Anheuser-Busch, faced with eroding US sales of its flagship Budweiser and Bud Light brands, will bring in fresh leadership as it attempts to kick-start a turnaround, the company said Monday.
But the company’s problems may be bigger than slumping sales, brewing insiders tell The Post.
AB InBev, which owns the two beer brands, the best-sellers in the US, may be finding that its long-standing playbook — acquire/cut costs/acquire again — is becoming harder to follow.
The founders of Brazilian private equity firm 3G Capital, which owns AB InBev, led a group that bought Anheuser-Busch in 2008 and then gobbled up the non-US assets of Modelo in 2013 and SABMiller in 2016.
Known as superb deal-makers and cost-cutters, 3G’s founders are less focused on organic growth.
3G management are “brilliant cost-cutters,” former MillerCoors Chief Integration Officer Tim Wolf told The Post.
But some say AB InBev is a bit frustrated in its attempts to find its next acquisition.
One possible target, Coca-Cola, is trading at too high a multiple to consider acquiring, a source familiar with 3G’s thinking told The Post.
Very little else in the US is big enough to move the needle for the $200 billion company, with $45 billion in revenue.
3G has recently crunched the numbers on Coke and reached the conclusion it does not work as an acquisition, the source said.
So AB InBev needs to increase revenue at a time when all major brewers are losing market share, Wolf said.
“The big brands are under siege from craft brews and you can’t cost-cut your way out of it,” Wolf said.
3G seeks enduring brands that are hard to replicate and have defensible brand equity, which require less work to retain and build market share, according to a 2015 McKinsey & Co. report, and the changing market for beer is prompting 3G’s founders to change their typical formula.
In the third quarter, AB InBev reported beer volume in North America was down more than 6 percent.
A-B has too large a US market share to make any sizable US beer buys and pass regulatory muster.
The possibility of AB InBev ultimately buying Coke still exists. Warren Buffett, who invests alongside 3G, owns 9.4 percent of Coke.
James Quincey on May 1 became chief executive of Coca-Cola and he has about two years to increase the soda-maker’s top line, a source familiar with Coke said.
For A-B, the task of improving the top line will fall to Chief Sales Officer Michel Doukeris, who will become CEO of A-B on Jan. 1, replacing Joao Castro Neves.
An A-B spokeswoman said, “We continue to focus on driving top-line growth across our portfolio.”