/Transcript: Pedro Earp

Transcript: Pedro Earp



The transcript from this week’s, MiB: Pedro Earp, CMO of AB InBev, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Overcast, Google, Bloomberg, Stitcher and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.




VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week on the podcast I have a special guest. His name is Pedro Earp, and he is the Chief Marketing Officer at beverage giant AB InBev. You know all of their products from Budweiser to Stella. They’re just giant. They do billions and billions of dollars in sales. And Pedro has this just fascinating career and résumé.

He has run their venture capital group. He was Director of Disruptive Growth. That was actually his title. Now he runs all of the advertisement and marketing for just an immense consumer product group. It’s really just an astonishing role. And we talk about everything from how do you manage marketing during a pandemic lockdown, what do you do when sports stops, and what do you do when you have a product whose name includes the word “Corona.” It’s really quite interesting. And if you’re at all a person who is fascinated by branding, marketing, advertising, you will find this to be just a fascinating conversation.

With no further ado, my conversation with AB InBev’s Chief Marketing Officer Pedro Earp.

VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My special guest today is Pedro Earp. He is the Chief Marketing Officer at AB InBev, one of the world’s largest brewery with 170,000 employees in 50 countries with 260 breweries and 13,000 owned retail locations.

Previously, Pedro was the former Head of M&A and the former Head of their venture capital funds. AB InBev has such august brands as Budweiser, Corona, Stella, Beck’s, Hoegaarden and Modelo, the list goes on and on and on.

Pedro Earp, welcome to Bloomberg.

EARP: Hi, Barry. Thanks for having me.

RITHOLTZ: So your resume is really quite confounding and fascinating. You are — you are head of M&A at a very large company at a very young age. Tell us about that.

EARP: So I joined the company back at the — the Brazilian side of the company. You know, ABI is the combination of a Brazilian company and Belgium company, Anheuser-Busch in the U.S., Grupo Modelo in Mexico, so it really became, you know, a global organization. But I started on the Brazilian side, you know, of the company in the year 2000 as a trainee.

And then as soon as I kind of finished my training program, they invited me to join the — you know, the marketing — the — the M&A department. And at that time, the brewery was growing a lot, you know, was doing — was starting to do some international expansion, so I thought it was, you know, a very good opportunity to — to join the M&A department.

And then two years later, you know, my — my boss ended up going to — to an operation we have this about going to headquarters and — and also going to operations. And then I have the opportunity to have the division (inaudible) in a very, very exciting times because we’re expanding in Latin America a lot of things to do at the time.

RITHOLTZ: So you’ve had a couple of really interesting titles. One was Chief Disruptive Officer. Another was Head of the Venture Capital Unit. Tell us about some of these jobs. Why would a giant beer brewery and distributor have a venture capital unit?

EARP: Yeah. So we — you know, we started trying to accelerate our — our innovation efforts from 2006, 2007 on. You know, until then the company relied a lot in — in organic growth and M&A. And — and then at some point in time, you know, we — we became a very big organization, so M&A started less — less accretive. And we returned our focus into organic growth and innovation being a — a big part of it.

But we — you know, we — we didn’t go as fast as we wish we — we could roll. You know, sometimes when you have a big organization and — and especially an organization that is growing a lot and support business, it’s very hard, you know, to divert the — the — some of the focus and some of the — of the people, and some of the money, you know, to really focus on innovation.

So, you know, our CEO and the Board in 2015, they decided to create, you know, a separate unit to be fully focused on — on innovation and — and the future. So this is kind of when — when we started the ZX Ventures Group, which is the — the kind of innovation arm of ABI.

And then when I was talking to, you know, to Carlos Brita (ph), which is our — our CEO, about the organization, he said, “Look, there’s only one thing that — that I would like to ask you. You know, you’ll define the mandate and the areas that (inaudible) going to export, but, you know, I really like your title to be, you know, well, the group to — to be called Disruptive Growth Group.”

And then I said, “Look, you know, if we put it Disruptive Growth,” I mean, actually at the beginning he didn’t even say growth, he said Disrupted Group. And I said people are just going to think we’re going to go in rooms, you know, kick the chairs, you know, and …


… say some serious silly stuff.

And so I convinced him on Disruptive Growth but, in a way, you know, he kind of asked me to — to have that title to the group because he wanted to make sure that the message of the organization is that this group would be disrupted even within, right? We’ll try to do some things that maybe was not the best thing for our core business could cannibalize our core business so we could create some — you know, create disruption from within. And that’s why I had this kind of funny, funny title.

RITHOLTZ: We’re going to talk more about the V.C. fund a little later; it’s now over $1 billion. But let’s talk about the elephant in the room. Obviously, everything has changed with Coronavirus, and the lock down, and the pandemic. I know I’m drinking a lot more than I was pre-lockdown. How has COVID-19 impacted your business? What has this done both for and restraining sales?

EARP: Yeah. You know, it — it varies a little bit depending on the — you know, the country that — that you are in. In general, you know, it has been — it has been tough for the business so we had a tough, you know, second quarter of the year. We have a lot of exposure to emerging markets where their own trade, you know, bars and restaurants are a significant part of the business. And because of lockdown, of course, this — this piece of the business was truly shut down.

So it’s been tough for business, right? The business was in depression the second quarter. We — we have seen improvement since then, which I think is — is good news, you know, we see a lot of markets reopening. But, you know, I think it was — it was — was a very tough, but — but great learning experience for us. You know, we had to really focus on people and focus on our — on our consumer. And I think we — we’re going to come out of this crisis, you know, much stronger than — than — than we got in.

RITHOLTZ: So — so your title is Chief Marketing Officer. How quickly can you change your marketing strategy or even your advertising in the midst of a lockdown? I know a lot of the stuff has done quarters in advance. How quick can you pivot once the lockdown starts?

EARP: Yeah, I mean, and our case was — was really fast for two reasons. You know, the first one is that we have big operations in — in China. You know, we have a 20 percent market share in China and — and — and roughly 60 percent of the total premium beer marketing in China. And we saw when we got started in — in China, so we had (inaudible) we had an indication of how we could look like in other — in other places and the seriousness of the — of the crisis.

You know, as soon as we saw things starting in China, two weeks later, we set-up a global task force, which allowed us to react much faster. And — and the second thing is that really I think the — you know, the culture of the — the organizations, the culture of — of ownership, you know, our employees really they — they behaved like owners and — and they fight for the business like it was their — their own business.

So it was — you know, during the — during the crisis, we’re all hands on deck, you know, everybody working 24/7 to adjust the plans, change the plans, you know, scrap campaigns. You know, even — I mean, we, you know, internationally and globally, we own the Corona brand rights so for — specially for Corona, we have to make a — to make a lot of changes. So, you know, it was — it was tough times, but again, you know, I think it was an opportunity for growth and — and the company is coming out stronger.

RITHOLTZ: So you mentioned Corona earlier, the Corona, the beer, how do you have to pivot in the face of a pandemic that has the phrase “Corona” in the first half of it? What — what sort of adjustments do you have to make? And is that the same in — in every country? How do the translations affect if people are superstitious about the beer? What — what do you do in response to that?

EARP: Yeah, so the — I mean, the first thing, of course, that we paid a lot of attention, right, is through social listening, what people are talking about, and if you are making associations or not with, you know, with the beer. And mainly, you know, there was little noise of association with the beer and the associations who are mainly people, you know, making fun of, you know, things related to the beer and things like that. So we really didn’t have, you know, quite an impact.

But we thought given the — the time, you know, that we should be silent for a little while with the — with the beer brand not — not to create even more confusion, so we — you know, we decided to be out for a little bit. We’re coming back now, you know, with the Corona brand all over the world of communication. But on all the other brands, we adapted.

And I think the trick here was to — to stop thinking a little bit about selling beer because that was not at the forefront of people’s priorities and see how consumers were changing, what were their immediate needs, and then what our brands had a role, you know, and how they could help, you know, people during the — during the pandemic.

So just to mention to you some examples, you know, Michelob Ultra in the U.S. is our balanced lifestyle brand (inaudible) has like two grams of carbs, and it’s for people that have an active lifestyle. And we — at the very start of the — of the crisis, there’s a lot of people starting to exercise at home, so we created the Michelob Ultra Movement, which every single week we had to kind of home workout sessions that ended up with a (inaudible) likes (inaudible), for example, that we had. And it was a — it was a great success.

You know, Michelob Ultra, during the time, have more engagement (inaudible) than sports, you know, brands and — and — and treatments, apparels and — and things like that. So, you know, that’s kind of one example.

Another example is, in Brazil, we had a huge relationship with country music singers. And — and, of course, because of the crisis, a lot of shows are canceled. You know, we use the fact that we had already these relationships and we had sponsorships and things like that. And we decided to do live streams instead of having live concerts. And it was a massive, massive success, you know. So today — today, out of the top 10 most watched videos on — on YouTube of all times, five of them are for some of the — our live streams.

You know, in Brazil, we had more than 2.5 billion views, you know, on the live stream because again people are at home locked in, they were bored, but they still wanted to kind of enjoyed themselves.

So I mean, it was a period of really trying to understand how consumers were changing, trying to leave aside a little bit, you know, the — the attempt to sell beer and to — you know, to grow the business in the short run, and it was more about understanding how — what people needed and how will our brands could create more meaningful relationship with them by providing what they needed the most.

RITHOLTZ: So historically, sports has just been huge for marketing all sorts of things, certainly beer. You guys were the lead sponsor of the World Cup. How do you adjust when so many sporting events are canceled in March, April, May? And then what do you do now suddenly between the NBA, and the start of the NFL, and the end of the baseball season, and we just finished the U.S. open, how do you adjust to the sudden onslaught of — of games played in these, you know, COVID bubbles?

EARP: Yeah, it’s, you know, the — the need for enjoyment and the passion for sports is still there, but again people are having to enjoy it in different ways. So again, we’ve been obsessed about understanding, you know, how people are still trying to enjoy sports and see how we can help them. So to — to mention a couple of examples in some of our markets, we saw that people are — because they were not going to the stadiums anymore, you know, the pre-game people had more time to enjoy, you know, the pregame.

So, for example, with some of our teams, you know, that were sponsoring a lot of countries, we start doing live stream of — of the pre-games in a lot of countries, you know, and we had a lot of people that used to go to the stadium so they — they wouldn’t watch any — any of the pre-games. They start tuning in.

And we had a massive audiences, you know, joining the live stream like one hour before the — the match or half an hour before the match, something that didn’t — kind of an occasion that didn’t exist before, right? So that — that was kind of one — one example.

Another example, you know, you mentioned the NBA, and what we — what we tried to do, we teamed up with — with Microsoft, you know, in the U.S. And we are basically providing people the opportunity to watch the NBA games, right? We have — we have a stand, you know, in the stadiums, you know, Microsoft and ourselves. And we have expectators there, and they are basically in a — you know, in a virtual environment where they cannot only see — watch the game from different angles, you know, as if they were watching it live, but they can also interact with other people that are on the — on the stand. And people that are watching the game on TV, they can’t see the people on the stand.

So again, this is kind of a new way for you to watch sports and — and — and that’s what we — we’ve been trying to do, you know, to understand that the passion is there, understanding that, you know, the behaviors might change, but then how can we adapt to this behavioral change.

RITHOLTZ: You know, the — the NBA seems to have done a better job having live appearing fans through those screens on the sides of the basketball court as opposed to just putting cutouts and — and some other attempts have not been as creative. I’ve been watching the NBA playoffs, and it almost feels like they are real fans in the seats.

EARP: Yeah, again, you know, I think the — the physical interaction, you know, and the proximity of people is something that — that, of course, everybody uses, ride. And — and that’s something that technology is trying to — to address, and I think is getting better and better. So, you know, we see the — the quality of the — of the interactions that you’re having through Zoom and through, you know, Microsoft Teams and — and other things is getting better.

But again I — I’m sure people, you know, when time allows and hopefully we’re going to have more effective treatment than vaccine very soon, I’m sure people are going to be very eager to physically, you know, attend — go to stadiums again.

RITHOLTZ: So — so I’m curious, how — how does a partnership like that come about? Do you pick up the phone and — and call the Head of Marketing in Microsoft and say, “Hey, I have a great idea how we can do something innovative at a — at a basketball game.” How — how does a joint project like that actually happen?

EARP: Yeah, you know, it started with the relationships, not only the relationships with the teams, but also the relationship with other sponsors, right, in a way …

RITHOLTZ: Right, right.

EARP: … you know, we — we are all — we are all in the same boat. You know, the leagues, the teams, the sponsors and everybody. And during this time, you know, the collaboration increased dramatically. You know, we were in touch again all over the world in all types of sports, you know, not only with the teams and the leagues, but also on the sponsors and see what are the things that we can, you know, do together in order to — to make sure that we continue to — to provide our consumers with experience they had before.

And also from this collaboration, a lot of, you know, things like that have happened during COVID, you know, and — and it’s the — the usual thing. You know, I think times like this, you know, bring people together to try to figure out what to do, you know, and — and that — that’s how these things came about.

RITHOLTZ: So, Pedro, let’s stay with the world of sports. You guys have been giant advertisers on events like the Super Bowl. How do you quantify your return on that sort of investment? What are you looking at? How do you measure if something is a success or not? Tell us about the thought process there.

EARP: Over the years I think we’ve been getting, you know, better and better in measuring, you know, kind of the returns of — of marketing activities. You know, we have — we have analytics center in media, you know, that kind of collect everything that we do, and then the consumer response and try to modify the returns that we have.

But some of these things, you know, that you have to take the bet. You know, again Super Bowl is — is like probably the biggest sporting event, you know, in the world, you know, every single year. The number of eyeballs that we have in the year, and — and that’s one of the few, you know, events that — that we have on TV that people actually stopped to watch, you know, the — the commercials.

So, of course, I mean, we’re always trying to measure the return and things like that, but in a way, you know, there’s a lot of, you know, belief that something like that has a very high engagement with people and — and the reach that is gathered is — you know, it’s very hard to get — to get somewhere else.

What we would be doing, you know, for the past two years has been to be a little bit more intentional about — about what kind of brands we advertise, you know, on Super Bowl. So in the past we will just advertise, you know, kind of the biggest brands that we had. And again, these brands are the ones that probably are the most known brands, so I’m not sure the eyeballs, you know, is really what the brand needs.

So we started to, for example, using more, you know, premium brands like Stella Artois on Super Bowl. We started using more, you know, innovation like Bud Light Seltzer, you know, for Super Bowl, so we try to be a bit more intentional on — on how we — how we go about it. But, you know, I think there’s a fundamental (inaudible) on an event like that with the level of engagement, the number of people.

It’s something that, you know, we — we should be …


RITHOLTZ: I have to ask what seems like a little bit of a wacky question, which is why on earth does a beer giant have a venture capital fund? What does AB InBev get out of this?

EARP: Yeah, that’s a — that’s a good question, Barry. You know, when — when we started our venture capital fund I met, you know, an entrepreneur that he has basically a home brewing business, but he was, you know, a Marine before and he — he used to work on Intelligence. And he was explaining to me that one of the things — one of the challenges they face for, you know, big carriers is, you know, the — the big carriers, they — they were trying to simulate what would be the — the best way to sink, you know, a carrier, some sort of, you know, enemy was trying to do it.

And — and at the end, you know, the carrier is kind of put there, you know, to — to fight another carrier or to fight airplanes or to fight, you know, land-to-sea missiles and things like that. And they came to the conclusion that probably the most effective way of dominating and — and destroying a carrier will be to have, you know, hundreds of pirate speedboats attacking the carrier at same time because the carrier didn’t have kind of defenses for that.

And he was saying that’s kind of, you know, a good analogy to what startups kind of doing to big CPGs. You know, the big CPGs, they are usually set-up for scale and to kind of, you know, compete in big markets with other big to TPGs. And now you have all the speedboats very nimble, very fast, you know, focused on — on attacking niche markets. And they are kind of, you know, little by little dominated big space, you know, dominated by — by the big CPGs in the past.

And the way, you know, the intelligence figured out on how to preempt — prevent, you know, an attack like that is actually to also have speedboats in the big carrier, you know, and deploy speedboats as they were being attacked because then you could count on the backup and all the intelligence that it would have from the big carrier, but then it will kind of, you know, have a more — a more even fight.

And that’s a little bit of what we are — kind of we are trying to do. You know, I think if our company really believes that with the — the big number, but limited number of brew masters that we have that we can create, you know, more beers and — and better beer than the thousands and thousands and thousands of craft brewers and brew masters that are over the world today, I think they’ll be naïve. You know, so what we are trying to do is basically to join forces.

You know, there are a lot of people that they’re passionate about beers and about beverages or about technologies to help their averages in beer. And then, you know, what — what we are trying to do is to provide a platform that they could be much more successful, you know, in their attempts and — and kind of trying to do something that works for both, you know, us and — and for the startups.

RITHOLTZ: So asymmetrical warfare and big consumer product groups are like carriers. That — that’s quite interesting. Let’s talk a little bit about the technology that you’re actually considering looking at thinking about how does technology help you track how effective your marketing is, and what does it teach you about your customers?

EARP: You know, we — there — there are kind of — you know, in terms of technologies, there are two — two big things, you know, that — that we are doing, of course, one is more on the (inaudible) tax side of things, right, being able to — to track your, you know, your (inaudible) reach (inaudible) to measure ROI and optimize and understand consumer segment, audiences. And doing all — all of that, I think that they know a lot of people are trying to do.

But the other thing that we are — we are also doing is to have more direct relationship, you know, with our consumers to really be able to measure, you know, (inaudible) final ride from people getting to know your brand all the way to making a final — a final purchase.

And we have businesses, for example, in — in — in Latin America now — in a lot of countries in Latin America that you can basically have your beer delivery, you know, to your home in — in 30 minutes like you would have, you know, Amazon Prime in the — in the U.S. So, you know, that’s kind of, you know, a dual — dual approach. One approach is, you know, the technology in terms of — of marketing technology and how to — how to measure and how to track things better. But the other one is how do you create technology especially on e-commerce where you have, you know, better data and better measurement by having a direct relationship with consumers.

RITHOLTZ: Quite interesting consumer preferences seem to change so rapidly in spirits and beer. I mean, Hard Seltzer, I don’t even know if this existed 10 years ago, and then suddenly, boom, it’s everywhere. How do you use tech and big data to track what are the new trends that are bubbling up? How can you tell the difference between something that’s a serious change in consumer habits or what is just a fad that’s going very rapidly go away?

EARP: Yeah. I — I think seeing the things that are big enough, you know, is relatively — is relatively easier right (inaudible) data that we have in social listening, in Google Trends and all of that. I think it’s kind of, you know, easier to understand what’s popping up and — and what’s going on.

I think the real question is the one that you asked, right? What are the things that we should really investigate and understand the drivers because they seem to be a more long-term — long-term things and what are the fads?

And I think, you know, in our experience, there are two factors that have been — you know, that have been separating the fads from the — from the things that are real. You know, one of them is how did the new product is really aligned with long-term trend, right?

So to — to give you an example, you know, in the U.S., for example, for the past two years we had a lot of new flavors in, you know, hard soda or, you know, not your father’s rootbeer and things like that that were, in terms of health and wellness, they — they were almost anti-trend, you know, because of the quantity of sugar and calories and — and — and all of that, you know.

And now you Hard Seltzer where it actually provides the flavor, provides the variety, but it’s pretty much align with the, you know, very strong long-term trend in terms of health and wellness, you know, so that’s kind of, you know, one indicator of the things that are more sustainable than — than — than fad.

And then the second one is — is the kind of the consumer that you see adopting, you know, this new — this new projects. You know, whenever it’s just, you know, now for consumer in the East and West Coast, you know, that it’s kind of they — they try everything and then all the, you know, everything new that they’d go there and try. Then it’s — it’s hard, you know, to — to establish on whether this is something more (inaudible) or it’s, you know, a fad.

But when you see a consumer that are more mainstream, you know, consumers, mass consumers that are (inaudible) adopting, then you — you have a — you have a huge indicator that the trend is more — is more sustainable, you know. So that — that’s kind of, you know, the two things that have been observed that make a difference.

RITHOLTZ: One of the things I once heard you say that fascinated me was beer created civilization. Discuss.

EARP: Yeah, actually — it was actually not (inaudible). Those are the archeologists and, you know, they know a lot of scientific evidence about that. But the story is, you know, beer exists for more than 10,000 years. And, you know, before — before that period, you know, humans were basically, you know, nomads, right? They will hunter — they will hunt and they will gather, and they will go from place-to-place as the resources become more scarce. And then — and then a lot of academics were trying to explain why human beings saddle in communities, you know, in the first place.

And until the 1950’s, you know, the main theory was that they start settling communities to — to plan, grow and store weeds, you know, to make bread. And — and — and that’s why they, you know, they start farming. But since the 50’s, there is a lot of evidence that the most — you know, the — the most ancient grains that they are finding in this very early settlement was — was barley. No, it was not — it was not wheat.

And I don’t know if you try to make bread out of — out of barley, but it kind of doesn’t work out. You know, so …


… (inaudible) they attended the first, you know, the grains that they found it was barley and it was basically to — you know, to make beer, right? So again, you know, I think beer — you know, the beer that — that — the role that beer has been playing, you know, in society for the last 10,000 years, it’s really to bring people together. It’s been interesting to see, you know, that there is some evidence that it’s been doing that for more than 10,000 years.

RITHOLTZ: Beer civilized people, I like that, I like the concept. So let’s talk about an old joke in advertising, which is half of the advertising dollars are wasted. The problem is we don’t know which half. So that raises the question, how do you measure the impact of things like brands, and influence and commercials? How do you recognize what actually works and what doesn’t? What — what’s the process like for that?

EARP: Yeah, I — I think — I think that — that phrase — I mean — of course, I mean, it’s not — it’s not perfect, but this phrase is very, very true probably 10, 15 years ago where digital and digital market was not so prevalent, where you had basically, you know, mass communication. It’s very hard for you to — you know, to relay the mass communication.

Today, you know, in a lot of places, we have operations that you can leak every single dollar that you spend on advertising, you know, for the people clicking on advertising being led to one of our e-commerce platforms, you know, purchasing the product then coming back. So in a way, you can calculate very well what, you know, the consumer lifetime value is and how much money would you spend to acquire, you know, that — that — that customer, right? So these things have become again, you know, with e-commerce and with technology — marketing technology became much better.

And — and I think the other thing is, you know, today, you know, back in the days you would kind of spend the money and then you will — you’ll try to look back and use some econometric modeling and — and marketing mix modeling to (inaudible) that thing worked or not.

Today we are — we are working much more in terms of, you know, you have a hypothesis and you have, you know, some variations of creative lines and campaigns that you want to attach and then you put that into each store and then you keep running them and seeing on a daily basis what’s working, what’s not, do we need the testing, and — and putting money behind the ones that do work, you know. So I — I — I really believe that productivity, you know, and the returns have improved substantially, you know, for the companies that have been able to — to deploy, you know, marketing technology and analytics.

RITHOLTZ: So digital certainly is helping. How do you — how do you look at things like social? What — what do you think of places like Facebook and Twitter? Is it a marketer’s paradise because it’s so specific and can get so granular or do you run into the same issues that you run into advertising anywhere?

EARP: Yeah, it’s — you know, these platforms, they — they allow you to understand your audience and provide a message that it’s much more adequate to the — to the audience that you are trying to reach, right? So back again — back in the days, you know, we would have to do a — kind of a TV campaign and that TV campaign is for everybody. So you — you would take some — some passion points or some sponsorships, and then you would — you would kind of blast that sponsorship to the — to the whole population through — through TV.

You know, today what these platforms they — they allow you to do is to understand, you know, consumer segmentation, the interest of people, you know, and — and — and how many of them are there and the engagement, which is one of the passion points. And then it allows you to — you know, to basically communicate with them through passion points, right?

So, for example, in Budweiser, you know, we have a lot of sponsorships. You know, we — we sponsor music. We sponsor sports. You know, we — we have kind of sponsor urban culture. We sponsor arts, you know, and a — and a — and a bunch of other things.

You know, back in the days we’ll kind of pick, you know, one passion point like football, for example, and you communicate through that platform and that sponsorship to the whole population. And what these platforms really allow you to do is to understand specific passion points and then what resonates with which customer segment and be much more surgical about your messaging.

RITHOLTZ: So — so you guys own three of my favorite beers. You own Stella, you own Hoegaarden, you own Shock Top. When you’re thinking about marketing a particular brand or a premium beer versus a sort of mainstream beer or a microbrew, is it all about just micro-targeting that specific passion to a group or is there up a — a — a broader more holistic branding approach somewhere in the background?

EARP: No, there’s a — you know, we — we kind of — you know, we have kind of our — our process, you know, on how to build the brand and these brands (ph), they are at different stages in different markets, so there’s a very, you know, specific approach to — to give you like, you know, an example, Stella is, of course, at a — at a much different stage than — than Hoegaarden or — or Shock Top, right?

And, you know, whenever — whenever we start, you know, in a country with a new brand, we — we focused mainly on creating salience for that brand and — and people getting to know that brand, and creating points of difference, you know, to other beers so that we entice the (inaudible) of people to consume the beer.

You know, as the brand grows then we focus more on — on relevance and meaning. You know, what — what does this brand do for, you know, for our consumers and how we can create more of an emotional connection, you know, over time, right? So — so there is — you know, there is a different approach, of course, depending on the — on the size of the brand and at this stage that it is.

RITHOLTZ: That’s really interesting. You guys have been very active in the mergers and acquisitions space. You seem to be adding products or at least pre-pandemic, you were adding products to your portfolio on a regular basis. When a new brand comes in, how do you go about marketing that? Do you — do you have to come up with a whole new strategy for each new acquisition? Take us through that process.

EARP: Well, it depends a little bit. So first and foremost, Barry, we — we start with the — with the consumer, you know, and we try to map out in — in every market what’s kind of the total addressable, you know, population that we have. And then we try to segment them and try to define what brand and what beer styles or what beverage styles are ideal to, you know, address the needs of these consumers, right?

So even — sometimes we even call this kind of programmatic M&A approach because we start from the consumer lens, and then we go backwards and we define what is the perfect portfolio that we need in order to, you know, to — to serve that — that consumer.

And then the answer, you know, on kind of how to do the marketing, how to integrate the market depends a lot on the — on the type of consumer we are trying to — to reach, right? So to give an example, in 2016, we partner up with Camden Town Brewery, you know, in London to, you know, the most loved and — and (inaudible) craft beer, you know, in — in the U.K. today.

And — and their consumers, you know, they are — they are people with a high level of engagement, you know, with — with the brewery, with the neighborhood, with the community and with beer. So we did very little advertising

And, you know, one of our main tools, you know, for promoting the beer was basically the events that we have on a weekly basis in the brewery and then the brew pub that — that we had. You know, that’s kind of, of course, is like super different from the way we launch Bud Light Seltzer, right, which is again, you know, a lot of people are passionate about Bud Light, but now we are providing them with the Bud Light (inaudible) different needs in different occasions than the ones that they are used to, you know.

So again I think the important thing here always is to start from, you know, from the consumer backwards and then define what brands do you need to create or partner up with, and then what are the best channels and — and ways to communicate with them.


RITHOLTZ: Quite interesting. Let me ask you a question about the company culture. AB InBev has a reputation of being both challenging, but breeding talent. And as an example, your predecessor as Chief Marketing Officer is now the CEO of — of food giant Kraft Heinz. What does this say about the corporate culture? And — and what does it mean as to where — where you may end up running a company at some point in the future?

EARP: You know, we — we have a culture, Barry, that is very — is very entrepreneurial, you know. And — and — and for me it’s hard to say that because I’ve been working here for 20 years. That was my first and only job, but I realize that when we set-up ZX Ventures, you know, back in 2016 because, at the time, we are trying to hire a lot of the different entrepreneurial talent to run new ventures and — and run new ideas.

And we had a big discussion on — on whether we should have in ZX Ventures the same culture that we had in our — in our main company or, you know, we should try to do something different and talking, you know, to people that we brought from the outside. And, you know, when they looked at our culture and the (inaudible) culture, they say (inaudible) entrepreneurial culture. You know, that’s — like that’s exactly what entrepreneurs they look for.

So the main — the main things that we have in our culture, you know, are about, you know, dream big, right? We like people, you know, that come here with big dreams. They want to accomplish big things. They want to have, you know, a big impact. We love people that — that like meritocracy, you know, which is the possibility of — of growing professionally and financially at the base of their — of your effort and talent. And we like to bring people that have a sense of ownership, you know, that they treat the business as their own business, and they have the autonomy, you know, like if they had their — their own business, you know. So that — those are the — the main things in the — you know, that we had in the — in the culture.

In ZX, 85percent of people that we brought to the company, they were external entrepreneurial talent. And our turnover is super low, you know, so which means that — that I think there is a fit between, you know, the entrepreneurial culture and — and our culture.

RITHOLTZ: What — what about pressure? Do you feel the situation when your predecessor is running — leaves to run a giant company? Does that — does that add anything to the expectations for what Pedro Earp is going to end up doing at AB InBev?

EARP: Well, you know, again, you know, going — going back to the — to the culture, you know, that the pressure that we have in here is because we want to accomplish more, you know, as a team and — and as owners. You know, it’s a lot of pressure that comes, you know, because the board wants us to do something, and deliver something, and the CEO wants to do something and deliver something.

You know, we see ourselves. And again I’ve been here for, you know, for — for 20 years, and this company, you know, was a small company, you know, back — back in Brazil, and we’ve been behaving, you know, the same.

We see ourselves as, you know, a group of — of people that want to, you know, to — to accomplish things and are ready to — you know, to — to work as owners in order to — in order to do that. So the pressure for me is much more, you know, given by — by our — our ambitions and what we want to get accomplished rather than by an external force.

RITHOLTZ: Quite fascinating. I know I only have you for a couple more minutes, so let’s jump to our favorite questions that we ask all of our guests starting with what are you streaming these days? Tell us your favorite Netflix or Amazon Prime show or any podcast that you’re listening to.

EARP: All right. So, you know, I — Netflix I haven’t been watching too much Netflix lately. You know, the last — the last one that I saw and I — I even missed I think the last episode was the Last Dance, you know, which is, of course, I mean, fascinating. And — but podcasts, I — you know, I — I listen a lot. I mean, I listen to the Bloomberg one.

I listen, you know, (inaudible), you know, the CMO podcasts is — is really great. The Scott Galloway (inaudible) is really good. You know, I — I — I try to exercise, you know, every morning and for me that’s the — the ideal format in order to learn something and get — you know, getting (inaudible) while — while trying to keep healthy.

RITHOLTZ: Tell us about some of your mentors, who helped shape your career in the world of marketing.

EARP: Yeah. You know, Barry, kind of in the — I mean, when — when I joined the company, the company was kind of in — -in a crazy rhythm, right, because we are growing a lot, and expanding and doing a lot of things. So in a way, you know, our training and our mentorship became more on a — on a day-to-day basis, you know, and — and facing the challenges that we — that we stage rather than proper kind of mentorship, you know, for someone that I would have like big conversations and — and get some — some learnings from.

Of course, I mean, to my — you know, my — you know, before joining the company, of course, I mean, my parents in terms of work ethics and values, they were — you know, they were fundamental.

You know, but after that we have — you know, in terms of kind of learning, you know, from the outside world, I’m a big fan of reading, you know, I think that the beauty of reading is that, you know, you can try to, the extent possible, learn with other people’s mistakes instead with — with your own mistakes. So I’ve been — you know, I’ve been reading quite a lot since — you know, since I left (inaudible).

RITHOLTZ: So — so let’s jump right into that question. This is everybody’s favorite question because people are always looking for new things to read. Tell us some of your favorite books and tell us what you’ve been reading during the past six months.

EARP: Yeah. So, you know, I’m reading about mainly — mainly two things, right? The one thing is about innovation, and agility, and things like that, you know, because again that’s — that’s kind of what we need to — to do to grow. And I’ve been reading about leadership, you know, to kind of trying to — to get better as — you know, as a leader.

One book that I’m reading right now, it’s from a big consultant, it’s called “Agile Done Right.” You know, there’s a lot of people — a lot of companies talking about Agile, you know, and — and things like that. And — and there are a lot of (inaudible), you know, in the (inaudible), and he’s — he’s — he’s basically — he’s the expert in the practicing in big consulting, so that’s a pretty interesting book.

I just read, you know, a — a good friend of mine, David Kidder, you know, the “New to Big”. You know, he explains a little bit how big companies are great at — at taking big things and making them bigger, and how entrepreneurs are great at kind of creating things from zero, making them big. And then how big companies can try to (inaudible) both at the same time, so this is more on the — on the innovation side.

And — and on the — on the leadership side, you know, I’m — I’m kind of almost finishing the — the “Lights Out,” which is the — you know, the story of G.E., you know, and what has been happening with the company recently, which is a pretty interesting story.

RITHOLTZ: I can — to say the least. So what sort of advice would you give to a recent college grad who was just beginning a career in either marketing, branding or advertising?

EARP: Yeah. You know, going back to — to the books, you know, I’m a big fan of Jim Collins. You know, Jim Collins has been, you know, close to — you know, to our company for a long time. And we — we learn a lot from, you know, from him. And he has this principle, you know, in what makes company — companies great that I think it applies to people as well, you know. So he says that companies outstanding and the last companies that first they love what they do. Second, they have the DNA to do that (inaudible) the people. And third kind of, you know, what they do, you know, it’s a — it’s — it’s kind of a sustainable economic model. You know, it’s something that leads the company to a direction that it’s — that it’s sustainable.

You know, if — if you use that analogy, I think, with your — you know, your professional life or your life is, you know, try to — to do what you love. You know, check on wed what you love. You know, you have the genes or the capabilities to be a — to be better than — than average, and then see if by doing that thing, you know, you’re going to — you’re going to — you are likely to go to a path that is going to make you a happy person in your life. You know, so that’s — that’s kind of a framework that I think is useful to think about your career choice.

RITHOLTZ: And our final question, what do you know about the world of marketing and advertising today that you wish you knew 20 years ago when you were first getting started?

EARP: I think, you know, when I started, you know, it was a lot about, you know, understanding the — the theory behind it, you know, understanding about brand building, about channel planning, about all the — all the theoretical underpinnings, and all marketing, and consumer understanding.

And, you know, today — today I think, you know, I — I — I realize that, you know, 80 percent is about having a deep consumer obsession and a deep consumer understanding. You know, the rest if you have that, the rest you can learn, you know, pretty quickly. But having the — you know, obsessive, you know, mindset on understanding what — what your — you know, what — what your consumers and what people need, and how your products can — can achieve that, I think it’s — it’s a big part of what marketers should do well. You know, the rest I think it — it’s easier to — to cope.

RITHOLTZ: Thank you, Pedro, for being so generous with your time. We have been speaking with Pedro Earp, Chief Marketing Officer at beer giant AB InBev.

If you enjoy this conversation, well, be sure to check out any of the previous 300 or so we’ve had over the past six years. You can find that at iTunes, Spotify, Overcast, Stitcher, wherever your finer podcasts are sold.

We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Give us a review on Apple iTunes. Be sure and check out my weekly column on bloomberg.com/opinions. Sign up for our daily reads at ritholtz.com. Follow me on Twitter @ritholtz.

I would be remiss if I did not thank the crack staff that helps us put together these conversations each and every week. Michael Boyle is my Producer. Tim Harrow (ph) is my Audio Engineer. Atika Valbrun is our Project Manager. Michael Batnick is our Head of Research.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.


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