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Influencers with Andy Serwer: Michel Doukeris

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In this episode of Influencers, Andy sits down with Anheuser-Busch InBev CEO, Michel Doukeris as they discuss the pandemic and its impact on the beer business, AB InBev's strategy for continued international growth, and how the company is innovating to keep up with emerging trends in the beverage industry.

Video transcript

ANDY SERWER: Michel Doukeris is the CEO of AB InBev, the largest beer brewer in the world. Prior to being named chief executive, Doukeris filled several executive roles within the company, including president of its China and North American regions. In this episode of "Influencers," I'm joined by the AB InBev CEO as we discuss the COVID-19 pandemic and its impact on the beer business, the AB InBev footprint around the world, and what the company is doing to keep up with emerging trends in alcohol consumption.

[MUSIC PLAYING]

Hello, everyone, and welcome to "Influencers." I'm Andy Serwer. And welcome to our guest Michel Doukeris, CEO of AB InBev. So nice to see you, Michel.

MICHEL DOUKERIS: Nice to see you, as well.

ANDY SERWER: So you've been CEO since July of this year, and you have, what, 600 brands, 150 countries. It's a giant company. And I'm wondering, what's sort of surprised you the most since taking over as CEO?

MICHEL DOUKERIS: So you know that I've been with the company for 25 years. And I think that would be like strange to say that something really surprised me. But I did spend a lot of time with people, talking to them. In the first 100 days, sometimes people are very busy announcing things, doing things. I took a role of talking to people, listening to them.

And then in this area of the surprises, what came across very strongly was our people really love the company, really engage it. They really want to advance our strategy in execution. They were really looking forward for us to make some moves. For example, the one that we did for a purpose. We had this well-established purpose that served us very well to this point. But at one point in time, I think that we missed opportunity to evolve because everything around us was moving, transforming and changing, and our purpose was no longer, like, as inspiring as it could have been.

And with this new idea of dream big to create a future of more cheers, we see now the energy in the office. I'm sure that you walk around. The engagement of people moving up. And this is a much broader umbrella that brings us not only what the category represents to people, which is this nice word, cheers, that has to do with celebrations, diversity, inclusion, prosperity, but is also very close to the core of who we are like a beer company. And this came very well from the conversations with people.

Then when you think about talking to investors, to analysts, maybe the biggest surprise was people repeating a narrative around beer declining, beer is not growing, beer is losing share. And without data and without facts. And we just put together this week to the investors a very nice compilation of Euromonitor with like 100 countries showing the last 10 years, the last five years, and the next five years projection.

And the facts are very clear. Like, beer had an issue in between 2010-2015, where the category stopped growing and then was even in a little decline. But in the last five years, the category is growing globally. Very healthy. It's a very big and profitable category.

And the forecast from Euromonitor is that we'll continue to grow in the next five years. And even more exciting is that, across different categories, beer is the one that has one of the lowest levels of premiumization. And because of the brands we have-- you quote very well, we have 500 brands globally, some of the most iconic global beer brands that you see out there-- we have a lot of headroom for premiumization in the years to come.

ANDY SERWER: So much to drill down there. I want to ask you about the pandemic, though, specifically, and your business, Michel, because obviously that's rocked everybody's business, including yours. In what way did the pandemic specifically impact your company? And how, specifically, have you responded?

MICHEL DOUKERIS: In many, many ways. I think that every time that I talk about the pandemic, I always start from businesses, they come and go, opportunities, they come and go, but this pandemic brought some things that are hard for you to deal with. So a lot of people, people that we all know, they had losses that are losses that you cannot repair. And we are always trying to do everything that we can to be close to these people and have our prayers and our thoughts with them.

But from the business standpoint, I think that was very disruptive for the supply chain, especially, when you think globally. We had an advantage early on, given the footprint that we have. We saw this happen in Asia, move into Europe so we could learn from what was going on. And we prepared ourselves very well with three priorities, like the safety of our people, business continuity, and how could we support the communities around us, because we are very local as a beer business, right? So beer happens in the country, in the state, in the city where we have operations. It's either on our breweries or with our wholesalers. We are very close to the communities.

And then in doing that, we first used all the resources we had to make sure that our people, they were safe in our operations. And we had, like, outstanding practices that we used globally to protect our people. Business continued to go on through the pandemic, which was very interesting because the category then proved to be very resilient. And beer is this kind of sense of normalcy, right? So people cannot go out, cannot go to the theater, cannot travel, but they could all go to a grocery store, buy some beer and have some good time at home, cooking or on a barbecue or just unwinding, right?

And then in terms of support in the communities, we did a lot, from building hospitals in Brazil to supporting the vaccination campaigns here and in Africa to having our teams really partnering with community partners to bring not only normalcy, but also solutions from the moment of the pandemic.

And the main disruption that everybody is still dealing with, not only in beer, but across all categories, is supply chain. So commodities prices went up. Aluminum disappeared because, overnight, people stopped going to bars, and everybody was buying convenient package in convenience stores and groceries. So just imagine you're resetting your entire footprint to sell more cans than bottles or draft beer. So this is a massive change. And then when you have the reopening, it's all over again on the other direction. So now you have cans, then you don't have bottles, then people are struggling with draft beer.

But we've been adjusting well. We've been using a lot of data and analytics throughout the entire pandemic to very quickly shift from one side to the other, anticipate a little bit the movements, and have a good surface level to the customers.

ANDY SERWER: Yeah, the consumption mix that you've been talking about, which is going from the bars to the home and now back to the bars and then how that informs you in terms of what kind of containers is something I didn't even consider that's fascinating, I want to get maybe a really current update with you this week about the pandemic and Omicron because I know you have a footprint in South Africa. And I'm wondering if you can share anything with us, what you're hearing there.

MICHEL DOUKERIS: I think that at this point, probably, as much as you are.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: So we have our people there. We are, again, making sure that we are protecting them. We are making sure that we can ensure business continuity and help and support the communities. The news that we get every day from the front are like available public information. So cases going up, not so much in terms of people going to the hospital. And this is something interesting, right, because the worst case scenario is again when people go to hospitals and people have losses.

So we continue to monitor. At this point, I think that is pretty early to give any type of projection or opinions. And we are working there pretty close to the government, health authorities, making sure that we can support with whatever we can.

ANDY SERWER: I want to ask you a little bit about the business. And for people here in the United States, you have these iconic brands of course, Budweiser, et cetera, that people know, but how big is the US in terms of your global business right now?

MICHEL DOUKERIS: Oh, it's the biggest country that we have is the US. And it's been like this for a while and very important one, given the brands that we have. Even more important when you think about trends, I think that one of the-- the big advantages of having like a global footprint and be a company like ours is this ability of learning from the good part of our scale.

Usually, people talk a lot about scaling the past was very good then became a liability because disruptors can attack you. I do think that there is some beauty on the scale that we have and in the size because trends, they show up in different places. You see what is happening, for example, in the United States and Canada with these so-called fourth category like the intersection between wine, hard liquors, and beer.

And a lot of things happening there. Seltzers, ciders, ready to drink cocktails, things that we can learn here, then we have an opportunity to pilot or to partner with some brands. When we get this right, we can quickly deploy this globally with the scale and the footprint that we have. So I think that the US is very important. It's our biggest country in which we operate, has been 40 years sliding, and we are in the last three years in a good turnaround.

So top line is growing. We know that bottom line follows top line. Our portfolio is much healthier today. We have brands growing very well, brands like Michelob Ultra, Stella Artois, Cutwater. They are really accelerating the transformation and the rebalance of our portfolio in the US. And you put together Canada, which is another North American market, same zone, is doing very well as well.

This one was an industry that was in decline for like 10 years, and we had the business in decline for 10 years. Now we expanded our portfolio to this beyond beer, and we find ourselves in an industry that's growing with a business that's growing. So huge turn around. Very happy with the results over there.

ANDY SERWER: I'm so glad you brought up that fourth category because it's so compelling on the one hand but so confusing certainly from a consumer standpoint. I go into a store and I see all these different bottles and drinks, and I don't even know where to begin to experiment. It must be challenging for you to pick your spots as you say. And, you know, first, it was hard seltzer, but as you say, of course, it's blending all these different drinks together.

Can you talk about how specifically you're positioning the company there.

MICHEL DOUKERIS: Yeah, this is-- is new for everybody.

ANDY SERWER: Yeah.

MICHEL DOUKERIS: Of course, I think that if we step back for a second-- and I'll give you some information. You tell me how much you want to-- to take. But it's like when you think about all the beverages, usually, you have like 5% to 10% of the volume. That is really like the latest innovation. And you think about energy drinks. It's like this. You think about soft drinks.

It's like this. You think about water, right? People, for years and years, thought that nobody could innovate in water because water is water. And you just saw a few years ago the seltzer with flavor and no calories, nothing added, exploded in the US and in some of their markets. So there is always like this 5% to 10% of the industry that's innovation, that comes and goes. Sometimes, some of these innovations, they stay longer.

ANDY SERWER: Hmm.

MICHEL DOUKERIS: In the alcoholic beverages, those are very interesting, because what we've been seeing is that this space between wine, hard liquor, and beer is any space that has become like-- almost like a void for a lot of innovation to come.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: And when you think from the consumer standpoint, all the categories they have benefits, but there are some barriers for you to address. So think like that in a simple way. People have been talking a lot about how sugary and high calorie wine is. After all these years of people only talking about the benefits of wine, people start paying attention on calories and sugar in wine. When you think about the hard liquor is this idea that, one, it's hard liquor, so a lot of alcohol.

Two, you need to mix. And then people never really pay attention of the amount of calories in a cocktail, but there is a lot of calories there. And a lot of people think about the convenience because they don't really like to drink the hard liquor. What they really like is the cocktail, but the cocktail cannot walk with me from the bar, to the walking, to the mountain, to the barbecue session.

In beer, people talk a lot about-- especially in people that sometimes it's too bitter--

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: --that they like more flavor, more Starbucks type of flavors. People talk about calories sometimes in beer. And these new beverages, they've been finding a way to solve some of these issues and to provide a solution to underserved consumers. So think about this consumer that likes cocktails but he cannot have a cocktail on the barbecue or at the beach.

Then, you have a ready-to-drink cocktail. We have for example Cutwater, brings delicious cocktail in a can you can carry anywhere. Think about the seltzers, and they bring this flavor from the flavored seltzer, but they don't bring gluten.

andy serwer: Right.

MICHEL DOUKERIS: They don't bring sugar as wine brings. So there is people that go for this gluten free, no sugar option seltzers. And the way that we see this shaping up is basically like three segments. One that is this very simple more flavored type of beverage. In the US, they call like malt flavored beverages.

ANDY SERWER: Right.

MICHEL DOUKERIS: You have the lime-a-ritas. You have the ready-t0-drink bottles with a lot of taste. Then, you have one specific that's light and refreshing where seltzers happened, but you see, for example, in Canada, it's ready-to-drink vodka soda, right? So convenient in a can. You know we control how much alcohol you are having. You can carry whenever you go.

And the third one is the more complex like this ready to drink real cocktails that you can also have today on a can where you can control the ABV. You know that the taste is going to be always great taste. And you can carry and have the cocktail at your convenience whatever you want to go, in the stadium or in a barbecue. So those are three spaces. We have plays and brands in each of these states.

They manifest a little bit different country by country.

ANDY SERWER: Right.

MICHEL DOUKERIS: Right, but they are like global trends.

ANDY SERWER: And so you talked about it before. There's always the 5% to 10% and that this is-- sort of reflects that thinking. And so does that mean this is-- all this is here to stay or is it just the same as it always is, that some of it will stay and some of it won't stay?

MICHEL DOUKERIS: I think that's both.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: I think that these trends, some of these products will stay and will stay for longer because they will find a very good opportunity to solve these consumer problems. And then they become part of the repertoire. And some of these trends we have seen in the past, they come and go because the product is very good but doesn't have a very unique place in consumer's mind and consumer repertoire.

Of course, if you think about beer, beer has thousands of years. It's always part of people's repertoire. We continue to be very relevant. But as consumers start having more choices, it's only normal that people start trying different beverages in different occasions. So there is no such a thing as an only wine drinker--

ANDY SERWER: Right.

MICHEL DOUKERIS: --or only beer drinker. So people go through categories for occasions and they switch things around. So this fourth category is a very good opportunity for the beer companies because of the capabilities that we have, right?

ANDY SERWER: And just one last follow up on this. So where are they taking share. It doesn't sound like you're saying they're taking share away from beer because you're saying beer is growing. But are they taking share away from wine, or hard liquor, or water?

MICHEL DOUKERIS: Yeah, the numbers are very clear. You look at different countries and different companies providing this, but what we know is that at least 50% of this volume comes from hard liquor and wine. In some products, in some regions, this can be as high as 80%. It's incremental and expands the possibilities of the beer category, and it takes from occasions that are often dominated by wine and hard liquor.

ANDY SERWER: You've had a day this week with analysts and investors, and I want to ask you a little bit about what they're looking for, specifically, when it comes to the P&L and the balance sheet how the business is running. Margins are so important right now with the supply chain and pressure there. What did they want to hear, and what did you tell them about that?

MICHEL DOUKERIS: Yeah, I think that, again, if you look at our company over the long term, it's a great value creation story in which we delivered incredible results. Our strategy was very focused and very simple, repeatable, focused on inorganic growth. And we are now transitioning, evolving this strategy to be more a organic-driven growth story.

And this is only possible because some of the competitive advantage that we build over the years, they now come together on what I call like the ABI ecosystem. And that's interesting because, over the years, we put operations together in 50 countries. We sell our beers in 200 countries. We have more than 20,000 farmers, six million customers globally, $2 billion consumers.

And sometimes in building this puzzle, putting together the company, I think that we are very focused on the synergies of the beer category. And we didn't realize how much value still exists in the ecosystem that can be unlocked with things that we are already doing, right? And just think about we have 10 million transactions per week with our customers, 10 million.

So each day, there is 1.4 million transactions that they happen between a customer and a ABI point of sales. So when you think about that, those are opportunities that we have-- one, to grow the beer category, two, to expand our business beyond beer, and three, as we digitize our touchpoints today, more than 50% of our sales are somehow digitalized.

We can have a lot of data that will allow us to create more value from this ecosystem. Think on the other side, this is downstream. Think upstream, we have 20,000 farmers. We are the largest buyer and fermenter of malt globally. Up until today, a few years ago, what we'll do is take this barley, malt it, ferment, and produce beer. In the fermentation process, the yeast takes all the starch, all the carbohydrates from the barley, and leaves the grain that is very rich in protein fibers as a byproduct.

These byproducts we were either giving away or selling at very low costs for people that put together food for cattle or other animals. Through technology, especially like biotech technology, we were able to do a separation with the fiber and the protein.

And now we have an amazing amount of protein that is very high quality protein without any carbohydrates to that that we can upsell, can transform in products that they go through bread production, pasta production, these enhanced milks with protein, and a lot of other possibilities they open by the same resources that we are using before but now using technology to transform this in higher value.

ANDY SERWER: Now are you doing that already or is that on the drawing board?

MICHEL DOUKERIS: Yep, no, we have pilot facility in Newark, close to Newark where we developed in partnership this technology. And we start to commercialize, that is the meant for that.

ANDY SERWER: Right.

MICHEL DOUKERIS: We have a huge investment in St. Louis, $100 million facility, and one in Belgium. These two big investments come to life next year. And we are already commercializing the product that we're going to be able to take out of these facilities to big companies in the US and Europe.

ANDY SERWER: You talk about those 1.4 million consumer transactions and then collecting data. I'm wondering, are you going to be a direct to consumer company, number one, and number two, what about pricing, Michel, and do you have pricing power right now? There's a lot of talk about inflation.

MICHEL DOUKERIS: Yeah, so the 1.4 million transactions per week, this is with our customers.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: With consumers, probably, we have many more interactions every week. So it's like 2 billion.

ANDY SERWER: So would that be-- so explain the 1.4, would that be delivering to a grocery store because it's actually kind of low to me. So that's not consumers drinking a beer. There'd be a lot more than that, right? OK, so it's delivering to a grocery store, delivering to a bar. OK, got it.

MICHEL DOUKERIS: Think like this.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: While we talk here, last 60 seconds, 1,000 transactions between an ABI, point of distribution, and one point of sales happened.

ANDY SERWER: Got it.

MICHEL DOUKERIS: 1,000. And all this data before was leaving there without being utilized. Now we built a very nice platform of B2B. We call Bs. And this platform is like a e-commerce tool for points of sales. And that's an incredible opportunity because we are used to big retailers, for example, in North America. But think about Latin America and Africa, how difficult it is for them to have a very reliable supply chain and be able to grow their businesses.

Sometimes, they don't have the cash. Sometimes, they don't have the product. Sometimes, they receive every 35, 45 days only. And we are there every week providing service to them. When you think about the consumers, we have today some very interesting tools as well in the e-commerce type of tool, where we have solving problems to consumers.

The most common one is we always asked ourselves this question. So why you can grab a phone and call someone and get like hot pizza in one hour or 35 minutes or now you go on the app and you can order pizza and customize your pizza and have it delivered but you cannot get cold beer when you need it? So we have, in Brazil, now expanding to 14 countries in Latin America we call Zed Delivery. It's like a carrier platform.

ANDY SERWER: [CHUCKLES]

MICHEL DOUKERIS: It's an app that you can go there, order your beer, and in 30 minutes, you receive this beer to your doorstep cold, ready for consumption.

ANDY SERWER: Now I hope you have a deal with the pizza company so it comes at the same time. But that's-- that's maybe the next step.

MICHEL DOUKERIS: In several places, this is already happening.

ANDY SERWER: Let me shift gears a little bit, Michel, and ask you about you a little bit. You grew up in a rural town in Brazil and studied chemical engineering in college. How did you end up at Anheuser-Busch then?

MICHEL DOUKERIS: So I was born and I grew up in Brazil, but my family is half Brazilian, half Greek.

ANDY SERWER: Mm-hmm.

MICHEL DOUKERIS: So I have somehow lived everywhere that you can name at this point, from Asia to Europe to North America and South America. And in the engineer course that I took, beer was a big thing, not only because people like to drink beer, but because fermentation is a chemical process and was part of our areas of study to study fermentation. So I visited several breweries. I always liked fermentation, yet it was not my first job when I left college.

At one point, I found this opportunity to join ABI. At the time, it was BREMA, a local Brazilian company in Brazil. This is 25 years ago. And you look back, a lot of fun living in several different places in Brazil, moving to a position that was Latin America. Then I moved to Asia. I lived seven years in China, where I had China first then our Asia business later, moved to global as chief sales officer, then CEO at Anheuser-Busch in the US, which is like life going all the way through one side to the other.

And now in the last, let's say, five months, had the privilege to be leading ABI globally.

ANDY SERWER: Can you tell us quickly what that other job was though?

MICHEL DOUKERIS: I worked for a bank actually.

ANDY SERWER: A banker.

MICHEL DOUKERIS: Yeah.

ANDY SERWER: And you're going from a banker to work at a beer company. It sounds like a good move to me.

MICHEL DOUKERIS: [LAUGHS]

ANDY SERWER: Right?

MICHEL DOUKERIS: Yeah, it was.

ANDY SERWER: Excellent. And so you have this global perspective, obviously. How has that shaped your thinking? I mean, people say it's all very local, but you have-- have to have a global perspective running a company with such a big footprint, right?

ANDY SERWER: Yeah, I think that the-- the fact of having the opportunity to work in different places, to live in a house that was very diverse, right-- so my father, Greek, my mother. Brazilian-- always gave me like perspective into cultural differences and how to talk to people and understand what people want to do and value a lot communication. So when I put together all the countries that I lived in and all the places that I worked, it's like a huge collection of tools.

Imagine this big backpack that every time that you move from one city to the other, you can always learn something. You add something to your backpack in terms of tools. And at one point in time, you find opportunities to use what you have learned from different people, different cultures, and to have like a different perspective when you analyze things. Of course, locally, you always need this local knowledge to solve local problems.

And we are very focused on solving consumer problems and customer problems. And those are the real opportunities to grow our business. You could be very focused internally in what you are doing or you can have more this outside in perspective. People talk a lot about empathy today.

ANDY SERWER: Right.

MICHEL DOUKERIS: I think that there is nothing more empathetic than understanding people needs, different culture aspects that they have, try to pay attention to what they want, and then be able, in a company like ours, to service them with the best products, high quality, great services, and something that they can trust. So our products globally our brands are brands that people trust because of our quality.

And our customers, they like our service, and we are always investing to deliver better for them in what we can do.

ANDY SERWER: Two quick last questions. One, do you get to taste and test beer yourself? And-- yes, no?

MICHEL DOUKERIS: You can ask around. So I taste a lot of products, almost all of them, before they go to market.

aNDY SERWER: Right, OK.

MICHEL DOUKERIS: And even products that are in development phase, like our protein that I just described, I bring home, I always taste it.

ANDY SERWER: And you can't do that at a bank. And then finally, this is the toughest question. I don't know how you're going to handle it. Favorite one. Come on.

MICHEL DOUKERIS: Everybody-- no, everybody knows that I love Budweiser. This is one of the brands that I like the most. I have a long history with Budweiser even before I joined the company. And I love this brand. I had the opportunity to work with Budweiser here in the US to work with the brand globally and work with the brand in China, which is a big market for this.

And there is others. So I like beer all the way. I often say that I'm a beer guy. So there's people that are always hopping between one category and the other one. If I can choose, it's always beer.

ANDY SERWER: Got it.

[MUSIC PLAYING]

All right, Michel Doukeris, CEO of AB InBev. Thank you so much for your time. You've been watching "Influencers." I'm Andy Serwer. We'll see you next time.

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