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Posted April 2010

The Mission

AB-InBev’s culture war | “This is the end, beautiful friend, … the end of everything that stands”, sang Jim Morrison. Perhaps this is not quite the end of everything that stands in the brewing industry, but the final act of the industry’s Great Game has begun. With AB-InBev controlling about a quarter of the world’s beer production, bookies will soon be taking bets on how many deals the Brazilian management will have to clinch before they can close the door behind themselves: Will it be one? Two? And what will the “bankers who sell beer” chiefly be remembered for? Their merciless cost-cutting drive? Or their counter-colonialist strive which has shown little regard for the complexities of mature markets and for brewers’ corporate cultures in Europe and North America?

Brewers, let us be frank about it, you’ve never had it so good. Ever since the Fall of the Iron Curtain and the end of the Cold War twenty years ago, you have had a ball. Money was sloshing around and the living was easy. You wanted to enter a new market? Done. Build a brewery with bells and whistles? Done. Roll out new brands? Done. So much, costing so little. “Wonderful”, you said. “This is the free market economy. Globalisation is a great game.”

The scramble to bring beer to the farthest corners of this earth developed into an Olympic conquest: Citius, Altius, Fortius (or “faster, higher, stronger” for those who do not speak Latin) became your motto – and may the best one win.

Sometime over the past two decades, something has shifted in your thinking. The brewing industry took a “numeric turn”. Quantitative principles began to dominate your life. The concern for cultural values turned into a love of size and speed. Concern for customers converted to an obsession with market share. Brewers became so attracted to competition that they decided to buy it. Acquire, merge and reduce headcount to pay for it was your modus operandi.

Wealth and shareholder value has become the primary measure of your success. You don’t complain too much because so many of you are silent beneficiaries. Once the stock market became the only measure of value, you became the victims of its whims. When it rises you are happy, when it falls you gnash your teeth and resort to cost-cutting.

The “numeric turn” has affected all aspects of corporate organisations. What began as a weekly conversation among members of corporations now resembles a statistical journey. Dialogue became tools, charts, fishbone diagrams and eventually a competition for bonus payments.

At a personal level, the consequences have been even more dire. If we only value what we can measure, we have in effect quantified and objectified our own selves. Hence employees are routinely referred to as “human assets,” human “resources” and no one gives it another thought that this is a euphemism and means that people have been decapitated so that only their “heads count.”

In effect, the “numeric turn” has led us to believe that if we cannot measure something, it is not real and perhaps does not exist. Cultural values, for one. Of course, they are almost routinely paid lip-service to. I heard of a company’s vision statement that said its core values were: trust, respect and accurate gauging. I love the term—accurate gauging. Does it evoke the image of humans whose loyalty, involvement and knowledge of the industry is cherished? No, it reminds me of automatons in a machine shop: minute measurements, hard edges, vices and low tolerances.

Who is in your face here?

Perhaps the “numeric turn” in the brewing industry was inevitable. Perhaps it was the unavoidable corollary of rapid growth: of having to knock into one all the various companies which brewers have gobbled up over the years while staking out their claims on foreign territories. Perhaps that’s what brewers thought they had to do as they were playing to the gallery: the financial analysts, the marketing hypists, and their allied fiction mongers, who had convinced themselves and the industry’s swashbuckling executives that the rush for profits, for higher margins and short-term shareholder value creation was really the only reason why companies existed in the first place. 

Those of you brewers who were brought up in the free-wheeling Nineties, may think: “No sweat. That’s how it is”. However, industry old-hands – and that’s basically everybody who was born in the Sixties because anyone older with some sense will have moved on – will remember the days when quantitative principles did not rule ok. Talk to them and their verdict on the current state of affairs in the brewing industry is: “an all-out culture war”. 

Come 2010 and the global recession, this industry is witnessing an unprecedented and particularly vicious culture war which is pitting beer against bonuses, values against profits, life style against leverage. Although incidents of this conflict have flared up all over the industry, the culture war is raging most fiercely, it seems, at AB-InBev, where the Brazilian management has shown little willingness to end it. What is tearing AB-InBev’s corporate culture apart at the seams is trench warfare over values. On one side you will find AB-InBev’s management, driven by a New World counter-colonialist fervour and carrying the flag of neoliberal free-market credence, while on the other side you have their European employees, fired by Old World nostalgia and defending the achievements of Europe’s social market economy. The demarcation line is easily drawn: between the Brazilians here and the Europeans there. Read on    

The rest of this report is reserved for subscribers to Brauwelt International

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