to a close, I ask what future there is for the name SUNInterbrew, the moniker for InBev in Russia and Ukraine. In 1999, Interbrew - as InBev was formerly know - teamed up with the SUN Group to create a strategic partnership in the two countries. But a year ago, InBev completed the acquisition of minority interests in the venture. The brewer now holds a 99.7% stake in the unit.
"We are in the process of changing the name, but we will do that gradually over 2007," Beyens says. "The consumer doesn't care! You don't drink a SUNInterbrew or a SUNInBev, you drink a Siberian Crown." However, SUN is a well known name in the Russian industry. "If you went to Moscow State University and talked about InBev, no-one would know who you were talking about. If you talked about SUNInterbrew, people will know. I would not make the mistake in this market to go straight to InBev and lose the name and network you have from the SUN name."
With a new face at the helm, and a new company name to look forward to next year, the pressure to perform is presumably great on Beyens' shoulders. His previous experience, coupled with the growth of Central and Eastern European beer markets, however, suggests that the unit will make for interesting viewing over the coming years.
InBev has remained silent amid claims that a merger between the brewer and Anheuser-Busch is "inevitable"....
This month’s just-drinks interview is a double-header, featuring two prominent executives from major international brewing groups operating in Europe. First, Olly Wehring discusses the challenges faci...
The possible privatisation of a brewery in Belarus has a slew of global brewers pondering a purchase, according to reports....
The distribution of Guinness in France is returning to Kronenbourg/Scottish and Newcastle, ending a five-year stint with InBev....
The SABMiller subsidiary Plzensky Prazdroj saw a 2.6% rise in net profit last year, on the back of a 6.4% rise in revenues, it was reported today....
SABMiller has confirmed closure of its sale of a juice business in Latin America....
Heineken is to file an appeal against April's EUR219.3m (US$294.4m) fine from the European Commission....
- Interview - Bacardi global marketing boss, whisky
- Comment - Hybrid Spirits: Innovation or Laziness?
- Constellation grapples with glass as reality bites
- Brewers Feel Prolonged Russian Winter
- Focus - Heineken's H1 Performance by Region
- Mast-Jägermeister targets UK off-trade boost
- Diageo doubles intake for spirits start-ups scheme
- Second senior exec to depart Bacardi
- Portman finds against Diageo "mix it up" tagline
- Bacardi sees North America president step down