It’s a brutal time in the beer business.
Anheuser-Busch InBev, the company behind some of the biggest names in beer, is ready to go on the attack to resurrect the industry.
“We’re changing,” AB InBev’s US CMO Marcel Marcondes told Business Insider. “We acknowledge as the leading brewer in this industry, we need to act as a leader and we need to take the category to a better place. … We always say we should face brutal facts everyday.”
In an interview with Business Insider last week, Marcondes explained the reasoning behind Bud Light’s Super Bowl ad and delved into AB InBev’s larger strategy to revive beer sales in 2019.
“Evolution never stops,” Marcondes said. “And there will always be a new generation looking for different things and asking for more and we need to adapt to them.”
Here’s what Marcondes has to say on the future of beer, Bud Light’s Super Bowl campaign, and AB InBev’s exploration of other categories beyond beer.
This interview has been edited for length and clarity.
Facing the ‘brutal facts’ of the beer industry
Business Insider: I obviously read your open letter on LinkedIn, about making beer “future-proof.” I liked how frank you were about transparency.
Marcel Marcondes: I had a very good time writing that op-ed because it was very sincere and the intention was to put things in a better perspective. Because depending on what goes out, and one Super Bowl ad here, and one initiative over there, people start talking about pieces, but I think it’s important to have a bigger picture.
In a nutshell, what is happening here at the company is we’re changing. We acknowledge that as the leading brewer in this industry, we need to act a as a leader and we need to take the category to a better place. So, I decided to be very frank and open and transparent and honest about what’s going on here simply because it’s all true.
We always say we should face brutal facts everyday. Things are changing faster than ever before. Consumers are changing, especially when you talk about the alcoholic beverage segment. Consumers have, nowadays, more options than they have always had before. So we need to reflect upon the way we’re working, we need to reflect upon the way we get things done because the beer industry needs to go back to growth.
The first reflection we had was: so what’s our role into this? In conclusion, we cannot work trying to protect our position within the industry. You cannot stop progress, it’s just stupidity, right? We need to act as a leader.
Although it seems so obvious, we know that we can be much more consumer-centric. We know that we can listen to consumers much more and much more often than we were doing before. … A lot of touch points we have with consumers, all the technology, we have now to have interactions much faster. So we talk to much more consumers in much faster ways and [on a] much more frequent basis.
Making changes — fast
Second thing, we need to be much faster and much more agile in the way we do things. Usually we would take two years to develop a new product, now these lead times have dropped to something like six months already and we want to do things even faster. … If it takes you two years to make something tangible, probably that train is gone by the time you’re ready. So we have been changing a lot of our internal processes, new methodologies, new technology, so that we can develop our new products in a much faster way.
When we’re talking about why we’re talking about low carbs and low calories, they’re already talking about organic. There were no organic beers. We have to do something about it and we need to do it fast. So, we developed Michelob Ultra Pure Gold in less than a year. Having to certify all the breweries and everything, it was pretty fast. We said let’s take a shot, even with Michelob Ultra, it’s doing awesome, but it can do even better. And, we need to prepare Michelob Ultra to keep it going for the next 10-20 years.
Consumers are revising their choices, and they want to have more premium propositions. So, although we do have some flagship iconic brands in the market like Budweiser and Bud Light, can’t we elevate those propositions? Let’s give it a try, let’s talk to consumers and let’s understand their needs and let’s make those propositions even more premium and sophisticated.
This is how we came up with Budweiser Reserve Series. We’re in the third edition already. The recent one was a partnership with Jim Beam. I think it’s interesting as well because in the spirit of elevating beer as a category, we need to bring more people in to the category. So when you talk about organic beer, let me talk about Michelob Ultra Pure Gold. That product definitely brings more people into the category.
This example with Budweiser, right, we are bringing more people into the category. We know that in some occasions people mix beer and bourbon or whiskey, right? It’s not a traditional kind of thing. Many people said, are you really gonna connect your brand to a bourbon brand? Shouldn’t you be defensive? That’s the thing, we don’t want to be defensive.
We cannot deny what consumers are looking for. We actually want to embrace their demands and their needs. And I really believe that the whole exercise that we are doing is all about being happy. To acknowledge that we have many opportunities to do better. That we have many opportunities to change the way we work so that we can become a better company, so that we can fulfill consumer needs in a much better way.
What do Bud Light drinkers want?
BI: I do think that a lot of people have the assumption that people drinking Bud Light don’t care about nutrition.
Marcondes: Some care about it and some don’t. And it’s okay.
This is why the big point for Bud Light is transparency. If you go to any supermarket, any convenience store, you’re going to see that every category is becoming much more transparent because this is what consumers are demanding.
Let’s talk about going fully transparent already with the No. 1 brand. So we’ve spoken a lot about this, should we do this, shouldn’t we? But the conclusion was either you really use your No. 1 brand, or you’re not really delivering a message. It’s not a statement, right. You’re not really provoking a change in the category. And then we said okay, let’s do it.
We have butterflies in the stomach all the time. But our decisions are always calibrated in: Is this addressing a clear consumer need? If it is, we take the risk.
BI: What have reactions been, both to the Super Bowl campaign and also changing the labeling to be more transparent?
Marcondes: I think it’s been great. We’re still learning, but so far, awesome.
Again there will always be the ones who don’t care. And it’s okay, but we know that there are many, many people out there who do care. Roughly 40% of Americans, they change the products that they purchase based on transparency, how much they disclose their own weakness and they explain everything.
Beer cannot stay away from that, otherwise we will get back to the conversation: Why is beer not growing? … We don’t have all the answers, but we do have some. Let’s act.
Will beer survive?
BI: Can beer grow again at the levels it once was?
Marcondes: Beer is connected to mankind. Since forever. So, I really believe that beer will be around us forever.
For me, the thing is whether or not beer is up to speed, to what’s going on out there in the real-life habit of consumers or not. And I think we need to all be able to acknowledge that as an industry, we haven’t been doing a great job in terms of being up to speed versus what consumers are asking for. So I really believe that as we all catch up, the whole industry is going to get to a much better place. We all need to do our part.
BI: Do you think of your competition as other beer brands, or is it people outside of beer — wine or spirits, or even marijuana?
Marcondes: I really believe that options will always be there. And maybe as time goes by there will be more and more and more options. So I always come back to the same point, which is that the winners should be the ones who are better prepared to listen to consumers and deliver what they’re looking for in a great way, faster.
BI: People are going towards more premium beer, and that is growing. Why do you think that is?
Marcondes: On average, we have a lot of global studies. When we compare the countries, the big beer countries all over the world, we know that beer in the US, on average, is cheaper than in other countries. We do a lot of analysis of how many hours does a person need to work to afford a bottle of beer.
We see consumers are seeking more premium prepositions in all the categories. Beer cannot be the only exception to that. Otherwise we’re gonna get into the same trouble of not being up to speed versus what consumers are looking for.
BI: How do you balance both kind of building up these iconic brands like Budweiser, Bud Light and then also having more premium versions like Budweiser Reserve and Bud Light Orange?
Marcondes: I think it’s all making sure that all these propositions are connected and they’re complementary to each other. Because of course we need to keep this clean of what the brand stands for.
But I think that because there are so many different occasions and the same consumers, sometimes looking for a different proposition depending on the occasion. So the same brand can have different variations to feed that consumer that likes that brand, but is sometimes looking for a different thing than one specific occasion.
We developed Bud Light Orange, as well as lemon tea, for summertime, because we know that this is when people go for flavors. We know that when temperatures are up, people are outside. This is when they mix different things and they look for new propositions. As long as we respect what the brand stands for, I think it is great that we have different propositions that better fit different occasions.
Bud Light means ‘no bulls—‘
BI: When you think about what Bud Light does stand for now, is that different from five years ago? 10 years ago?
Marcondes: I don’t think so. I think it stands for the same thing. Bud Light stands for great social moments, when people get together and have a good time. This is very simple, but that’s one of the strengths of the brand. It is simple. There’s no bulls—.
That is why transparency is connected to Bud Light. So it’s simple, it’s fun. You should feel at home. You should feel good. There’s no judgments, right? So you should feel good with a Bud Light. So this hasn’t changed.
What we do need to evolve over time is the voice — how you bring your proposition to life because society knows. If you want to remain culturally relevant, you need to stay up to speed with the culture as well.
BI: Beyond transparency, what are some ways that Bud Light is evolving?
Marcondes: I think that for the last two years, the consistency we’ve managed to drive within our idea of the world was great. We reflect things that happen in real life. Things are much funnier there, more interesting.
So I’ll say that this has a lot of very powerful windows for Bud Light to be much more relevant in culture. If you compare shares of social mentions, the cultural relevance of Bud Light the past two years versus the past five or 10 years, it’s much stronger now. Bud Light’s much better connected to people’s conversations nowadays than it used to be before.
Gen Z ditches beer
BI: Now we have Gen Z starting to be able to legally drink alcohol in the US. How do you think about the next generation and what they want and how that affects your plans?
Marcondes: Evolution never stops. And there will always be a new generation looking for different things and asking for more, and we need to adapt to them. Always invest.
We’ve been studying a lot this new generation and I can tell you for sure that transparency is one of the key elements that we have identified as powerful. Because they will probably be less connected to iconic brands, they’re much more concerned about attitudes and what brands really do for them, instead of just having a nice speech or talking about heritage or the past.
This is why we’ve been talking a lot about the attitudes our brands should have in the portfolio, and the transparency thing for us is an attitude. It’s a brand saying for the first time I’m gonna take the first step.
BI: Gen Z might just be drinking less in general. How do you deal with that?
Marcondes: I think that does make sense for this new generation to be more health-conscious.
If people start to see beer as something that is not necessarily healthy, then inevitably people will start to drink less beer. But if we manage to make them see clearly beer really is predominantly made with natural ingredients as it is. If we talk about low carbs, low calories, if we have tailor-made propositions like Michelob Ultra, we can change that game. If we develop organic beers like we just did with Michelob Ultra Pure Gold, we can change the game, because it’s all about the way we see beer within the priorities they have.
BI: What are some misconceptions that you might wanna kind of correct that people have about beer?
Marcondes: This is why we’re talking about ingredients. But if you don’t disclose your ingredients, if you don’t show people what you have inside, they will never have the right vocabulary to talk about it right. This is why I firmly believe that transparency should be a powerful weapon for beer.
We know that a lot of people believe that these beers are all the same. So if we decide to really go transparent, I think it’s fair for us to highlight the differences that do exist among the beers. Then, consumers should make their call.
Advertising in 2019
BI: How do you respond to MillerCoors?
Marcondes: We don’t respond to MillerCoors. Again, we need to keep our focus.
You need to go back to the decision that we made, which is to put consumers first. And that has to be the only thing that matters to us. Everything we do, we do because of the consumers. Never because of companies A, B, and C.
BI: Bud Light and Budweiser are known for their iconic TV ads. How do you think about reaching consumers now that there’s more ways to reach people?
Marcondes: I remember when I started my career, what really made me excited about becoming a marketer was the ability to become a part of a conversation. And to eventually influence people’s behavior, right. That is what fascinates me. It was like this since the beginning.
Although it is much more complicated to deal with multiple touchpoints that we nowadays have with consumers, it’s also fascinating because in the past, the TV-only kind of thing was just some monologue. It never was a real conversation. Now we have the opportunity to have real conversations with our consumers. We started things on TV many times, but then those conversations actually happen on social and digital. So we here at the office, we really celebrate, we jump, we hug and everything.
Last Super Bowl, one year ago, the Eagles won and then … we said we would give away free beer for the whole city. And then everything becomes “Philly Philly” and we see the whole city talking about it. And then you interact with people, right, so they say, “You should give us a statue because this is a historical moment for the city.” And then we did the statue and everything.
These things only happen because we have a conversation. The secret for a company, especially big companies like us, is to listen. Because if you don’t listen, you don’t leverage from the conversation you can now have with your consumers. And then you just missed the opportunities.
BI: I know a lot of marketers have expressed concerns with YouTube ads. How do you guys approach that and make sure that your brand doesn’t get tarnished?
Marcondes: We’ve been talking a lot about this with our partners. I think the way I see it, I expect it to be a natural process of evolution. I think that instead of just criticizing, our role is to work together because we are all into this. These are becoming the most important vehicles that we use to talk, to have conversation with our consumers. So we need to work together to come up with the right solutions. I think it’s gonna take some time, but as long as we keep evolving constantly, I think we’re gonna get to a great place.
I am a big believer in the power of conversation. Although this makes our lives more complicated because we need to manage multiple touchpoints with our consumers, this gives us gold in terms of the opportunities we have to really interact with our consumers.
The modern drinker
BI: What are other things that you’ve heard that maybe are a little bit surprising that younger consumers want and are seeking out when it comes to beer?
Marcondes: I’m spending a lot of time trying to understand different occasions. Because there are some things that are high-level needs that they have, like transparency. There’s another level which is health and wellness, this is an inevitable trend.
But, it’s important for us all to understand the nuances that exist in the different occasions. So that’s the more complicated level of this conversation — with different occasions, different people, or same people having different needs in different occasions. And this is a beautiful opportunity for us to better organize our portfolio.
Our innovation team is working very hard on that, and soon we’re gonna see new products coming to life. Having that point as a goal, to be really on target in terms of addressing specific conception occasions.
BI: Has the image of the average drinker changed? Who you guys are marketing to, has that changed at all?
Marcondes: I started drinking alcoholic beverages by drinking beer. And I will assume that this is kind of common. That that’s what happened to pretty much everybody before.
That is maybe the main change today. This is not the case anymore. All the consumers that are getting into the alcoholic beverage category as a whole, they are now trying different products. They now have much more options.
So our role again as an industry is to make sure that we will have propositions that we will address different consumers going through different life stages. Beer should be fully capable of addressing different consumer needs and different occasions. It’s all about listening first, working hard, working fast to deliver what they are looking for.
Moving beyond beer
BI: You guys could just be on the defensive and be like, “Bud Light is the biggest brand in America, we’ve got this.” How do you stay motivated to keep going on the attack?
Marcondes: The best answer I have to that question is that it’s a portfolio game. It’s all about us understanding what’s going on in the industry. Understanding what’s the flow of the consumers, where they’re heading to. And the portfolio needs to address that. Different brands will address different consumers and different needs. Some segments will grow, other segments will shrink.
This is why we currently measure share of segment. Because we need to understand that different brands have different jobs to do. So as long as we grow in each one of the segments, we’re going to be fine as a company, as a portfolio.
I think this industry has become so complicated, so complex now, that even when you as a company have a winning portfolio, it becomes really hard to win. Because there’s no such a thing as a one-size-fits-all kind of beer brand. You must play a portfolio game.
BI: Can we ever expect more deals where you’re crossing more into non-alcoholic, more spirits, or into wine?
Marcondes: Why not?
We just announced we acquired a spirits company. We are, of course, predominantly a beer company. I would say it is going to remain like this for a long time. But we need to adapt to change. This involves what we do with beer and this involves what we do beyond beer. That’s how we guarantee the longevity of our business.
BI: For you personally, what is in the pipeline that you are most excited about?
Marcondes: The two topics that we’re really passionate about are creativity and innovation.
So for sure, starting from innovation, you can expect to see a lot of new propositions coming to life soon because we’re working much harder and much faster in understanding consumer needs, developing the propositions, doing some local regional pilots to learn, fine-tune things, and then we go bigger. But this is becoming a very powerful machine. So you can expect to see not only new propositions coming from the brands you already know, but you can expect to see some new brands coming to life as well, so that is one thing.
And the second thing with creativity. People don’t pay attention to what we do anymore. To regular campaigns, people are not there in front of their television waiting for your message. They have multiple screen at the same time. You must be relevant to them so that they pay attention to you. Then and only then the conversation starts.
Either you find really creative ways to show up in a relevant way or you don’t start the conversation. We talk about this with our agencies and our partners 10 times a day, and I’m so excited about the progress we’ve been having as a company in terms of taking it to a much better place in that direction.
We need to grow as a company, of course, we have to. But the only way that we can grow as a company is if the whole industry grows, otherwise we’ll be doing what you just said, just managing the clients in an industry that is shrinking. We cannot allow that to happen. That is our role, to act as a leader.
BI: How many new brands will there be?
Marcondes: I don’t know. We’re doing a lot of pilots first. So before we go big and national, we try things out in real life, in a more controlled environment. Currently we have 10 different propositions and the majority of those are public already, because they already exist in some of the different regions.
So, it’s a pretty decent number of things going out there. I always like to see each one of those pilots as having great potential to become the next big thing in the industry. That’s the future we have before we go live with anything. Does this have the potential to become the next big thing?
It’s tough when you just come to the office to keep things as they are. I can feel right here in the office, everybody’s much more energized and excited, every day you are seeing people’s faces. We feel like we’re doing something new. We’re doing something that can take everybody to a better place. The industry can get better. We’re really listening to consumers.
BI: If consumers are saying, “We like beer,” but it won’t be as big as it was in other generations, is that okay?
Marcondes: To be really honest, I think this is something that only time will tell.
What I do believe 100% is that still thinking about beer, the beer industry is — we as leaders, we have a big responsibility here. We can and we have to do a much better job in terms of addressing consumer needs. So I have no doubts that we can and we will do a much better job.
Is this gonna guarantee 100 years of growth for beer? Only time will tell. But I have no doubts that beer has a huge opportunity to do a much better job and that’s our mission.