Brito: InBev can do a better job of marketing Bud

Tag : USA Distributors and WholeSalers

Jeremiah McWilliams and Jeffrey TomichSt. Louis Post-Dispatch
Released : Thursday, July 10, 2008 4:00 AM
Jul. 10--NEW YORK -- The man who could be king of Anheuser-BuschCos. is quick to voice his respect for the St. Louis-based brewerand its top executives. But make no mistake: Carlos Brito thinkshis company can do a better job managing Anheuser-Busch and itsvenerable Budweiser brand. And he's itching for the chance.
In an exclusive interview, the chief executive of Belgian brewerInBev said the proposed buyout of Anheuser-Busch is the naturalnext step in a relationship that stretches back nearly threedecades.
Brito is making his case that the combined forces of Anheuser-Buschand InBev, the maker of Stella Artois and Beck's, would unleashpowerful brands in markets around the world. An important part ofthe pitch: many of the endearing things that St. Louis loves aboutAnheuser-Busch would remain unchanged.
Brito, 48, is trying to pull off the deal of a lifetime -- the$47.5 billion takeover of an iconic American brewer that oncetowered over foreign rivals.
Anheuser-Busch, maker of Budweiser, Bud Light and Michelob,controls about 48 percent of the U.S. beer market, the world's mostlucrative. But the company has struggled to grow in the ploddingU.S. market as it sat out on a series of international mergers andacquisitions that created London-based SABMiller and InBev. Thosebrewers now far outrank A-B in terms of global beer sales.
Accustomed to being the King of Beers, Anheuser-Busch finds itselfan unwilling takeover target.
LITTLE OVERLAP
On Wednesday, Brito touted his company prowess in meshingnewly-acquired brewers into the parent company.
"We've been able to integrate, not lose the local touch," he said."Not sacrifice the local jewels in terms of brands."
Taking over Anheuser-Busch would allow InBev to surpass SABMillerand create one of the world's top five consumer products companies-- the rarified air of companies such as Procter & Gamble,Nestle, Coca-Cola and PepsiCo.
But Brito, a Brazilian who lives in Belgium, is himself running upagainst challenges. There is Anheuser-Busch's legacy ofindependence, as well as rampant nervousness in St. Louis andbeyond about InBev's true intentions.
InBev is known for constantly pursuing acquisitions and forinexorable cost-cutting, wringing wider profit margins from itssales. Some analysts have suggested that InBev's desire for A-Bstems from a need for a big source of cost-savings, since its ownoperations offer fewer and fewer opportunities to trim.
The Teamsters union, which represents about 8,000 Anheuser-Buschworkers, predicted recently that the ascendancy of InBev could meanlayoffs, wage cuts and inferior health benefits.
For his part, Brito stressed the advantages that Anheuser-Busch andInBev could reap by merging their brands into the distributionsystems of the other. More Budweiser would be sold overseas andmore InBev brands would travel to the U.S., he said.
The "beauty" of his company's proposal, he said, is the lack ofoverlap between Anheuser-Busch and InBev. The two companies arelargely complementary rather than competitive, said Brito, who wasin New York to meet with advisers. The CEO sat for an interview inthe offices of a public relations firm, accompanied only by InBevspokeswoman Marianne Amssoms. He sported a blue oxford shirt,unbuttoned at the top. No tie.
Despite the informality, Brito is on a serious mission. He istrying to reassure a variety of constituents, from workers to beerdistributors who carry Anheuser-Busch brands and whose loyalty hasin many cases been richly rewarded.
"We look at wholesalers as business partners," he said. "A changein ownership doesn't mean a change in what matters. People are veryrational. Once the emotion settles down, they look around and saywhat's in it for me?"
Anheuser-Busch ending up in InBev's hands, said Brito, would meanan infusion of more InBev brands that wholesalers can use to enticebeer drinkers.
On Wednesday, the InBev CEO reiterated his earlier statements thatthe Belgian brewer plans to maintain a significant presence in St.Louis; the plan is to make the city InBev's North Americanheadquarters.
Anheuser-Busch's St. Louis brewery tours, museum, Clydesdales,habit of charitable giving and support of Grant's Farm would remaina part of the company even after a takeover, he said.
"I have no place to go, so why would I exit St. Louis if St. Louisis important to the business and the brand, for which I'm paying ahigh premium?" Brito said. "Why would I change the Clydesdales ifthe Clydesdales are the thing that most people remember?"
He added that he liked the Cardinals, even attending a game atBusch stadium.
'WE LOVE THEM'
The chief executive spent much of Wednesday's interview extollingInBev's culture, which he said stresses candor and constantaccountability for performance.
The cultures of Anheuser-Busch and InBev, he said, are more alikethan different.
Brito acknowledged that Anheuser-Busch's executives and board "know(Anheuser-Busch's) business better than we do," and said InBevhopes to retain them after a takeover.
A friendly deal, he said, is a better way to do business. Heexpressed optimism that the stare-down would not verge into afull-blown conflict.
In the pursuit of Anheuser-Busch, InBev is pursuing parallel plans,Brito said -- launching a lawsuit and laying the groundwork for anaggressive shareholder solicitation to replace A-B's board ofdirectors, while still urging A-B's board to negotiate a friendlydeal.
"I know a lot of the top guys, most of them for years," Brito saidof Anheuser-Busch's executives. "We love them, we respect them, welike what they did with the business and the brand."
It appears those feelings may not be reciprocal. In a federallawsuit filed this week in St. Louis, Anheuser-Busch accused InBevof misleading A-B's shareholders about the reliability of itsfinancing for the buyout, which would be funded primarily by debt,and other aspects of the deal.
Brito defended the $65-a-share, all-cash offer, saying it is a firmproposal with committed financing.
"For a company like our company, a public company ... you don't do(a proposal) if we think we don't have money or if we didn't thinkwe're serious," he said. "We'd lose the credibility we'd built overmany years."
One big attraction of the deal is Budweiser -- "America in abottle," Brito said.
Compared to Anheuser-Busch, InBev can "do much more for Budweiserbecause we have the scale, the size, the knowledge" in dozens ofmarkets around the world, he said. InBev has significant operationssuch as breweries and distributors in 30 countries; by contrast,Anheuser-Busch is mostly focused on the U.S., Mexico, Canada, Chinaand the U.K.
But InBev has a somewhat mixed record of building brands. ItsStella Artois is growing worldwide, but analysts say the brand hasbeen badly damaged in the U.K. because of price cuts that erodedthe beer's upscale image.
InBev hoped to make Brahma a global brand, but the Brazilian beerdidn't take root and those plans were recently dialed back.
Still, the InBev CEO has high hopes for what he can do with A-B'smost famous brand.
"Look at Coke, look at McDonald's, look at so many American brandsthat did so well internationally," said Brito. "We believeBudweiser can be the next one."
jmcwilliams@post-dispatch.com -- 314-340-8372
jtomich@post-dispatch.com -- 314-340-8320
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