Anheuser-Busch reported its fourth-quarter results earlier this week. The company saw 4.8 percent revenue growth during the fiscal year of 2018 and 5.3 percent growth during the quarter. Following the release of the results, Adweek caught up with Anheuser-Busch InBev’s U.S. CMO, Marcel Marcondes, to learn more about the company’s evolving strategy, how it has become a more agile marketer and more.
This conversation has been edited and condensed for clarity.
Adweek: What do you think of the Q4 results?
Marcel Marcondes: We’re excited, but not yet completely happy, right? There is a clear tangible evolution. We have been changing a lot the last year or so. We acknowledge it was time for us to change the way we get things done here. We are the leading brewery, and we’ve always been proud of being the number one in terms of market share, but to be very candid, we woke up to the fact that [being] number one in the market share [is] always connected to being the number one in driving growth. So we’ve been making a lot of changes here to really drive growth to the industry.
We decided to be much more consumer-centric. So we became obsessed about listening to consumers. Second thing, we decided that our portfolio of brands would have to evolve so that we could really address the recent consumer needs so that our portfolio brands would be up to speed to what consumers are looking for. And the third thing was speed and agility, because if you want to bring a lot of innovations to the market, if you want to upgrade and update our portfolio, [you] have to do it fast. In the world, as it is today, either you address a gap or an opportunity fast, or by the time you show up, the train has left the station.
For other marketers who might read our a conversation, what can they learn to become more agile and drive growth?
I would say it’s important to have long-term thinking. This was one of the most important things that enabled us to start doing the changes here, because if you’re just thinking about the next four weeks, you’re going to keep betting. You’re going to keep trying to do what you currently do a little bit better, instead of having a broader reflection about what’s going to make [you] better prepared for the future. … Companies, especially big companies, need to make sure that they are on the right side of history.
So, for example, a Michelob Ultra is the fastest growing brand in the industry, and it’s been like this for the last four years. This is amazing. But … we said, OK, what can we do to make sure the Michelob Ultra will still be the fastest growing brand in the industry for the next 10 years? We saw, for example, that there was a big organic trend [in the] food and beverage industry, but the beer wasn’t part of it yet. So we … launched the first major organic beer in the country directly connected to health and wellness, which is a core business for Michelob Ultra.
Did you make any internal changes to your structure?
Our brand teams are working in a completely different way. We work under the system of the newsroom. Instead of having long briefs that take one month to get defined, then you brief the agency, they take four weeks to bring together and then we do a call, we do newsroom meetings every day. … Then we present what people are talking about, what the opportunities [align] with what our brands stand for. … It’s a big change in the way we listen to consumers and in the way we develop our brand content.
Are there any particular ways that you’re listening to consumers?
We do daily research with consumers. We use online panels—this is where we proactively talk to consumers to share ideas, new concepts or new content [to which] we have to get their initial reaction. [W]e are referring to … new ways of doing research instead of going to a room and being behind the mirror and everything. This is when we proactively talk to them.
The second thing is, we’re betting deep [on] social listening. Like never before. I tell people that we became CNN people with the number of screens we have here [to show us] everything that people say, everything that’s trending all day. All of our brands have daily meetings that we call “newsroom meetings” where they start the day by checking what consumers are talking about and what is trending, and then they start working with to develop content as a publisher.
That sounds like a huge shift. When did you guys implement that?
We’ve been learning, we’ve been evolving, but [we] really started doing this last year.
Would you say that some of these positive results came from this strategical shift?
I believe so. We also changed the way we track [success] here, the indicators that you track. [W]e’re now paying much more attention to share of social conversation because what really matters is what people are talking about. … [W]henever people talk about beer, 60 percent of those conversations on social mention our brands in a positive way. So this is [an] indicator that [we] track, and this proves that we are becoming much more culturally relevant with our brand.
This is a reflection of that model, right? Something we can talk a little bit about as well [is] the impact on innovation, because as we listen more, we become more confident about what consumers are really looking for, and we become much more confident about taking some risks and developing some new products that aim to address the needs that we identify with consumers.
Do you have any examples of products that came out of that?
This is why we launched Bud Light Orange last year, and we’re just about to launch Bud Light Lemon Tea. We see that in summertime, people are going to [want] flavors.
We also [found that when people go out], they start mixing beer with bourbon or whiskey. And because we identified that, we spoke to Jim Beam, and we developed the partnership that enabled us to launch Budweiser Copper Lager—Budweiser aged on Jim Beam barrels, which is quite innovative for a beer brand.
This is what made us confident in betting big [on] developing the first organic beer in the industry, which is Michelob Ultra Pure Gold. All of that started by listening to consumers, and then we applied speed and agility, because again, if you are too late to the game, somebody is going to do it faster.
What impact would you say 3G had on the company’s brands? Was it all about streamlining costs, or has it helped you become more agile?
3G helped us implement a very rigorous way of managing costs. This is [where] people say, OK, they cut costs and they’re very focused on that. Yeah, they are. We still have 3G people involved in our board. We do have a great discipline on managing our cost.
[What’s] misleading sometimes … when you read news about it is that the only thing you do with 3G is cut costs. But this is not the philosophy, and it has never been. [W]e have a lot of discipline on managing the costs so that we can always find money to invest in the business. The thing is not to waste money on things that don’t make a difference, but to reinvest that money when it does move the needle.
For example, I don’t know about [any] other company on this planet that has decided to make the investment that we just did on the Super Bowl. … We are only capable of doing this because [we took] the money out of other initiatives that we believe that are not that strategically relevant for the business. It’s not only about cutting costs. It’s about taking money out of the places that [aren’t] really moving the needle to … places where we believe the money will help us move the needle.
Reading the recent Wall Street Journal piece on 3G, it sounds like Kraft-Heinz hasn’t been able to reinvigorate its brands in that way.
We do have a different composition as a company, but I see your point. We want to drive growth. That’s what matters. … Our mantra here is to drive growth for the industry and for us as a company. This does not mean that we just wanted to improve our profitability by reducing costs. We want to drive growth, and there is no other way but to listen to consumers, upgrade and evolve our portfolio and deliver what they’re looking for in a very fast, agile way.
[T]his is a damn expensive business! To launch the first organic beer in the market in less than one year—we did it in seven months—do you have any idea of how much [it costs in] terms of brewery investments?
How much does it cost?
I cannot talk about specific numbers, but we are definitely talking about millions and millions of dollars in research, development and brewery investments to be able to deliver this to consumers.
How do you know which parts of the business are worth it for the investment and which parts are not?
Our goal is growth. That’s always the primary decision-making point for us to make all the calls and investments. What has the best potential to drive growth? It’s a very simple question. It’s a very simple debate that we have.
And then, it’s a portfolio game, right? … Consumers are evolving very fast. Their needs and their demands and moving very fast. We need to adjust and adapt to that. The only way to win is by having a powerful portfolio. We cannot rely on … one brand that’s the one-size-fits-all to everybody. It does not exist anymore. Every day, [we’re] talking about how to better balance our investments so that different brands can win in their different segments.
The company worked to produce more premium brands. Why push for that?
We do have some very clear trends influencing our strategy. Premiumization is a big one. We see this happening in all the industries. Beer needs to follow that. So this is why we made the big decision to premiumize Budweiser. These core brands are getting elevated.
Any other trends we should look for?
You’re going to see us betting big behind health and wellness. This is a huge, inevitable trend. This is why you can expect us to keep fueling Michelob Ultra, big time. This is why Michelob Ultra was even bigger and bolder this year [at the] Super Bowl as well. And this is why we extended Michelob Ultra into Michelob Ultra Pure Gold, the organic version.
[During the] Super Bowl, for the very first time, we had Bon & Viv Spiked Seltzer. For the very first time, a product like this made it to the Super Bowl. [W]e are intentionally placing bigger bets on adjacent categories as well beyond beer, because we know that consumers are demanding in that direction.
Do you have advice for other marketers on what it’s like to become a more agile marketer?
The most important thing is to work to elevate the industry first. I see many industries are facing the same issues. They need to find their way back to growth. That’s a mindset that seems obvious, but it’s a big change. Let’s work to elevate our industries first.