CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.
There’s a common perception in business that scale slows you down – that it takes a long time to change course of a big ship. Which should be a big disadvantage at a time like now, when a pandemic is forcing businesses everywhere to adapt quickly to new realities; to change course.
But sometimes being a big ship gives you a view that smaller boats just don’t have. Turns out, that can be critical when the waters are really choppy.
Our guest today is the CEO of one of the largest consumer goods companies in the world – Anheuser-Busch InBev, the global brewer of Budweiser, Stella Artois, Corona, Becks, Castle, Brahma, and hundreds of other beers.
Carlos Brito has been at the head of the company since 2008. And he’s here to talk how he’s leading it through the crisis response and recovery, and why seeing beer sales fall early on in China may have been one of best things to happen to his multinational enterprise.
Brito, thanks for speaking with us.
CARLOS BRITO: You’re very welcome. Thanks for having me.
CURT NICKISCH: One thing I didn’t know before prepping for this interview is that the biggest market for Budweiser and Corona beers outside of their home markets is China. Which was the first place affected by Covid-19, what would become a pandemic. When did you know that you had a major challenge on your hands?
CARLOS BRITO: It was interesting you say that, because in January this year, the first thing I did was, I went to China. I travel a lot to visit our countries, and I went to five different cities. I was there for a whole week, and the first week of January. There was no talk of pandemic. Nobody was aware of it. Then I came I came back, and ten days later, the whole thing started, and the country got into a lockdown when the Chinese New Year started in the last week of January.
CURT NICKISCH: What did you first encounter, and how did your operations there respond? Because as Chinese New Year happened, people started staying home, on premise sales in bars, restaurants, stadiums, that kind of thing, that must have dropped off?
CARLOS BRITO: Well, we saw, for example in China, that consumers went big time even more to ecommerce, that contact-less delivery was the second one that consumers were requiring from companies.
CURT NICKISCH: Because at home consumption was still there. Right? And rising, even.
CARLOS BRITO: Exactly. Exactly. The occasions migrated to the homes. So people could not go to stadiums, to venues, to bars, restaurants, pubs. So all those things, or most of those things, migrated to the in home occasion. And therefore the sales of our product in supermarkets went up, because now instead of going out for dinner, people are having dinners at home.
So the new occasion, dinners and stuff, became more prevalent at home. So that also has an implication in our product mix and SKUs and brands that people were buying during the pandemic and the lockdown. We saw consumers buying more big packs, because consumers are going in and out of grocery stores, they learn to drive a quick trip, in and out, to be less exposed to possible infection, and they also wanted to buy bigger packs so they would have to come back for resupply less often.
So we saw all that in China, and we saw that the same thing would happen if the disease, the virus would become a global phenomenon, which it did. So when it hit Europe, we were prepared for it. And then the Americas and Africa.
CURT NICKISCH: That’s so interesting to talk about just one specific operational shift, right, which is changing the size of what consumers actually buy in a store and carry out. And that is something that often takes a long time to adjust. Right? You’re trying to supply the cartons that those go in. You’re also working with the sales channels, because the size of the shelves might be, may need to be different.
I know that you’re a company that’s famous for acting quickly and responding quickly, and you have a culture for action. But these are shifts in distribution and sales that often take companies a really long time. So how did you actually manage that?
CARLOS BRITO: The most important thing in our company, and we’ve built our company based on those principles in our culture. Our culture’s all about, I mean, big dreams, hiring the best people up there, but more importantly, creating an environment that they come and stay, and then provide those people an environment where they can, where the ownership mindset, as we call it, will be faster, that people look at the company as their own company, because we are the company.
I also tell my colleagues that myself and 170,000 colleagues around the world, we are aiding in that. There’s no dark room with the company in there that tells us what to do. I mean, we are the company. So if we decide to do something because consumers want, and we follow them, or we predict where they’re going or would go first, that’s where the company’s going.
So this, our culture is one that thrives when urgency and action is required, and we’re never completely satisfied with our results, so we always want more, and always focus on where consumers are going, because that’s where growth is.
CURT NICKISCH: Now, a lot of this quick shifting still costs money. Right? At a time when revenue is changing and was dropping overall, even though you had growth in a lot of markets. How do you manage financial agility in such a fast changing time?
CARLOS BRITO: That’s a very good point. So when the Covid crisis started, first we told our people what the five priorities were. First one, safety of our people. Second one, help the communities, because we’re part of the community. Third one was to sustain business and continue to operate the business, because communities, most of them, understood that in allowing us to operate, we could do way more than just sell our products. Even in a place where we could not sell our products, we still helped the community. The fourth priority was to prepare for a strong recovery. And the fifth priority was to try to understand more and more insights about what kind of consumer habits would emerge post-Covid, to be prepared again for it.
And there was one more that was an overarching one, which was liquidity. So when this whole crisis started, in a couple of weeks, we increased our liquidity position. So now we’re in a very comfortable liquidity position. So we could then go through the other five priorities, which are more business related. By having this priority, it’s very clear and helped us, because everybody in the company knew that during Covid priorities were one, two, three, four, five. And again, given that we’re very action-oriented, that was very important, because when our company wants to show, you know, what the direction is, people really get together and go.
CURT NICKISCH: Let’s talk a little bit about this idea of business continuity. I’ve heard some places call this “plan and act”. You have to act in the moment and respond to what’s happening. But you also have to plan for the new reality that’s coming and the new market. How have you thought about this, trying to respond to the crisis, but also trying to move out of it at a quick pace?
CARLOS BRITO: First, during the crisis, we were totally focused on helping communities, the safety of our people, and business continuity, as you said. Then, at the same time, we were planning for a strong recovery. We said, this is lockdown will end one day. And then consumers will come back to bars, restaurants, you know, traveling, all those things. And we need to be prepared for when that moment comes.
And third point, we need to understand and have insights on how consumers’ lives will be different and how they will spend their free time, and how that impacts our business, so we can be prepared for things like e-commerce being more relevant, direct to consumer delivery, contactless delivery being more important, bigger packs, but also social distancing in bars and restaurants and pubs, when they would open.
So for example, we work with pub associations in the city hall of different cities to align with governments and pubs to license during the summer now to go and expand their footprint to sidewalks with tables, to squares, town squares, to pedestrians streets.
And we tried to help with other things. You know, in bars, they cannot go to the sidewalks. We’re working in physical separators, like acrylic or plastic that can enable consumers to be closer to each other, but at the same time, separated because of the physical barrier. So we’re trying to equip also when our customers reopen after being locked down for two months, we’re giving them a reopening kit with masks, hand sanitizers, gowns, gloves, because sometimes in some countries those are hard to find materials. But because, again, we learned from China, we equipped ourselves, we bought on a global basis all those materials before they became scarce, because we knew it was coming. And we knew those things would be in short supply.
CURT NICKISCH: And in some cases, you’re making them, too.
CARLOS BRITO: We’re making them.
CURT NICKISCH: Like sanitizer.
CARLOS BRITO: That’s exactly right. We’re making hand sanitizers. We’re also making face shields, because we have plastic injection equipment for our plastic bottles of soft drinks. So we turned them to many of those with the plastic face shields. And also we bought some equipment for mask making, the surgical masks. Those little masks. So we’re also manufacturing those now in key regions of our business.
CURT NICKISCH: What have you been really surprised and excited to learn during this time?
CARLOS BRITO: Well, first, what we learned is that our partnerships and collaboration are essential, have always been, but in a crisis, even more. So we partner with communities to help in whichever way we could. Also, we partner with governments. There is a country in Latin America in which the president of the country went on national TV to talk about the steps that the government was taking to help the community and the citizens, and mentioned our company by name, because we were involved in the logistics of getting medicine and food to more remote areas with our trucks that were idle.
Collaborating with our customers to help them weather the lockdown by, you know, pulling in our social media platforms that reach a lot of consumers, the option they had to support their favorite pub by buying a voucher at a discount in which we matched their dollars one by one. So, when the pub reopened, they could redeem that for food and drinks.
And the other things that consumers are also more and more interested in what companies and brands are doing for the world around us, so you know, we have a very strong sustainability platform around water, farming, packaging and energy. And all those things, I think, became even more relevant, like health and wellness. People said, hey, if I’m healthier, and a pandemic like this hit, I have more of a chance of being more able to fight that thing, you know, that pandemic.
And the same with our world. I mean, if our world is a better world, in the sense of being more sound environmentally speaking, that can only be good. You know? So if the water’s clean and available – for example, think about water. Water’s the first thing to do. I mean, if you don’t wash your hands, you know, there’s no way you can fight this pandemic. So, but water’s not available to millions of people around the world.
So one of our pillars of our sustainability goals is all about the water stewardship, so making sure 100% of our communities in high stressed areas will have measurably improved water availability and quality. And we do the same with circular packaging. We want our package to be, we want our package to be recycled. Mostly out of recycled material. And climate action. We want to purchase electricity to be 100% coming from renewable sources. And we’re already at 60% only two years into this journey. You know? So very proud of that. And I think consumer will value that more and more.
CURT NICKISCH: What is the uncertainty hard for, you or the company in any way? I mean, obviously, no one likes uncertainty. But was there a time when it was too difficult? Or you weren’t prepared to act quickly?
CARLOS BRITO: What we do always is that we try to focus on the things we can control, you know, and for the things we cannot control, like I think most companies, we have scenarios and trigger points. Right? So we have scenarios, for example, now everybody’s talking about the V-shaped recovery, a U or an L. So we also have scenarios for different markets, because different markets will recovery at different speeds. And so we have V, U, L scenarios, and we have clear trigger points that will trigger different action plans. So you know, for example, if countries start reopening, and bars and restaurants are only 50% back, that triggers a whole set of actions. If 100% of the restaurants come back, but they are only with 50% occupancy, how can we help them stay in business? That triggers another set of actions. So for things we control, we know what to do. For things we don’t control, we have scenarios and trigger points.
CURT NICKISCH: I’ve heard you talk a lot about bringing consumers together and serving them in their new way of living and the new demands in just their daily routines. How have you managed that at a company level for your employees? Certainly in operations you’ve had to limit how people work together, but you also have offices around the world. And I haven’t heard you mention that that transition’s been very difficult. Has that been an issue for you?
CARLOS BRITO: Well, first I mean, our operations were running the whole time in the majority of our markets. So our supply and logistics people did an amazing job of being able to adopt fuller calls, to be able to operate in a safe way. And we owe them a big gratitude, because they were committed to our clients, committed to our consumers, committed to our company, and trying to bring some normalcy, so consumers could go to a grocery store and find the brands that they’re used to buying.
You know, so in a very abnormal world, we thought our role was to bring some normalcy by having our brands available in the channels that consumers were shopping, so they could feel a little bit like they could still access things that they like and that were important for them. So I think that was a big part of it.
In our offices, we, a lot of our offices around the world have already reopened. Not all. And where we opened again, from the learnings we had from China, in a phased approach, with sanitation, with separation, social distancing, with fewer people. So doing like shifts. So sometimes different functions will come to the offices. Some other times other functions will come to the office.
So again, the safety of our people is number one. And one thing we were surprised at, is that with technology, we’re able to work at home during the lockdown in a very efficient way. Of course, it doesn’t replace the office interactions, but I think like everybody else, we’re all very surprised to see how technology was able to bridge the lack of physical presence, and we were able to be in touch with our people to do town halls, also help people because some people were, you know, becoming depressed sometimes, or becoming fearful of what was next.
So we also put a lot of services in which people could access in terms of, you know, mental support, because some people sometimes lived in, were not in their, there were expats living in different countries, and they were locked down. They didn’t know exactly what to do. They were beginning to feel a bit fearful about what was next. And we tried to support our people the best way we could, and technology was a big part of that.
CURT NICKISCH: What have you been learning now from this experience that tells you what that post-Covid world is going to look like?
CARLOS BRITO: I think first, it’s important to say that we’ve conducted consumer research during the lockdowns. And it’s amazing to see that around the world, if you ask consumers what do you intend to do once the lockdown is over, the answers are very similar. Everybody wants to see friends and family, be physically with them. Everybody wants to go to restaurants, pubs and bars, their, you know, preferred places to go and have the experiences they so much miss.
Everybody wants to go back to traveling, to get to know new places. Everybody wants to go back to venues, to sports, music, culture. And this is what we do as a business. Our business is to be there with our consumers in all those things. So we think consumers are going to go back to some of their pre-Covid habits. Of course, they’re going to be more careful.
And we’re trying to help our pubs and restaurants to open in a safe way. We think it will be some time before customers go to a live concert where everybody’s packed in a stadium or to sports where everybody’s very close to each other in the bleachers. Maybe it will take some time for travel to be 100% as it was pre Covid because again, some people that are more at risk will avoid planes and hotels and airports.
But on the other hand, people want to have their lives back. We will not, we’re social animals. We need to be together with other people. We need the physical contact. We need to go to that bar that we love, to eat that food that we love. You cannot eat the same thing every day at home. We need to travel. You know, everybody’s tired of eating the same thing, you know, because we can only cook two or three things. And we need to travel, to get to know different people, different places.
So I think the human beings, the genetic make up of the human being, the way we are wired, will prevail. And consumers will go back to things we all love to do. But depending on which group you are, those that will be faster, or those that will be more cautious and will be more of a delayed comeback, until there is a vaccine or a treatment that people can rely on, people will continue to be more cautious. But what we see is that consumers want to go back to their normal lives, and go back to the things they love. And that’s where our business thrives, when they go back to things they love, because that’s where our products interact with our consumers.
CURT NICKISCH: As a leader, how do you model behavior for the teams at the company?
CARLOS BRITO: Well, a couple of things. First, I mean, the way to spread our culture is by personal example. You have to do what you say. You have to live the culture that you ask other people to live by. So, our culture is very simple. Our people are our greatest assets. We also foster this idea of ownership, so people are empowered to run the company as their own company.
CURT NICKISCH: Is that hard for you sometimes? There must be a part of you that wants to jump in and advise a decision, or recommend a decision, or help in some way.
CARLOS BRITO: I mean, we do talk a lot. I mean, being in touch with others is part of our culture as well. So we do talk a lot. So, if somebody wants to pick somebody else’s brain, it’s totally OK. So if somebody wants to call me and say, Brito, we’re thinking about building a hospital with two other companies in Brazil, and in other countries around America, what do you think about it? It’s going to require this much people involvement, this much money. But it’s something the community is, that they need. I’ll say, well, that’s your decision. Go do it. I agree. I think it’s a good decision.
But again, the guy didn’t ask me for permission. He was just picking my mind on if there was a different angle to help the community, or if I had learned from some other country in our footprint something new that could be applied there. But if it’s something that I have nothing to add to, or you know, it’s his or her decision to do it.
The other thing is that we take no shortcuts. So, we’ve been in business since 1366. 1366. So since the 14th century, more than 600 years in business. We intend to be another 600 years in business. And when you have that kind of idea that you want to be in business forever, you have to understand that at times you have to forget your P&L, you have to forget other metrics, and do what’s needed, because it’s a crisis. And this crisis will only come every 100 years, we hope. But when it comes, everybody is in a tight spot. And if you have something you can do to help, our people first, but then the community, then our customers, and then our consumers, we should do it.
CURT NICKISCH: Brito, this has been really great to hear what you’ve done. Thanks for coming on the show to talk about it.
CARLOS BRITO: Well, thank you for having me. And have a great day.
CURT NICKISCH: That’s Carlos Brito. He’s the CEO of Anheuser-Busch InBev. This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Adam Buchholz is our audio product manager.
Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.
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