Interview

"In any integration, we've always talked about three kinds of synergies. With SABMiller, there was a fourth" - just-drinks meets Anheuser-Busch InBev CEO Carlos Brito - Part I

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Late last week, just-drinks editor Olly Wehring met with Anheuser-Busch InBev's CEO in London. A notoriously-reluctant interviewee, Carlos Brito talked for over an hour about the brewer's learnings from SABMiller, the trends set to shape the future for the beer category and which bets the group has put down on potential growth opportunities going forward.

Anheuser-Busch InBev began implementing SABMillers Category Expansion Framework model in 2017

Anheuser-Busch InBev began implementing SABMiller's Category Expansion Framework model in 2017

This has been a long-time coming. Finally, after 14 years of asking, Anheuser-Busch InBev has granted just-drinks an audience with its CEO, Carlos Brito – who prefers 'Brito' to Carlos': "I went to a Jesuit school for 12 years and everybody was called by their last name. My wife and mother call me by my first name, so when someone calls me Carlos, I really pay attention."

So, tell me, Carlos, why the wait?

"We do what we consider to be the right level of media," he says. "We don't like cult of personality. If you talk too much to the media, it looks as if you're trying to sell yourself - that doesn't build a great team spirit within a company. We don't value that. We prefer to talk about the team - that's how we think.

"There's a difference between being an owner and being an executive. For an owner, it's all about the company first, then me. For an executive, it's the opposite - me first, then the company. If I do too many interviews, then... Me first? Or the company?"

Brito is in London, having spoken at the Brewers of Europe annual conference in Brussels the day before. At the event, it's clear that Brito is hugely popular amongst his peers, and that he is well-connected to what's going on, not just in beer but also in A-B InBev. This struck me as being true three years ago, when I visited the group's corporate HQ in New York and saw Brito's desk ... in the round, in open-plan.

"I'm there with my direct reports around me," he says. "It's always been like that: I've got supply, sales, marketing, corporate affairs & legal and procurement, all on the same desk with me.

"If I'm on a different floor, I lose touch with what's happening. We try to create an environment where people feel included"

"There's no place to hide," he laughs. "If I'm on a different floor, I lose touch with what's happening. We try to create an environment where people feel included."

Brazilian-born but now residing in Connecticut, the 58-year-old father of four can safely be described as a beer man. Joining AmBev in 1989, he became the then Brazil-focused company's CEO in 2004. The acquisitions of Interbrew in the same year, Anheuser Busch five years later and – most dramatically – SABMiller in late-2016 means Brito now oversees an organisation responsible for one in every three beers consumed on the planet.

The road to MegaBrew - How SABMiller and Anheuser-Busch InBev arrived at today's historic deal

Questions? After 14 years of waiting, I've got a ton of them. But, let's not look too far back in history. Time is a wasting. I allow myself just one peek into the archives.

What did the SAB acquisition bring to A-B InBev that Brito didn't expect?

"In any integration we've done in the past," he says, "we've always talked about three kinds of synergies - cost, top-line, working capital. With SAB, there was a fourth kind - intellectual synergies. We'd never used that term before.

"We found a lot of things on the shelf that were ready to be used, but weren't. The Category Expansion Framework was one of them."

He's referring to a business model drawn up by SAB before A-B InBev came along. The Category Expansion Framework had been created by the group as a way of expanding the beer category going forward. A-B InBev implemented the concept across its organisation last year.

"SAB had many interesting things," Brito says, "but they had a different modus operandi. They were much more decentralised compared to us. Their regions could opt out of some initiatives developed by the centre. The CEF was developed by the centre, but the zones said: "Call me next year." 

"We have a different model: Our regions have a lot of autonomy - you own your zone - but if we see something that makes sense for the business, then we'll push it. If our people buy it, that's great. If they don't, we'll still push! Our new colleagues are so excited because now they're seeing something that they played a part in developing being used. They're also impressed at how fast we have started using it."

"In 2009, when we did the AB transaction, SAB said that the big deals had gone; there were no major inorganic opportunities left"

Curiously, A-B InBev had an indirect hand in the creation of the CEF. Brito elaborates: "In 2009, when we did the AB transaction, SAB said that the big deals had gone; there were no major inorganic opportunities left. In their main markets, they had 95% share of beer. They decided they needed to learn how to grow the category. We weren't at the same point as SAB: In our main markets, we had between 45% and 60% share. We always felt there was so much to do in beer that we didn't need to think about the category. While we understood it was better to do both, we were more focused on our share in beer."

The step up in size from the SAB deal gave A-B InBev a new way of looking at the overall beer category. "What we've learned from our new colleagues is, even if you have 45%-60% share, as market leader, it's important to have one eye on share of beer and another eye on category expansion. If you don't plant the seeds today of what the category should be in three to five years' time, it won't be. Then, you start losing space to other beverages."

Enter, the CEF, a way of looking at how beer markets mature and the associated growth opportunities for brewers. "For every market, there are three phases," Brito says. "First, it's all about capacity and availability, along with having coolers to chill the beer - a lot of markets in Latin America and Africa are in this phase. Here. the occasions are very limited - mostly all male, outside of the home, in between work and home or, at the weekend, watching a soccer game. Beer dominated these occasions.

just-drinks editor Olly Wehring met Carlos Brito in London late last week

"Maturity level number two, sees women having more of an influence. They're more independent, they go out to work, they have more money, they go out. Consumption starts to move from outside of the home to inside the home. Now, it's more co-ed. In most cultures, women are the gatekeepers for what comes into the house. If she doesn't like beer, then beer will have a hard time getting to that fridge."

Then, there's level three. And, A-B InBev is betting, this is where the big bucks are. "Level three is where premiumisation plays," Brito says. "Everything gets more diversified - SKUs, shelves, occasions. Also, the meal occasion is much bigger and beer is under-represented here, big time. With meals, wine is the dominant player. How can you avoid some of the pitfalls for the beer category at level three, where things are more profitable? By planting seeds at level two - such as promoting Stella Artois with food - as the market develops, beer earns its place at level three.

"For us, this has become company language very fast. It's used by all of us in ABI, not just the marketing guys. The CEF is so deep but, at the same time, portrays things in such a simple way that it's been adopted by everyone in the company.

"The worst thing is when you have a solution in search of a problem. You think you've got a great idea but nobody needs it. In the end, that doesn't work. Our problem was that we were trying to get everyone in the company to speak the same language - consumer needs, occasions, etc - all of a sudden, this thing fell into our lap and solved our problem. We use the same language now, we use the same framework when talking about our plans.

"It doesn't solve everything, but it gives us all a way to talk - the language gets more similar than different."

Join us later this week on just-drinks for more from our exclusive interview with Brito.


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