Carlos Brito’s Unquenchable Takeover Thirst

king-of-beers-nb51
Illustration by Alex Nabaum

Nobody is focused on quenching thirst like Carlos Brito. As the chief executive of Anheuser-Busch InBev, the Brazilian-born Brito is responsible for every other beer–be it a Bud Light, Beck’s, Stella, or Leffe–guzzled in this country. Two weeks ago, Brito added a complement of Mexican brands, including Corona and Negra Modelo, to his company’s coolers. And yet somehow, despite already running the world’s biggest brewer by a wide margin, Brito’s ambitions as a takeover artist seem insatiable.

“You are only going to be the size of your dream,” Brito, 52, told students four years ago at Stanford Business School, where he received his MBA. “To dream big or dream small takes the same amount of energy, so why not stretch a little bit?” The question is how much bigger Brito can make the world’s largest brewer without overstretching. Since there aren’t many independent beer companies of size left to buy, for his next trick Brito may have to go really big by acquiring SABMiller, or even making a run for the company that once offered to train him in leadership skills: PepsiCo.

If all of that sounds far-fetched, consider Brito’s accomplishments. Since merging Latin America’s AmBev with Belgium’s Interbrew in 2004 and then acquiring Anheuser-Busch and a few other brewers along the way, Brito’s business has grown from $11 billion in sales to about $47 billion today. Operating profit has surged more than fivefold to some $18 billion. With Modelo, the group will boast 17 beer brands, each drawing in more than $1 billion in annual sales. This year the company will ferment nearly 700 million kegs of beer, almost double what the world’s second-biggest brewer, SABMiller, churns out.

And along the way, Brito has made investors incredibly happy. Shareholders who stuck with him since 2004 have seen their investment appreciate by 17 percent a year, far outpacing gains by Nestlé, Coca-Cola, and Pepsi. Moreover, all of this has come not because humans have dramatically increased their beer consumption. On the contrary, the increasing popularity of microbrews, cocktails, and wine has left mainstream beer out in the cold.

No, what Brito has done exceptionally well is ruthlessly cut costs with each acquisition. For instance, when he finally convinced the Busch family to relinquish the reins of their brewer and its Clydesdales, Brito promised investors $1.5 billion of annual savings. He wound up slicing more than $2 billion. He’s now pledging to trim at least $600 million from Mexico’s Modelo.

To investors, these are all happy numbers. To workers at SABMiller and Pepsi, of course, it may be cause for anxiety. Brito has his hands full for the moment, but with the beer business’s prodigious cash flow, it should take only a couple of years to bring debt from the Modelo deal down to comfortable levels. Once that happens, Brito will be back on the prowl.

Join the Discussion