Does Inbev's new boss have the toughest job in brewing?

21 April, 2008

Inbev's new leader, Stuart MacFarlane, tells OLN about his dream role, fudged figures and how Stella Artois will rise again.

In his first interview as Inbev's boss, Stuart MacFarlane tells Rosie Davenport about his dream role, fudged figures and how Stella Artois' star will rise again.

Eight weeks ago Stuart MacFarlane became the fourth man to occupy the hot seat at Inbev UK in five years. He has inherited the global brewer's only western European division to lose market share last year , with sales of its flagship Stella Artois dropp ing 4% to £516.5 million in a flat beer market.

"It's a tough job, but someone's got to do it," the joke goes, but in MacFarlane's case as president of Inbev UK & Ireland, some industry observers believe it's true.

A year into the newly-created position of global director of customer standards at Inbev's Belgium head office, the Scot was drafted back to the UK to take up the "dream job" he has always coveted.

In February, he replaced Richard Evans, who left after 19 months as president and 14 years with the company. Before him Colin Pedrick exited just 10 months into the top job, having worked his way up the business over 22 years.

In 2003, New Yorker Steve Cahillane took the helm for two years, filling the gap left by charis matic former chief executive Stuart Gilliland.

It's been something of a revolving door at the Luton office since Interbrew merged with Brazilian giant Ambev in 2004, which resulted in tighter head office control and created a working culture that Evans once told me "you either love or you hate". At the time he said he loved it - clearly things change.

"Richard's a good friend of mine," MacFarlane emphasises. "We had his leaving do last night. He is still working in a supporting capacity to me as I start my role. He got to the point in his career where he wanted to do different things, which, for him, meant not working in a big company.

"Inbev is the eleventh biggest FMCG in the world. Change of management is normal. I've not been in a role here for more than two years."

MacFarlane is an Inbev veteran with 16 years at the company. Whereas Evans' career stemmed from marketing and Pedrick came from a sales background, MacFarlane is a trained accountant, initially working at Rolls-Royce and then Scottish & Newcastle. In 1992 he joined Whitbread beer company (as Interbrew was then known) as its marketing finance manager, moving into brand management and marketing before overseeing the company's take-home division.

Trends rather than averages

With the current trends in beer and falling sales of Stella Artois, he will certainly need a head for figures.

Like most accountants, he prefers to talk about trends rather than averages, which he says "can hide a lot about your real performance. Just looking at a performance in isolation in a short period is not the best way".

Encouraging the market not to focus solely on Stella Artois' top-line sales slump clearly suits his agenda but, in many respects, he is right to call for more context when ana ly sing the data. When it comes to Stella Artois' enduring popularity and scale, the facts speak for themselves. The top-selling beer by a huge margin, Stella Artois dwarfs its rivals and is some £153.3 million ahead of second-placed Carling.

Over the past two years, while sales were down 4% to the end of January, it's an improvement on the 5% decline for the same period in 2007. " I think sometimes averages can hide what you're trying to do. We have areas we're trying to drive where we are successfully growing our share, such as Scotland, some channels of trade and with some customers. If you just see the external data you see things differently to our internal data because I don't just measure the Nielsen volume and value. Are we growing in areas we want to go, are we growing in channels and formats we want to grow? We're pretty much on plan.

"If Manchester United lose a game on Saturday no one says they're not the most successful brand in the past 10 years of football," continues MacFarlane. "We don't get obsessed with looking at our result on Saturday, or a one-season performance." Like Manchester United, MacFarlane says Stella Artois is in it for the long game, and he urges the trade to judge it over time. "We get obsessed with looking at what happened in the past 10 years and what's going to happen in the next 10 years. We might have some blips in performance and we track both. But our success will be determined on our last 10 years and our next 10 years."

However, lager drinkers don't chart a brand's performance in the same way they judge their football team on goals they score - to them it's all about how the wider world perceives the beer they choose to drink.

Undeniable though Stella Artois' success has been, it has been hit by negative perceptions about its values.

Brand erosion through heavy discounting will be just as much a part of the brand's legacy of the past decade as its meteoric rise to the top.

The vice called discounting

Brewed under licence by Whitbread in the 1990 s, Stella Artois was established in the pubs as the definitive lager for any bar. In the ultimate irony, it is widely believed that Interbrew inadvertently became the architect of its problems when it sanctioned the beer's first major price promotion in Asda.

Seeing the brand's on-trade success, the supermarket approached Whitbread about running a price promotion , which the brewer refused, worried it would harm Stella Artois' image. But the beer's Belgi an owner, Interbrew, was far more accommodating, signing on the line and agreeing to supply the order.

That started a chain of events which made consumers stop thinking about it as a premium, "reassuringly expensive" beer and perpetuated undoubtedly one of the most damaging associations in a brand's history - the "wifebeater" monicker. It's impossible to imagine a worse connotation and a desperate attempt by the brewer last year to claim that the name was borne out of affection for the brand proved just how much Inbev was struggling to manage the escalating disastrous PR.

MacFarlane is keen to set the record straight. "I find the 'wifebeater' tag offensive. I don't think it's borne out of any affection at all. I think the use for the name is irresponsible. I don't condone anything to do with any association with that name and our brand. We take social responsibility extremely seriously. Ninety-nine point nine per cent of drinkers are drinking responsibly , and the responsibility lies with the drinker, not with the brand. I don't feel as though Stella Artois has any higher percentage of those 0.1% of people who behave irresponsibly than any other brands, we don't have more associations with it than anyone else."

Emotive, controversial and provocative, it's this nick name which the media has seized on and, ultimately, this is one of the reasons it has become so fashionable to attack the brand. It's also why MacFarlane's calls for a sense of ­perspective in evaluating the brand's performance may struggle to find an audience.

Last week's headlines in the national press declaring that Carlsberg is now bigger than Stella Artois are a case in point. It was an example of Chinese whispers distorting the facts of the story . These are that, last year, the Carlsberg family of brands (Carlsberg, Carlsberg Export, Carlsberg Special Brew, Carlsberg Edge and Jacobsen) sold more on a volume basis than the Artois family (Stella Artois, Peeterman and Bock).

MacFarlane is justifiably annoyed that the figures were distorted. "I think there can be smoke and mirrors around figures and I was disappointed about the way Carlsberg grouped the brands together. That's like bundling their company together and comparing it to ours. On an individual brand basis we are bigger than each one of those. Three-and-a-half times Stella Artois versus Carlsberg Export.

"The best-selling car in the UK is the Ford Mondeo. If BMW had come out and said 'BMW is bigger than the Ford Mondeo, because when you add the one series, three series, the five series and the seven series together we're bigger than them', I'm not sure whether the press would have had a headline saying "BMW bigger than Ford Mondeo ".

Hostile climate

In such a hostile climate, finding ways to bring back growth and restore Stella Artois' premium image is top of MacFarlane's agenda. Encouragingly, some of the company's objectives are coming to fruition, such as moving from being the most discounted beer brand to the fourth.

He says: "We have a 46% price premium versus Carlsberg lager. How much volume do you think Stella Artois would sell if it was priced the same as Carlsberg? If you look at Nielsen data for volume sold on promotion last year, Carlsberg Export was the number one brand. Stella Artois, which has historically been the most promoted brand, has dropped to fourth.

"We are the biggest lager, most ­preferred by consumers, have all the right pricing associations versus the brands in terms of Carlsberg and have a reduction in the volume sold on promotion. That's one of the things which we believe is important to us and our customers."

Price is just one side of the coin though and he admits the company needs to up its game to avoid losing ground to rivals in the quality stakes.

"I think we have some areas that we can improve on, and some areas of performance, like any other top 10 brand, that need improving," he says.

"We have got to find a way of translating the whole family of Brasserie Artois brands into the off-trade more because you see it together when you go to the bar. We have to find a way to better execute it in the off-trade."

Innovation is another area where he promises more action with a bias to the off-trade. "When you compare us to the top two global companies, Nestl é and P&G, you look at their innovation and they're ahead of the beer industry. I don't think we lag behind any of the brewers - I think we're one of the leaders. But as an industry we have to change. And Inbev should be learning to behave in line with its status (as a leading FMCG company) - we should be taking that lead.

"I see innovation as packaging, dispense and new liquid, and new brands. We have to tackle all three."

He pledges that new lines will join the range this year, and not a moment too soon as former stablemate Heineken prepares to take it head-on, bolstered by the additional brand-power it will gain from S&N's vast armoury.

The trade is unrecognisable now from a decade ago, with many more teams on the field, but you have to credit Stella Artois for staying out in front, and so significantly, for as long as it has.

Selling beer is tough whoever you are, and the trade needs strong leaders and iconic brands - in Stuart MacFarlane, Inbev has a man with the passion to be the former. His actions now will determine the legacy of the latter.




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