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Which white raven is suitable to succeed AB InBev CEO Carlos Brito? For headhunters, this is the nec plus ultra of all assignments. ‘You never say sorry, not interested in such a job.
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‘This story is not simple. I estimate that there are about 20 candidates in the world who can do it. But this is a very interesting challenge. AB InBev is an iconic company. It doesn’t happen that often that the top position is released with such a world group. Every candidate will want to at least look at that. You don’t say, “Sorry, I’m not interested.” This is the best search ever. I would even pay to do such an assignment. ‘
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Filip Lerno, a former executive searcher at Heidrick & Struggles, sounds almost euphoric about AB InBev’s reportedly quest to replace CEO Carlos Brito. At the beginning of this week, the Financial Times reported that Brito will stop at the top in the course of next year, and will then take a seat on the board of directors. The recruiting firm Spencer Stuart is said to have been instructed to list candidate successors.
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How do you replace someone who left his mark for 16 years and who will soon close an era? Brito made the brewery from Leuven to grow into the number one in the world, with global brands in its portfolio such as Stella Artois, Budweiser and Corona and some 500 local beers. Under his leadership, the brewer made mega acquisitions, including those of the American Anheuser-Busch and the South African SABMiller. That saddled the brewer with a giant debt of $ 102.5 billion, of which still exceeds 87.4 billion, or 4.9 times gross operating profit.
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19 billion loss
‘In such a search, you should always first look at the cui bono: who will make a difference for that replacement?’, Says Lerno, who says he can speak freely because he is no longer active in the sector. “It mainly has to do with dissatisfied shareholders.” He refers to the tobacco giant Altria and the Santo Domingo family, the two reference shareholders of SABMiller, when AB InBev took over. In that deal, they received cash and shares in AB InBev, which cannot be traded until the autumn of next year. Due to the fall in the price of AB InBev, those shares are facing a paper loss of 19 billion euros.
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What requirements must the new CEO of the beer giant meet?
- Someone with a passion for products who can bridge the gap to a broader consumer group.
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- Someone who is able to destroy sacred houses.
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- Iemand die inspirerend en charismatisch is: you need to fill the room with your presence.
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- Someone with an open mind who is open to innovation and experiment.
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- Someone who is able to create additional shareholder value so that the employers are satisfied.
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- Someone with the right moral compass, if only because of the impact beer has on health.
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- Someone who sets out a strong growth strategy and enforces the space to invest in brands and products.
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“You have to look at the matter in the context of accelerating and building shareholder value,” says Lerno. That’s the number one thing. That will be the job of the new man or woman taking the helm. What does the profile look like? I always tried to create a Frankenstein-esque profile with bits and pieces of other CEOs who were successful in their field. ‘
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‘Then I think of a percentage of Elon Musk, who is enormously inspiring with Tesla. Brito has lost some of that magic, perhaps because he was a little too involved with costs and his gross operating profit (EBITDA). Look at Tesla’s stock price, which has skyrocketed into the stratosphere in recent years. It remains a story that everyone looks up to. I’d also have a slice of Tim Cook. Steve Jobs made Apple an icon, but under Cook it became an incredibly well-oiled profit engine. And then I think, damn it, we work with beer: can’t we add more experience to it? As with LVMH: they don’t sell a handbag, they sell the LVMH way of live. In this way I try to visualize what the ideal profile looks like. ‘
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Procterian
The appointment of Spencer Stuart for the search for a new CEO would amount to explicitly looking for external candidates. Managers who do not currently work for AB InBev. Of the current management team, only Michel Doukeris, who now heads the North American brand Anheuser-Busch, would be eligible to follow in Brito’s footsteps.
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I certainly wouldn’t go for an internal solution. That is more of the same. In that case, holy houses will remain. You need a visionary.
Filip Lerno
Ex-headhunter at Heidrick & Struggles
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“I certainly wouldn’t go for an internal solution,” says Lerno. ‘That is more of the same. In that case, holy houses will remain. You need someone who looks at the story with an open mind. Also don’t look for the classic Procter & Gamble boy, because they too often think in trodden paths. The word ‘Procterian’ was not chosen by chance. They are people who always think the same way. At AB InBev, a lot has to be changed to be successful. ‘
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If it were his company, Lerno would be looking for a chief transformation officer. ‘The AB InBev share now costs 50 euros. That is not expensive, although it is not cheap either. How can you organize this so optimally that the shareholders or managers are satisfied? That will be mission number one. AB InBev itself has sufficient experience in financial leverage and savings. What you need is a visionary. We’re in alcohol. Today’s alcohol may be yesterday’s cigarette story. Look at how young people’s mindsets evolve. Then you have to pay attention. Is alcohol still 100 percent the business you want to invest your money in as a shareholder? Why not also in health and natural drinks? You need someone like that. You have to dare to look at things differently. Although you must of course remain in your domain of expertise. ‘
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Although external candidates are apparently being sought, Chris Burggraeve, former top marketer at AB InBev and the penultimate Belgian in management, does not believe this. “Nine chances in ten it will become an internal heir to the throne,” he says. ‘Don’t forget that AB InBev has a very strong corporate culture. The number of heroes that come from outside and can turn a company up to such a level is very small. Lou Gerstner at IBM was one such exception. In theory it sounds very nice that open-mindedness is necessary. But often outsiders bring in their own people. This causes more turbulence than when choosing an internal candidate. Does the board of directors have the appetite for that? Does he think AB InBev needs a deeper revolution? How existential is this moment? AB InBev is under pressure, but is in itself a very performing company. It’s not in survival mode like IBM was back then. It is about opening a new chapter of sustainable revenue growth. The key question is: how much freedom of choice does that internal candidate demand and get from the board? ‘
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I am aiming for an internal candidate. Often outsiders bring in their own people. This causes more turbulence than when choosing an internal candidate.
Chris Burggraeve
Former board member of AB InBev
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Chalk lines
Insiders point out that the operating margin (EBITDA) at the beer giant is very high: 31 percent and double that of the other players in the sector. That is an important requirement of the board, it sounds. That’s the mantra. Everything differs from that. As a result, a substantial part of the income cannot be invested in brands and products, but disappears into the pockets of the shareholders. It is the board with its large family and financial anchors that sets the guidelines for this and determines the global strategy. The CEO exists by grace.
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This bottleneck was accentuated with the acquisition of SABMiller. At AB InBev, a CEO has little room for maneuver to invest, it says. At the same time, AB InBev is struggling with high debts and a faltering stock price. Why stick to that 31 percent profit margin in such a context? Does the board want to deviate from that dogma? And does this give the new CEO financial leeway to devise a new growth strategy? Everything depends on how the balance of power in that board – with the Belgian Van Damme and de Spoelberch families, the Brazilian investors and the Santo Domingo family – evolves.
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A sensitive point, according to Philip Hendrickx, the managing director of Robert Half Executive Search. ‘The tension between the board and the mandate of the CEO often causes major problems. The members of the board of directors are an important stakeholder, but clear agreements must be made. I know CEOs who say: ‘I don’t want to see that shareholder here in the parking lot. He will receive an overview of the results every six months. That is enough. That is always a challenging factor. ‘
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My gut feeling says that the new CEO should make consumers more consciously choose AB InBev products again.
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“There are no idiots on the board,” says a former AB InBev executive. ‘They are all sophisticated, smart and long-term thinking people. They will think about the new recipe and then decide which cook should carry out that recipe. ‘ The successor to Brito will probably be much more of a sales & marketing driven person, says Wout Van Impe, partner and director at headhunter Mercuri Urval. AB InBev is at its ceiling when it comes to the best seats on the supermarket shelves. It has to win the sympathy of the beer lovers who look elsewhere. My gut feeling says that the new CEO should make consumers choose AB InBev products more consciously again. ‘
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The best of the best
Fabiaan Van Vrekhem, partner at the selection office Accord, is also thinking in this direction. ‘You need someone who does a value proposition. Someone with a passion for products who can bridge the gap to a broader consumer group. That’s the white raven we’re talking about. It is the crème de la crème you are looking for. And just as important: how will that leader figure deal with power? What does that do to him or her? Having the right moral compass is important, if only because of the impact of your product. That man or woman must be made of the right stuff. ‘
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Is gender a criterion? ‘Beer has an unprecedented market potential for the female consumer. Then why not a woman as CEO? ”Says Van Vrekhem. “That’s an absurd question,” says Lerno. Gender should never be a criterion. The qualities to do the job count. You have fantastic women and fantastic men, but you need to fill the room with your presence. This is possible at the age of 35 and also at the age of 55. However, that top woman from Pepsi-Cola, Indra Nooyi, the former CEO and now chairwoman, has done a fantastic job. A naturalized American entrepreneur from India. A good example of diversity and a top candidate. ‘
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