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Today, the Financial Times carries an interview with the founder and chief executive of 3G Capital, Alex Behring. 

Carlos Brito said AB InBev is trying to expand production in Nigeria

Carlos Brito said AB InBev is trying to expand production in Nigeria

An elusive sort, Behring rarely gives interviews, but as the head of one of the biggest dealmakers in corporate history, his power and influence is enormous. 3G was behind the merger of Kraft and Heinz, as well as the creation of Anheuser-Busch InBev and, while the group doesn't directly own any stake in AB InBev, its directors do. Behring himself sits on AB InBev's executive board.

Behring's chat with the FT is via email, and therefore infrequently raises above the level of vapid corporate-speak. However, the conversation heats up when the journalist pushes Behring on 3G's perceived strategy of cost-saving through large-scale job cuts. As the FT puts it: "Shareholders love you but many of the people working in the companies you acquire do not."

At the centre of this is the idea that the 3G vehicle merges two large companies and makes its returns through synergies, cost cuts and the implementation of zero-based budgeting. Organic growth, meanwhile, is a secondary concern.

Behring refutes this accusation. Look at AB InBev, he says, a company that has expanded into new countries "on the strength and global reach of its brands". Since AB InBev was created in 2008, global volumes of Budweiser have jumped by almost a third, Behring says.

It is a defence supported by AB InBev's Q1 results, released last week. In them, the company revealed that its sales growth in the first three months of this year were driven primarily by increases for its three biggest hitters, Budweiser, Corona and Stella Artois. Combined, the global brands posted a 12% sales rise, while the biggest jump came from Stella Artois, which boosted its sales by 21% in the quarter.

The increases are down to a global ramp-up for the brands, adding further weight to Behring's comments. Since AB InBev purchased SABMiller last year, it has focused on using its distribution clout to expand into new markets around the world, with the most well-known brands as the advance guard. The company expects to launch Budweiser in South Africa - formerly an SABMiller core market - before the end of the year, and says it is also looking at Australia, Peru and Colombia as new entry markets for either Budweiser, Corona or Stella Artois.

Meanwhile, expansion continues in markets where those heavyweight brands have already created a bulwark. In China, where AB InBev sees big opportunities at the premium end, gains for Corona helped drive a near-50% sales jump for the brand outside of Mexico. Stella Artois' sales performance, meanwhile, was driven by volume gains in the US.

The growth was grist for the mill for analysts, who praised AB InBev's focus on the global brands stable, which now account for about 20% of total sales. At Stifel, Mark Swartzberg raised his outlook for AB InBev, partly due to "managers' obvious enthusiasm for scaling global brands".

Indeed, AB InBev CEO Carlos Brito said taking the brands to new markets was a "no-brainer", adding that Corona, Budweiser and Stella Artois account for 30% to 40% of his company's sales growth. (In an interesting aside, Brito also said that in terms of pricing, Corona is usually highest, followed by Stella Artois and then Budweiser.)

It's not all good news for the global brands. In its home market of the US, Budweiser has had a tepid few years, and those struggles look to be continuing. Bud Light has been in decline for a while now, and despite fresh marketing investment in February's SuperBowl, AB InBev appears powerless to stop the US rot.

Management hopes that a new ad push will get volumes rolling again, but warned that the core lager "remains challenged" in key US markets.

On a global scale, however, it is clear that - in an age where craft beer steals many of the headlines - AB InBev's mainstream brands are prospering. Much of their future success will depend on whether the company can integrate them into SAB's old stomping grounds. Management says it is working on this - in Nigeria, for example, Brito said AB InBev is trying to invest in new lines, and perhaps even a greenfield production plant.

Good news, then, for AB InBev. Alex Behring, meanwhile, will be able to use the brewer's expansion as proof of 3G's job-friendly growth strategy. If, of course, any journalist is able to pin him down again.


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