:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/QPF5NTG4PFGMRJVYSHZSJVAVXU.jpg "Cans of Brahma Duplo Malte, one of the beer brands that is a result of innovation at Ambev. (Jonne Roriz/Bloomberg)")
Bloomberg Línea — A little more than five years ago, Jorge Paulo Lemann made a rare statement for successful entrepreneurs when he called himself a “terrified dinosaur” in the face of the innovations taking place in various sectors, and what he was seeing in the management of companies he controlled, such as AB Inbev (BUD) and Kraft Heinz (KHC), two global giants in the food and beverage industry.
At that time, Ambev (ABEV3), the company that became a global business empire, was making investments to stimulate innovation, but concrete results were still a long way off. After five years as Brazil’s beer market leader, it seems the time has come to explore the narrative, now based on results and different business cases.
Known for its more than century-old brands, such as Brahma and Antartica, Ambev has launched 100 innovations in the last year, after halving the so-called time to market.
The equivalent of 20% of revenues now comes from products and services that did not exist three years ago, a period that also coincides with Jean Jereissati’s tenure as CEO of the company. The technology area employs 4,000 people, more than its sales team, which gave the company much of its fame.
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“These numbers are only possible because we are creating a culture of lots of testing and understanding that there are failures. You have to encourage discovery-related failures through testing on small market bases. But that was unthinkable until a few years ago,” said Dani Waks, Ambev’s vice president of marketing, in an interview with Bloomberg Línea earlier this month on the sidelines of Web Summit Rio, one of the world’s leading innovation and technology events held in Brazil.
The executive, who was with Ambev for 15 years, refers to what for decades became the company’s trademark, as if it were an export product: the operational efficiency idealized by Lemann, Marcel Telles and Carlos Alberto Sicupira, as well as Carlos Brito and dozens of other executives who held leadership positions in companies controlled by the trio, but whose reputation as management wizards was dented recently with the accounting scandal that engulfed retail giant Americanas.
“Several points that were long Ambev’s big differentiator remain at the core, such as operational efficiency, M&A and management, but this is no longer just what sets us apart,” Waks said. “There is still the culture of overcoming and dreaming big, but seeking to understand that it may be necessary to make mistakes and change the path to achieve a certain goal.”
:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/PZK72OMAEVGI5D6UIG4LRE45CI.jpg "Lemann at the Milken Conference in 2018, during which he described himself as a \"terrified dinosaur\" amid the innovation taking place in business. (Dania Maxwell/Bloomberg)")
Ambev’s shares are still about 50% below the level of five years ago, but have accumulated gains of 35% in three years.
A decentralized model is in place to streamline decisions and encourage testing within the company’s guidelines. According to Waks, Ambev decided to stimulate innovation practices in different areas horizontally. Initiatives are connected from the supply chain to the sales team, with the Innovation and Technology Center opened five years ago in the Brazilian state of Rio de Janeiro as a link.
The company’s latest bet is a canned version of Brahma draft beer, a product presented at Web Summit Rio that Waks says could not have been launched five years ago, even though the concept had been on the radar since then.
“The launch was only possible thanks to the advancement of technology, the learning we had about the refrigerated chain, the existence of Zé Delivery [an alcoholic beverage delivery app in Brazil] to guarantee the delivery standard, and the new asepsis processes in breweries,” he said.
Gustavo Castro, Ambev’s director of innovation, told Bloomberg Línea that the development process included studying existing practices around the world that could make it viable for the canned beverage to maintain the characteristics of draft beer. “We found in the South Korean operation a microfiltration process that allows for an unpasteurized beverage that can maintain freshness longer,” he exemplified.
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Brands power innovation
Castro said the combination of the use of data and the ability to innovate is enhanced by Ambev’s well-known brands, with a broad consumer base, and cited the case of Brahma. “Sometimes you develop a solution, but it’s very difficult to get people to try it.”
According to executives, preliminary Net Promoter Score (NPS) numbers, the universal consumer satisfaction metric, point to Brahma’s draft canned beer having the best performance for an Ambev launch among customers who are part of the initial test base in regions of Rio de Janeiro.
As part of the reinvention strategy, Ambev presented the audience at the Web Summit Rio event with more information on its private trajectory, something Castro says is significant. “No one would think they would hear at an event like this what a large consumer goods company has to say. What you would expect would be a case from a startup or a big tech.”
Castro said the new momentum has been made possible by the increasing use of data and technology. “There are two key points: the redesign of our relationship with customers, which are the bars, through Bees’ digital platform. And the contact with the consumer through Zé Delivery, with the information we need to be able to innovate.”
Connecting consumer data
The two platforms intersect and allow for integration, Castro said. “If I can serve a consumer at home, and a bar is out of booze, why can’t I also deliver to the bar? Why do I have to wait for the next day? There’s a logistical footprint, but also a data connection of in-home and out-of-home for the first time, which is a very powerful thing.”
The launch of Brahma draught beer in cans is initially through Zé Delivery for two reasons: to maintain the necessary storage conditions, and for the collection and subsequent analysis of consumption data. “We evaluate whether or not the customer has bought the drink again, how often, for what reasons,” Castro explains.
“For a company the size of Ambev, if the business is small, it doesn’t make sense. Is the business relevant enough to be ‘scalable?’ In every pilot we do that: we start with one city, then in different regions and then nationwide,” Waks explained.
The VP of marketing offered the example of the pilot projects that culminated in the launch of German beer Spaten two years ago, considered Ambev’s second-biggest innovation (behind Brahma Double Malt, a year earlier). “We did trials with three brands in different regions: Spaten, Andes [from Argentina] and Modelo [from Mexico]. Spaten had the best evaluations,” he said.
If Brahma draught beer in cans took five years to become a reality, a recent project impresses with agility, according to Waks: Becks 70+. “We had an idea related to an issue that is gaining importance, which is ageism. We’re not talking about beer for older people. We put more hops in the formula and increased the bitterness, because in general you lose that perception with age, especially above 70. We managed to launch it in about a month,” he says.
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