Bidding adieu: on brewing industry CEOs stepping down

Europe | There is only so much you can say when the CEO of AB-InBev steps down after 17 years. And it seems Heineken said much of it in February 2020, when its CEO Jean-Francois van Boxmeer announced his departure after 15 years at the helm.

Consider it a given that the farewell statements were hammered out by teams of lawyers representing both sides: the brewers’ and their soon-to-be-gone CEOs. And while there are certain set phrases, dictated by convention, the differences between Heineken’s and AB-InBev’s announcements are still pertinent.

The Heineken board talked about Mr van Boxmeer’s extraordinary contribution, and how the company had grown so much under his leadership. Mr van Boxmeer was quoted as saying what a privilege and honour it had been to lead Heineken and work with so many great people from all over the world.

As the journalist Ann Crotty from South Africa points out on moneyweb.co.za, “AB-InBev could not avoid some repetition 15 months later. The board spoke of its gratitude for Mr Brito’s tremendous service and leadership in building AB-InBev into the world’s leading brewer, as well as a ‘leading global consumer packaged goods company’.” Mr Brito, who had been CEO for 17 years, added that it had been an honour and privilege to have worked with such talented people around the world.

What’s the difference? It is more than just words

But Ms Crotty insists that even the “anodyne farewell comments contained the essence of the difference between the two groups, and the two men who led them through much of a 25-year long period of unprecedented industry consolidation.”

AB-InBev mentioned how Mr Brito had “masterfully” integrated the many businesses that comprise AB-InBev today. “Essentially Mr Brito was an acquisitions man,” Ms Crotty said, “and AB-InBev the result of ever-bigger acquisitions. It was a formidable integration process, given that it had been launched on the back of a little-known Brazilian beer company, and included the absorption of US brewer Anheuser-Busch just as the global financial crisis hit in 2008.”

In Ms Crotty’s reading, Heineken’s statement seemed more nuanced. Per the official announcement, Mr van Boxmeer had more than doubled the size of the group thanks to “transformational deals” and “strong organic growth”. The Dutch brewer made no reference to consumer packaged goods, instead it claimed to be the world’s “most global brewer with iconic brands enjoyed by consumers on all continents”. Ms Crotty concludes that “Mr van Boxmeer was not just an acquisitions man, and Heineken not just the product of a series of acquisitions – it could grow organically.”

The era of transformational M&A is over

The fact that the CEOs of the world’s leading brewers stepped down within a year of each other not only signals a generational change – Mr Brito turned 61 on 8 May, Mr van Boxmeer was 58 when he resigned. It also marks a paradigm shift in the brewing industry.

The days of mega deals are over. The future reads “organic growth”, or rather “incremental growth”, the new key term in financial circles, which alludes to a predictable course of events unlike organicism’s more arbitrary and volatile nature.

For AB-InBev, the resignation of Mr Brito is truly a clean cut with its past. The statement said that he will leave the company. Mr van Boxmeer, however, was appointed to the board of Heineken Holding as a non-executive member after his departure. It is through the Heineken Holding that the Heineken family controls the brewer. The appointment underlines that the family is confident that Heineken does not need to alter its course.

In order to grow organically, Ms Crotty assumes that the world’s two leading firms will be using their brands and muscle to stake out a larger share of a sluggish beer market, particularly at the premium end. And they will increasingly be looking outside traditional beer to grow revenue. No doubt, analysts will be keeping a close eye on their progress.