The world’s largest beer company has come up with a new direction of growth, but it does not sell beer.
Yesterday, Budweiser group held a 2021 investor meeting. Michel doukeris, CEO of the company, not only finalized the growth target for the beer giant, but also brought a “new idea” that can increase revenue: selling by-products of beer raw materials to peers in the food industry.
Let’s see what’s going on.
Michel doukeris
According to Deng Mingxiao’s release, Budweiser group has a medium-term outlook for its performance indicators: the goal is to achieve an organic growth of 4-8% in EBITDA (i.e. profit before interest, tax, depreciation and amortization). This outlook reflects the company’s evaluation of future business performance and market conditions (including the scale and extent of the epidemic), Although it may change.
“Today, we announced the important evolution of global goals and global strategies, which will enable us to better lead the growth of the category.” Deng Mingxiao told investors that Budweiser group is rethinking what kind of enterprise beer companies can become.
It is reported that the company hopes to change from a category leader to a category growth leader. According to the latest information released by Budweiser group, its global goal is “we dream big to create a future with more cheers”, and its global strategy consists of three parts.
The first is to lead and develop the category. The company reiterated that beer is a large, profitable and exciting category. The beer category has been growing in the past five years and is expected to continue to grow in the next few years.
“Budweiser group has developed its own category expansion model, which is reproducible and verified. It can expand the inclusiveness of the category, expand the core advantages, develop different scenarios, achieve high-end and even expand beyond the beer category.” The company said.
Secondly, it is the digitization of ecosystem and profit from it. The company’s goal is to release value from existing assets and expand target markets through its ecosystem. At present, the company’s ecosystem has more than 200 factories and strong market distribution capacity, enabling it to reach more than 2 billion consumers and 6 million customers worldwide, generating more than 10 million transactions per week.
“Through our platforms, such as bees, direct consumer e-commerce solutions and biotechnology, including evergrain and biobrew, we have the opportunity to accelerate growth and build a unique ecosystem.” Budweiser group said.
The last part of the strategy is to optimize the business. Budweiser group said it would create more value through prudent financial principles and comprehensive resource allocation. In addition, ESG (environmental, social and corporate governance) is clearly listed as an agenda crucial to the company’s future, strategy and objectives, and will fully promote its realization. Therefore, Budweiser group announced that it would realize net zero carbon emission in the value chain in 2040.
Back to “new ideas” at the beginning. Budweiser group announced to investors that it would enter the field of “biotechnology”: converting barley by-products from beer brewing into plant proteins that can be sold to the food and beverage industry. This emerging business is expected to generate an additional revenue of US $20 million for Budweiser group in 2022 and will promote the growth of business in the future.
邓明潇还表示将通过高端啤酒来加速增长，并会推广苏打水、罐装葡萄酒和鸡尾酒等非啤酒产品，同时加速线上渠道布局。
For this investor meeting, the Wall Street Journal pointed out that this is the strategy released by Deng Mingxiao after taking over the CEO in July. At the same time, it is also the first time Budweiser group has released such prospects for medium-term organic growth, reflecting the top management’s confidence in growth, which is a necessary means to repay the company’s heavy debt.
The newspaper believes that one of the most difficult tasks for Deng Mingxiao is to deal with the problem of liquor seizing beer market share, at least in the North American market. However, globally, beer’s share of the liquor market has remained stable at about 43% in the past 15 years. In order to drive growth, Budweiser group will promote high-end beer in the Chinese market.
Deng Mingxiao took over the post of Global CEO of the company from July 1. He had previously held important leadership positions in Brazil, China and the United States, including being appointed president of AB InBev China in 2010. Before Deng Mingxiao, Carlos Brito served as CEO of Budweiser group for 15 years.
During Bo ruituo’s tenure, he has successively implemented many big acquisitions that shocked the global beer industry, including the 100 billion marriage of SAB Miller in 2015, but this transaction also generated huge debts for the company.
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