{"id":7541,"date":"2016-04-21T04:00:00","date_gmt":"2016-04-21T04:00:00","guid":{"rendered":"https:\/\/business.cornell.edu\/centers\/2016\/04\/21\/a-bright-star-in-turbulent-times\/"},"modified":"2026-07-14T18:16:57","modified_gmt":"2026-07-14T18:16:57","slug":"a-bright-star-in-turbulent-times","status":"publish","type":"post","link":"https:\/\/business.cornell.edu\/centers\/2016\/04\/21\/a-bright-star-in-turbulent-times\/","title":{"rendered":"A bright star in turbulent times"},"content":{"rendered":"\n

Investment in innovation, creation of new products, and diversification of its portfolio are some of the keys to AmBev’s success.<\/strong><\/p>\n\n\n\n

\"Headshot<\/figure>\n\n\n\n

by Lourdes Casanova, Senior Lecturer of Management and Academic Director of the Emerging Markets Institute<\/p>\n\n\n\n

It is not easy to keep my optimistic view these days. At the recent International Monetary Fund assembly in Peru on October 8-10, 2015 we only heard bad news. According to some executives of the Institute of International Finance, about $800 billion will leave emerging markets between this year and next, the biggest exit since the late 1980s. India and China are the bright spots with growth forecasts for this year of around 7.3% and 8.8% respectively. Brazil, the biggest economy in Latin America and the seventh in the world will see a contraction of -3% and the region as a whole will grow by only 0.8%.<\/p>\n\n\n\n

Among the bad news we have a bright star: the Anheuser-Busch Inbev and SABMiller $100 billion merger, which will concentrate one third of the world\u2019s beer brewers in what is going to be the third biggest merger in corporate. The major investors behind the deal were Brazilian and Colombian. On the Anheuser-Busch Inbev side the Brazilian investment firm 3G Capital founded in 2004 by Paulo Lemann, Carlos SIcupira, Marcel Telles and Roberto Motta who own 22 percent of the group and from SAB-Miller\u2019s, the Colombian Santo Domingo family, who owns 14 percent of of the company and are also investors at 3G.<\/p>\n\n\n\n

We need to remember that at the origin of this big operation is the merger in Brazil of Brahma and Antarctica in 1999 (and approved by CADE, the regulatory body in March 2000). At that time, it was the biggest merger in Brazilian history and was marketed as the \u2018Dream Project\u2019. As a rationale for the operation the CEO said that they believed in a single market from the USA to the Southern Cone and that they would continue their expansion in Latin America and later in the US. The ambition was to create a truly Brazilian global company. Let\u2019s remember that in January 1999 the Brazilian currency was unpegged to the dollar and lost 100% of its value in a few months. And the region was going through what some called the \u2018half lost decade\u2019 (1997-2002). Those were turbulent times as they are today.<\/p>\n\n\n\n

In July 2013 the Brazilian magazine Exame ranked the best and the biggest (Maiores and melhores<\/em>) Brazilian companies as part of its 40th<\/sup> anniversary celebration. CEOs were asked to vote for the best Brazilian company in those 40 years and, not surprisingly, they choose AmBev. The company had started in 1989, when the Brazilian investors Lemann, Telles and Sicupira purchased Brahma, a traditional Brazilian brewery founded in 1888 for US$50 million. Despite the fact that none of them were experts in the brewing business, they helped the company succeed by implementing an efficiency culture with the support of the consultant Vicente Falconi, who was hired shortly after the acquisition of Brahma and is still today the company\u2019s advisor. At the time of the Brahma\u2019s acquisition, a team of 34 employees produced 17,000 bottles of beer per hour; in 2013, nine employees produced 63,000 bottles per hour. To reduce its production costs, AmBev promoted an annual review of all expenditures, known as \u201czero-based budgeting\u201d, and tied the employees\u2019 remuneration to the company\u2019s performance.<\/p>\n\n\n\n

Since the merger of Brahma and Antarctica in 1999, AmBev\u2019s revenues increased six times, reaching US$15.7 billion, with profits of US$5.1 billion. During the same period, its market capitalization increased 2,670%, compared to an average of 176% of other stocks negotiated at Bovespa. In March 2012, AmBev became the largest company in the country, beating out mining giant Vale. On 26 June 2013, AmBev was valued about US$112 billion at the Brazilian stock market. This resulted from an ambitious round of growth by acquisition in Latin America: AmBev acquired six companies in Latin America, including the Argentine brewery Quilmes in 2002, and the Republic Dominican brewery Presidente. In addition, AmBev became part of InBev, the largest brewer in the world, following a merger with Belgian company Interbrew in 2004 and the acquisition of the American beer giant Anheuser-Busch for US$ 52 billion. After that the Brazilian Carlos Brito took over as the CEO of the merged company. Finally in 2012 the now Anheuser-Busch Inbev took full control of Corona (owned by Grupo Modelo in Mexico for US$20 billion.<\/p>\n\n\n\n

In order to maintain this performance, AmBev invested in innovation, creation of new products, and diversification of its portfolio. All this linked with a visionary leadership have been key of its success and are lessons for other Latin American companies.<\/p>\n\n\n\n

Marcel Telles, CEO of Brahma at the time of the merger in 1999 told the press that 15 years from now there will be only five major beer companies in the world and AmBev would be one of them. The dream has become a reality and is a great example of \u2018yes, we can\u2019 in turbulent times.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investment in innovation, creation of new products, and diversification of its portfolio are some of the keys to AmBev’s success. by Lourdes Casanova, Senior Lecturer of Management and Academic Director…<\/p>\n","protected":false},"author":33,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[161],"tags":[195],"ppma_author":[],"class_list":["post-7541","post","type-post","status-publish","format-standard","hentry","category-blog-posts","tag-emi-at-work","organizational_unit-canizares-center-for-emerging-markets","organizational_unit-centers-institutes"],"acf":[],"yoast_head":"\nA bright star in turbulent times - Cornell Business Centers & Institutes<\/title>\n<meta name=\"description\" content=\"Investment in innovation, creation of new products, and diversification of its portfolio are some of the keys to AmBev's success. by Lourdes Casanova,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/business.cornell.edu\/centers\/2016\/04\/21\/a-bright-star-in-turbulent-times\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A bright star in turbulent times - 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