What’s The Main Job Anheuser-Busch’s New North America CEO Has Been Tasked With?

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Anheuser-Busch InBev (NYSE:BUD) recently announced the appointment of Michel Doukeris as the CEO of its North American unit, effective January 1, 2018, replacing João Castro Neves, who currently holds this position. Most recently, Doukeris served as BUD’s Chief Sales Officer, leading sales strategy globally, including “providing strategic insight into the company’s long-term growth plans.” Faced with flagging sales in the US, the company’s most important market, the new CEO’s first task is to turn around its fortunes, and focus on driving top-line growth.

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Past Experience Bodes Well

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Michel Doukeris joined Anheuser-Busch over two decades back and held sales positions with increasing responsibilities before taking over as Vice President Soft Drinks for the company’s Latin American region in 2008. Thereafter, as President AB InBev China starting 2010, and Zone President Asia Pacific from January 2013, he oversaw Budweiser’s rapid sales uptick in China, making it the largest growth market for the brand. Doukeris also spearheaded the creation of The High End business unit, first in China and the US, which was then expanded to 22 countries across the world during his tenure as the Chief Sales Officer. This unit focuses on craft beers in the company’s portfolio, such as Goose Island and Shock Top, besides big, imported beers like Stella Artois. The unit has managed to garner over $5 billion in revenues globally and has attained significant share gains in the premium segment across markets.

Unlike Neves and previous North American CEO Luiz Edmond, who had their background in finance, Doukeris has his in sales, marking a crucial shift for the company that has relied on inorganic growth and cost-cutting in the past. Carlos Britto, CEO of Anheuser Busch, has stated that “Doukeris championed a fast-prototyping process for new beer development that can bring a new product to market within 100 days,” further stating that this ability to pivot and scale a product will stand him in good stead in the North American region. Doukeris has also noted that new products introduced in the US should have a local focus, given the vast size of the country and different regional preferences. Hence, while a national stance is important, it should build on that with a regional view.

Falling Sales Of Budweiser

Anheuser has been faced with declining volumes in the United States, at a rate which is higher than the industry average. This implies a market share loss for the company. In the nine months of FY 2017, while sales-to-retailers (STRs) has been down by 1.3% for the industry, the corresponding metric for the company has been estimated to be 3.1%. This has been driven by weakness in the Premium and Premium Light categories, which continue to underperform the industry.

Growing the volumes of Budweiser and Bud Light seem to be the main challenges facing Doukeris in the immediate future. Both remain pressured in the US, despite being the biggest brands in the country. While these brands are growing internationally, their poor performance in the US has been pressuring the top-line in the country. Though the company does not report sales volume by brand in the country, according to Beer Marketers Insights, Bud Light’s sales have fallen by 5.8% this year, while that of Budweiser have slid 6.7%. This is in addition to the 3% and 2.5% declines seen last year. Meanwhile, in more positive news, the company’s Above Premium portfolio has accelerated this year, gaining market share along the way. In the recently reported quarter, it was noted that Michelob Ultra grew volumes by double-digits and was the top share gainer in the US for the tenth consecutive quarter, achieving the highest quarterly share gain in the past five years. As per Beer Marketer’s Insights, the brand is closing in on a 10% volume share for the company in the US, though Budweiser and Bud Light still account for about 50% of their volumes. Hence, Doukeris will not only focus on curtailing the fall in demand of Bud and Bud Light, but will also concentrate on growing the momentum surrounding Michelob Ultra.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
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