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Oh, hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founders Felgate. Founders Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at Investor Field Guide dot com.

Patrick O'Shaughnessy is the CEO of O'Shannassy Asset Management, all opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shannassy asset management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shannassy Asset Management may maintain positions in the securities discussed in this podcast.

Our guest today is Carlos Brito, CEO of Anheuser-Busch InBev. AB InBev is the world's largest brewer of beer and maintains a portfolio of hundreds of beer brands across the globe. Our conversation focuses on AB InBev culture of ownership, how Carlos balances organic growth with acquisitions, and how he and his team manage disruption as an industry incumbent. I loved hearing about Carlos, his story from growing up in Brazil and now running one of the largest businesses in the world. I hope you enjoyed my conversation with Carlos Brito.

So, Carlos, when I first heard your story, was that a charitable event that my wife helped put on called Reach Prep here in Connecticut? And I was so interested in your personal story that, well, I don't normally start with someone's personal story. I think in this case, I'd love to do so. I'd love you to begin with just a thumbnail sketch of what got you here to this point in your career. I love the path that you've taken, the things that have mattered to you along the way.

Introduce us to how you got here.

I'm originally from Brazil, from Rio de Janeiro. That's where I was born and where I spend a lot of my early years. I come from a middle class family. My dad is a doctor, a medical doctor, a physician. And my mom stayed at home, typical middle class family. And I went to junior high school. I went to Jesuit school for 12 years. And then I went to a public university, Federal University of Rio, and it was for freedom.

And you pay like 500 bucks a year for you? Of course, I did mechanical engineering there. After that, I went to Germany and I worked for a Mercedes Benz, the car company, for a year, and that opened up my eyes to the world. In those days, as a closed economy, the course was very depreciated. So it was impossible to travel to anywhere, at least for middle class family. So we didn't know much about the world.

It was the first time I got the scholarship. I went there. I mean, scholarship was a job. I went there and I opened up my world. So when I came back before I start doing something on a more permanent basis, I like to still go study elsewhere. When I came back from Brazil, I went to work for show as an engineer at Shell was the first time I heard the word MBA, the Masters, and it was one of my friends.

There are two guys actually. They were applying for an MBA in the US and I said, you know what? That's something that could fit well because I'd like to open my horizons to engineering a bit harder. So I started the whole process, didn't have the money to do it, probably family. So I had to go for scholarship in Brazil. There's no scholarships, no loans, nothing. Very high interest rates and all that. So I got a scholarship from the Rotary Association, Rotary International to go to Wharton or UCLA put it, and I was accepted by both.

So I was all set to go to schools. But then the very last minute, one of my friends, the Jesuit school, had gone a year before to Stanford Business School. And you would call me and sent letters from there, say, you have to come here. You reply, have come here, said no, my scholarship doesn't cover Stanford because so much I play. And I applied to Harvard as well. So four schools are playing.

Harvard did not accept me and Stanford did. And so I said, I'd like to go to Stanford because this friend of mine tells me it's great in those days. And the business school rankings, US news report, whatever it was, no one said so. It would only take a Brazilian, one Brazilian. So I decided to go. I tried to change my scholarship, Rotor's said to late does work and it is something I have to monetize.

Somehow I have to get somebody to sponsor me. I knew through a friend of a friend of a friend that was this banker in Rio that had an investment bank, a boutique investment bank, and he would finance employees of his at the bank. He would extend a loan to employees of the bank to go shoot MBA in the US. I was not an employee of the bank, but I decided to try to approach him and tell my story. So long story short, I did.

We had an interview. I was very nervous. For one hour. He dedicated time to my story and he said, you know, you're working for Shell shows a client of the bank. Let me get some news about your career there and stuff some info and I'll call you back in a week. And sure enough, he called me back. I got some information in the bank and I help you, but I'm going to help you myself get a scholarship for Fisher.

I was shaking on the phone and said, well, you're not going to be able to pay back the scholarship. You need to pay me back. So the first year and second year you have to figure out how to do it. And it's about three things in return. I said, OK, what are the three things I said? The first point is that you keep me updated, informed in those days. No email, nothing. I wrote a letter for him every month for two years and he never wrote back, but he would call back every time, every month.

I've sent a letter report. I'm taking this class and doing this. I saw this article, Xerox Copy attached and you call me back. We talked for two or three minutes, same thing next month and so on. Something said, as I said, I like you to help people like I'm helping you in the future if you can't. And I do. So right after business school, I came back, I started helping people pursue dreams like my own.

And the third thing is that is that you don't have any obligation to come work for me after it's finished. But come talk to me before you select acting full time job. And I did that. But what really made a difference is that on the day I went to the bank, he signed everything. And at the end when I was about to leave, he said the one thing that changed my life, he said, had been an investment bank before.

And I said, no, I'm an engineer. Mercedes Benz in Germany. Well, in Brazil said when you get Stephansen in three weeks time, you said, why don't you come here for two weeks to get to know our people in our culture? I didn't even know at the time with me as coach was, you know, if I said OK, and that made the whole difference, because when I was there for two weeks, going from area to area was a small boutique bank.

And I compared to the other two companies that worked for that place was small. Everybody was brilliant and fast paced decisions that are being made cause I said I would love to be part of this group one day and that stuck with me. And it is a business school. Like my colleagues, I participated in a different interview cycle so that I had the seven job offers, but the only people I spoke in Brazil was with. That was the only time I spoke to all the other offers were in letterhead, paper, all formal.

This is your salary, your training. You could be doing this. Retile is going to be doing this in the US to Germany and from Brazil. I interview with him and his partners. You call me when they say, Brittelle, we like you very much when you come work for us. I said, OK, but what am I going to do? I said, Oh, I don't know. I mean, you got two weeks. You you know, the people you come, you search, like you said, always do it.

I said, OK.

And I look at all this offers formal offers and paper and all that. And I have to make a decision because the time line is going fast. And I said I would to ask you about compensation. I didn't have the courage because the guy did so much for me and I was embarrassed to ask. But at some point I had to every time the conversation was going to the end, I would come up with a different things just to recover and see if you would talk about compensation.

You wouldn't if at some point a situation I know it's not important, but I need to ask you this. What about took a deep breath? What about what about compensation said I mean, salaries, the other ceremonies and that kind of thing. And it's twenty thousand dollars for you. That's thirty plus years ago. And the offers I had in front of me were between 80 and 100, OK. And he said, well 20. And I said, oh.

Twenty. And everything else is variable. Everything else is variable. But it's difficult for you to pay rent, gas bills and everything. I said to the other side that I was a bit surprised by that decision because he has to move from the US back to Brazil. Let's give for the first year another five to pay for the OK. So twenty five for the first year, then goes back to twenty. I said, OK, I'll take it, then I hang up.

I said, oh my God. Twenty five. I have one hundred in front of me waiting for me. Nineteen for me. I spoke to my dad, never told him the difference in salary but just say I was going back to Brazil in those days when Brazil was going through a crisis. So you're crazy out of your mind, you know, and then made all the difference. That's where I met my wife, by the way. She used to work for the bank.

So when I got back and started for the bank, that's how we met. Instruments that usually for kids. That's great.

I absolutely love the starting story and the hard choice to make just to get it to that culture cultures. I think a big part of our discussion today, obviously, the entire ecosystem around you is famous for its culture. You describe that a little bit with a few adjectives there, what it felt like for that two week period. But I'd love you to talk about what you've learned about culture building as you've moved through your career and the distinct form of culture that you and your partners bring to bear at AB InBev.

What I learned from my senior partners from day one is that companies are formed by people. So I just think that people forget about it, spend a lot of places. You hear people saying, what are they going to do? What's the company going to do in this kind of situation we're facing? And people forget the company is really a group of people that have a consuming mind, somebody who's going to pay for your services and products. At the end of the day, that's why you exist, because you solve their problems somehow.

And the group of people that have some basic values that are important for them, relevant to them, and they work together as a group because they believe in the same values and they're excited about the consumer mission and their consumer centric and all that. So we learn from the one that the only sustainable competitive advantage any company could have was really the quality of the talent and engagement of its people. That said, everything else is accessory and everything else is the product of this people and the values they have and the values we call culture.

So in our company, for example, we've always had what we call the Ten Principles in our website. And in short, it's about dream people culture. So we say life's too short for you to waste time with small things. Let's think big. Let's have a purpose in what we're doing. Let's do something that can be transformational, impactful. I can look back years from now and be proud that we're part of that group, that it's something meaningful.

So Feedbag is the first one for you to think big and have big dreams. You need great people because only great people can take something that's a dream idea and get it and realize it, put it in practice. So this idea of invest time so you can attract the very best and more importantly in a trap, you can retain them the. Does it create an environment where things that are important for them are there so they can stay here for the long term and that connects?

The third piece, which is the culture summarize, which we call ownership. So this idea that the owners make better decisions because it's their money, their company, as compared to executives and professionals, owners, joint companies, to get that dream and make it real. And professionals join companies to stay for three years to build their resume, not to build the company and its mission. So from day one, we said, OK, what's important are the people we can attract, retain, develop, deploy and develop the culture that they all share, because especially as the company grows, you cannot have oversight of all the operations around the world.

That company has amazing products that consumers love is because the people, the company, understand what consumers are going, what they need to make their lives better. And you get their insights and you transform that into a product or service, if you're able to be very efficient, is because the people that mandate that process have operational excellence in mind as a value. And they want to pursue that because they think that wasting resources is a bad idea. We have no plan D we have this planet we live in and it can be efficient.

Why be inefficient? But some people don't think about that. They just think about, OK, let's get this done no matter how we do it. And some other people say no, let's get this done with the best quality in the most efficient way we can so we don't waste precious resources and we minimize the impact we have in the communities where we operate.

What have you learned about maintaining the ownership part of the culture as a company gets as big as yours is? I understand the ability to do so in the early stages of a business with an early partnership and everyone is truly an owner and size. What have you learned about keeping that concept alive? As a business has many divisions. It's global, it's everywhere. How do you maintain the ownership culture?

That's a very good point because we have one hundred and seventy thousand people around the world in all continents. But what we learn from day one is that what makes you an owner is not shares or equity or options that you get. Actually, only one percent of our people have equity participation. A company we give us incentives. We like to think that a hundred percent our orders and things are perfect. People that don't feel like that as time goes by, they become an owner or they're not going to fit somehow.

But the ownership is this idea is this mindset you have that this is our business. This is our company. I want to be proud of what I'm doing here. And you give people freedom to own the business that they're responsible in charge of. That gives people that ownership mindset because they're empowered to take decisions, to make decisions, to take risks and to manage that business as their own business with accountability, of course. With rules, of course.

But we also freedom to operate within a framework and many of the things we do to get people the idea that this is our stuff. If somebody is not an owner, you can give them equity or anything. That person will remain a known owner if the person is an owner. As the person progresses in the company, at some point you give them equity that reinforces an existing ownership mindset, but it doesn't create that mindset. So this is something that we have very present in our mind.

I absolutely love the flipping of that order. Right. You would think that getting shares makes you an owner, but I love that it reinforces it. So fascinating. The other key thing you said there, and it obviously is tied to the ownership mindset, is this concept of wasted resources. People will be familiar probably with zero based budgeting, the idea of constantly assessing how you're allocating capital, how you're spending the company's money. This is a very unique aspect of you and your partners business.

Can you walk me through the how and the why of avoiding wasting resources?

This is hand in glove with the ownership mindset. Think about this. When we deal with the money that is hard to work, we all know that it's hard to earn money. So when we deal with our money in our household, when we travel with our families, we always look at the cost benefit of things, right. So should I go every day for five star, seven course meal with my family, or should I do this every now and then?

But not every day? I stay at a five star hotel, we fly first class. We do things if you can afford comfortably, but you always try to have that common sense of judging things. If the company is yours and you're an owner, you do the same thing at the company. The problem is that a lot of people have a dual life. They have a life when they get home and they are efficient with their resources because it's their money.

But when they come to the company to work to the office, the company's rich, the companies big. What difference it makes if I turn off the light, what difference it makes if I do this better, if I don't travel first class, I travel business. A troubled economy for two hour trip for the company doesn't make any difference. Well, it does, because if everybody thinks like this, the moment you get people that ownership mindset you start doing at the office what you do at home, and then efficiency comes naturally the same way you turn off the lights when you exit your bedroom at home.

We expect people to reflect when they leave the room is what you do at home. So we're not asking anything that's outside of this world, anything that's torture. We're just asking people to use common sense and that comes with ownership. The moment you understand that this is our company, you do what you do at home and then efficiency comes naturally.

Are there tactics or strategies that help reinforce that behavior or show people the why that way of operating is not just better, but also frees up resources for growth elsewhere?

Uncertain the moment to tell people, guys, we have to go or consumers are going. The more efficient we are with things that consumers don't value, are not buying to not buy more, will not be a premium for and put money behind things they value. And that's a distinction we do. We make between non-working dollars in working hours, non-working dollars, everything you spend in the company and you need some of those expenses that consumers don't care are not willing to pay a premium for working dollars and everything that supports what you're doing that consumers value.

So, for example, if you're in a very luxurious office, this is something that will drag your resources. But consumers don't care because when they buy a product off the shelf, they don't care for your office this year, they're anywhere. So you spend your money that you could be putting towards the sports that they love, music that they love or that they love, broadcasting things, screaming things for them. And you're wasting intellectual's office. Does that mean we have better offices?

No, that's truly the opposite, where people that value how tough it is to make money. So we spend just like in our household, we spend with care. So office is always very comfortable, very well located by the over the top. No. Why? Because we don't believe it's necessary. I remember when I was interviewing people many years ago when we came to New York, I remember I got a guy that RELLENO website that was very efficient and cost conscious.

And the guy came to the interview and said, Oh yeah, no, I understand that because the company I mean, these days, that's New Jersey and our office is a terrible no drugs are all coming apart. We have a river that's not the best in our backyard and all that. I said, no, no, no, you're wrong. We're not cheap wufu. So different. Our people here look at our offices here. Everything we just described has nothing to do with the way our offices are set up.

So no. Yeah, you're right. It's very nice. So yes, because we like people to come here and stay for the long term. So we treat our people well like we do at home. We try to have a home that's not any castle, but it's something comfortable. But we're not cheap by any means, but we're also going to throw money to the window.

And I, I love the concept of frugal but not cheap. And it also makes me wonder, as the business has progressed and so many different brands have come together, I want to talk about brands in a few minutes. But first, just to understand what you've learned again about when some new team is coming into the fold, how to effectively spread the culture that you've worked so hard to cultivate to these new parts of the team.

When you look at our company last year, we grew organically but also organically through M&A in different business combinations, as we call it, companies coming together. And the question always comes, well, where are you going to acquire this company that has sixty thousand people, three thousand people? They come from a different culture, different background. How are you going to make this thing work? And what we notice, at least so far, lucky us, is that different than us that think the culture is very important and that we have this on the wall on the website.

We talk about it every time, every opportunity. Most companies don't do that in the companies they've integrated. They had something that was in our culture that was there but was never formalized, or they had a culture that was dependent on one person, the CEO or the founder, not our case. And the moment that person left, because the company was acquired, there was a vacuum. And then we came with our principles and said, hey, let's adopt this.

We can learn from each other. Best practice in this whole thing for sure. And the best practice, we went over the other ones. But in terms of principles, these are principles. The big green best people ownership. OK, let's use that in our company. The culture is not my culture. It's everybody's culture. We design from day one because we don't want to have a dependency on one person or two or three. We said no, no, it has to be everywhere in the company to be truly a one company, one culture.

And the distinction we make here is that as we operate, as we do around the world, in all continents, you have to be very clear about. Local culture and company culture, local cultures are diverse, they're different. That's why we travel. We travel because when you go to Korea, to China, to India, to Brazil, to Germany, to Canada, people eat differently. They spend their free time in a different way. They dress differently.

They have different stories or histories. That's what attracts. That's why we travel to see different things. We don't want to change that. But we do join us in any of these countries. You have to subscribe to our values that luckily our common sense is I never met anybody who said these things don't make sense, a bickering that people ownership in. We found that as we went to more and more countries where the question, will this culture travel well?

Will people of different local cultures accept our company culture? And what we saw is that, yes, because what we are proposing is what most athletes that are successful students are successful. Do students that are successful and athletes, what do they do that would be dream. They want to go to the best college, have a best mentor for their Ph.D. So they have a big dream. They know that to get there, they have to be great, but they have to surround themselves with great people because nobody gets there by themselves.

And you have to own you can be forced to do anything. Athletes that go to Olympics, if they want to go to the Olympics, they train 363 days a year. They think today's off birthday and whatever Christmas or something else, you know, but they train five hours a day. But not because you're forced to do it, is because you have that big dream. You want to achieve it and you own the process. You do it because you chose to you chose to sacrifice other things since you can have it all to dedicate to that one thing that you're single minded focus on.

But this is very important. So that's why in any business combination between signing the deal and closing the deal in our space is always six months to nine months because of all the different jurisdictions. You need to get it approved because there are multiple country deals. We use it very intensively. There are rules for what you can share. Not these two companies are in between the signing close, but we go visit, we travel, we meet the people, we identify with the key people are we talk about our cultural values.

We ask questions because when the signing comes, we want to be one company, one corporate culture.

One of the things that's happening alongside these cultural integrations is the management of an ever larger portfolio of brands and brands. Certainly under this umbrella are distinct things. They have rich histories, imagery. They connote certain things with the consumer and they're different as opposed to the culture. What you want to be very aligned brands have their own unique feel. What have you learned about managing such a large portfolio of distinct brands like what is a well managed brand mean?

First of all, many brand is a brand that's consistent and its position. So can we change our view what it means in consumers minds? So it has to own a part of my brain because it's connected to the beach, it's connected to sophistication, it's connected to Mills', it's connected to sports, it's connected to in home locations. And so it has to be consistent. Second, that consistency and that's position has to be grounded on consumer insights, something that's relevant to consumers and that we can deliver on a consistent basis, and that's to be executed with guardrails.

So you could try to reinforce that positioning with everything you do, the packaging, the experience, the event, the trademark activities you have when you go shopping, grocery store, all these things that reinforce that position, consumer's mind. So this whole idea that consumer insights, what comes first, if you understand consumers position the brand on something that's relevant territory for them and you execute a brand with consistency, with guardrails, given the position you have in consumers mind.

Good to see you again, Patrick, is that consumers around the world are more similar than different. So when you talk about their needs and what they're trying to achieve in life, with one or two exceptions, you're there the ranking of needs. And what they trying to achieve is very similar, very simple. No matter what they drink, what they wear, what religion they have versus. So that also makes it easier. That's why you have global brands more and more in any business.

You have a global nature. So they appeal to different consumers around the world because they tapped into a need that a consumer has or pinpoint consumers trying to solve in their lives. And you tap into that needs and that's a global need. So, yes, you have global brands, but you also have local brands that have the roots and heritage in that world market. This combination of global, regional and local is what makes a portfolio perform.

What are the largest brand management or brand mistakes that you've seen, whether in your portfolio or outside within the business?

For six hundred years since our brewery in Belgium started in. Sixty six. Incredible. That's more than 600 years ago, and one myth that we saw that we learned from time and again is that brands have a life cycle and at some point they'll disappear. And we believe that's a myth. What you have is that brands that lose touch with consumers, whether or not consistent or don't have a cell positioning, a simple thing that consumers can understand. They are poorly managed and that's why they disappear.

On the other hand, brands can grow or can shrink. And that's why you have a powerful and sometimes brutal shrink. And then to grow again 20 years later because consumers are interested in the history. There's a throwback type consumer mindset and also the consumers are value. What was bigger 20 years ago, 30 years ago, and then it comes back. We've seen that time and again in all sorts of industries. So that's why it's good to have power for the brands, because brands should not die.

But if they are poorly managed, they could die. But in the fourth quarter, you have to accept that some brands, sometimes in growth mode, sometimes they're stable, sometimes don't shrink until they find stability. But the fact that they're there and they have a role to play in that portfolio as consumers change in generations are new that are new, come to consumer products, that they can become relevant again and will grow again. But if that thing disappears, then you're going to be at a loss, because when that thing comes up again in terms of trend, you won't have that player in your portfolio to play that trend.

I love Jeff Bezos. This idea that you want to bet on things that won't change. And I love the six hundred year old history. Pretty confident in one hundred years people are going to like to drink beer and beverages. But even in something that is a low rate of change like your business, there are still always smaller changes that happens, threats that come. And there's too specific in the beer business that I'd love to hear how you personally and the company navigated or thought about navigating through.

The first is the rise of crap brewing, and the second is the rise of seltzer more recently, which you've worked on pretty aggressively. Maybe we'll start with craft brewing. What was it like to live through that interesting and exciting change to the global beer market? And how did you think about it as a company?

Exciting, because, again, if you start for the consumer, as it should always start again in our company, the mantra as you go, customers go because that's where growth is. So the movement started. We as a company, we didn't have a craft portfolio because the portfolio we inherited in the US and other countries that were new to us, we didn't have a portfolio of craft. But in the US, as consumers or some customers started migrating to that segment, that was an emerging segment.

We started investing in that segment. And today, not only we grow we ahead of the craft segment, but we are one of the top players in the craft industry. And that's because we realized that instead of fighting with a trend, as people say, you should make friends or friend, we decided to invest behind it and we took advantage of something that was growing, the category that was appealing to new consumers that were not necessarily in the category.

So they joined the category. It was very profitable and it was wrong. So it's beautiful to kind of work. Same thing with social skills. There's a development that is different than beer but has some beer cues. But there's some other things that are different. And because it's a slightly different mix in what it offers, it attracts people from other beverages into beer and beer like products like seltzer. And that brought more people to the Category three new product premium price point, great margins and growing segment.

So again, it's all this idea about you have to observe what consumers are going because that's where growth is so really the key to having the right mindset around change and making change an opportunity, not a threat, is just the empathy for the consumer or understanding where the consumer is.

One of the things we talked a lot about in our companies is I give the incumbent an insurgents. We built our companies a bunch of insurgents when we started three years ago. We're not market leaders in our markets. But then we became market leaders and you became big. So once you have to fight every day in a company that's large and global is that people don't feel entitled to the business we have today. But we feel because it's true that we have to earn and return it every day because consumers have choices.

And this idea of change is one of those ideas. If you behave as an incumbent, you believe that change means risk threat. If you're an insurgent, you believe that change means opportunity because this is a new technology or new consumer trend or a new habitats for me that you wish you embrace it. You can ride with it as opposed to. Yes. So this idea of embrace change, take measured risks, learn from it and continue to iterate.

Easier said than done. But this is the right way to look at change.

One of the things we haven't talked about that's happening behind the scenes is an incredible network of activity to get consumers the product that they love. We've talked about brands as far as the consumer knows. They go to the store or order it, they get it, they consume it. But to make that. Happened is an incredible coordination exercise in production and distribution. I'd love to hear what you've learned in those areas. And obviously it's a scaled up business.

I think you're the largest buyer of rice in the world. What have you learned about the production and distribution side of the business that helps you fulfill this big dream?

It's interesting you ask that because our business is a global business. When you look at it, but it's a local business in its essence and its DNA, 95 plus percent of what we sell, we produce and sell locally. So we get the orders from the community. We get the farming products from the farmers, local farmers. We bring the beer in the community. We hire people from the community, and we sell back to consumers in the very communities.

In a way, we're very tied to how well that community is doing. So the community is doing well economically and thriving, growing, creating jobs. We tend to do well if the community is doing well in terms of environment and the environment. The same is balanced and this water is good for high quality farming. We tend to do well sustainability. We always say sustainability is not part of our business. It's not an add on that we look from time to time in our business.

Sustainability is our business. There's simply no water, no beer, but simple, very simple. No farming, no beer. I don't have what to do. So because of that, our four pillars of sustainability are truly connected to a business. They are water, farming, packaging and energy. These are all things that we have to do every day and we've done it for 600 years. Otherwise there's no beer. But the way to do it in an efficient way, then it talks to sustainability.

So today's sustainability made it cool to be efficient and to have less of an impact in the world around you because people value that. People understood that there's no Plan B, we only have this planet and resources are finite. We've always tried to use less water because that makes business sense. And it's good for the communities because we have to show the world, the community, we try to have the highest quality and most efficient farming and we have resource from thirty thousand farmers around the world and we help them win their seats.

Better technique, information about weather information, when to plant, when to harvest, went to seed, went to do all those things so you can have more quality and more efficiency in the way farming is being managed. Packaging more than half of our products are solely returnable packages, packages that will come and go. Consumers are used up all the bottled water. We wash it, fill it again, send it back to the market and the ones that are one way that people will dispose off after using, we want most of it to be recycled content.

Aluminum cans like the returnable water, glass bottles, kegs for draft beer.

I love the local aspect of it, which raises the question of how you assess and go after new markets. I'm sure there's a lot of this is done already. It's a very global brand, probably most places in the world. But as you have been progressing through your career and the company's gotten bigger and bigger, what have you learned about the art and science of deciding, you know, is it time now to try to go into Africa or into some other part of the world?

What are the key things about assessing a new market and then rolling out a strategy to expand into that market?

I think what's key for us is this idea of, OK, the markets here today, why is it going to be ten years, twenty, fifty years, one hundred years from now? And that's how you start expanding. You have the map of where the industry is today based on demographics are the trends. You try to map where the demand will come in years to come, and then you put it against your footprint today and you check with the gaps and either you start developing that organically or you try to acquire a player that's active in those regions.

But it's all based on that. Whereas the industry today, what's going to be one hundred years from now, what are the gaps and what are the gaps we need to fill organically and organically?

How much role does data play in the way that you think about allocating capital in the business now that you have all these brands, all these different parts of the world, knowing where to invest the company's time and resources? Probably as a major part of what you think about how much of that is qualitative, quantitative? Walk me through that decision process. You're right.

The capital allocation does this, especially with the world live today, where change is ever more present and faster. It's a very interesting exercise because think about this. You have a business to support the way it's defined today. So the way the business is defined today and its support in terms of OpEx, in terms of capex, but you have emerging segments, things you need to start investing behind because that's where the trends and consumers are going. I'll give an example.

Five years ago, we founded a venture are within our company called Xians Ventures, and we started investing things that were small five years ago that our big company, our big machine, as you call it, would not be prioritizing five years ago. But we know. Those things could be big given what was happening in other categories, not because we're very smart, we look at other categories, that this category is already a there all categories that they had.

But of course, we'll get there at some point. Let's start in five years ago. So everything has to do with craft on a global basis, not only the US, with ecommerce, with direct consumer delivery, last mile solutions during covid, during the pandemic, because of all the lockdown's all the restrictions that our retailers and our consumers had, all those platforms went through the roof. So I need to be able to see platforms grew in one year.

What we projected they would grow in three years. And luckily we were there because we're investing five years on that. And luckily we had platforms that could be scaled up quickly because they had good technology behind them. And we had an amazing group of people of owners that are resilient, committed, engaged and passionate about what we do, which is serve our retailers and serve our consumers. We have values. So Japanangka had to use, for example, when a lot of Latin American countries we use are quickly transformed some of our platforms to be marketplaces for consumers and retailers that were in lock down periods.

So retailers that survive but couldn't open, but they could do delivering consumers are local needed staples, not only our products, products in general. We put our technology to serve consumers and box because we believe, Patrick, that businesses exist only because society allows them to exist. So covid gave us an opportunity once again to show that we are part of the solution to issues that the community is facing. So in the community needing an app, it was there.

We had the water emergency program that we have on a global basis trigged. We use our plastic injection mold to do facemasks. We use our trucks that were idle because walls are down because bars are closed, restaurants, traveling corridors are all closed to help governments get staples where they needed to. We help hospitals to make makeshift hospitals in six countries. We did so I mean, we proved once again that countries like ours can be part of the solution like we've always been.

That's something that could really accelerate those platforms and also the very role of companies in collaborating with communities to solve common problems.

I love the concept of pivoting the company's resources and the local focus. One of the things that we haven't talked about yet is just like you're the largest buyer of rice, you're probably also one of the largest marketing organizations in the world. You mentioned earlier this really interesting idea of each brand having to own its own positioning in somebody's mind. What have you learned about marketing, generally speaking, especially how that has changed across your career as the world has gone?

Digital brands like Bud Light, I think one in five beers consumed as a Bud Light, something crazy for an iconic brand like that, but also for the long tail of the portfolio. What have you learned about the evolving nature of marketing?

What's very clear today are two things. First, the way you touch consumers in terms of marketing. Messaging is very fragmented. More than ever. In the old days was the 30 second TV commercial on prime time TV. Super Bowl ad is thanks today. This things are still important, but they are not the only game in town. You have tons of ways to get in touch with consumers and not interrupt their lives, but talk to them, interact with them.

So that's one thing that I don't think the changes that consumers today, they think highly of brands that are connected to a purpose, not just brand that have glitzy marketing campaigns that can even be back to the brand, can be seen as empty. If you have a purpose, if you have something that your brand is connected to, that is something that really elevates it. But I'll give you an example, Stella Artois, we have a partnership now for six years or more with Water Dog.

What are the co-founders being that day and what a dog. The idea they have is that in countries in Africa, Asia, where some parts of the population don't have access to water because they're not connected to the grid, normally the women in that family will spend eight hours a day in search of work. So what about work and start work together to give that time back to those women so they could do something productive so their families could have a better life?

And what we do is microloans to those families at subsidized rates so they can get connection to the grid in blood or not. After many, many campaigns of Starkloff throughout its history, you can think of is the most successful was the one that connected Starkloff to water that works purpose, which is to bring water to farmers that have no access. And it was very simple. It was you buy this chalice. We give the family five years of access to water.

A lot of consumers, sometimes they want to do something to help others, but they do not want to start with the celebrity trust. And sometimes. I'm going to give money to this entity. It's all going to be lost in the bureaucracy. They have such a big overheads, big offices and stuff. One cent of every dollar of mine will get to the final recipient to the one I'm trying to help. It was said, you trust me.

I've been with you forever. And what about work? Matt Damon is as far as he's saying he's dedicating part of his life to this. You by chance or you buy a six pack of Stella. This money will get 100 percent of this film. And this has been very successful. And what was amazing is that Matt Damon, Mr. White, the two co-founders, came to us and said, you know what? We've been on the road for a long time.

We had no idea what a brand could do to our cause. The moment you were just talking about water, about families in places nobody knows. Sometimes sometimes our families, the people, they're not your friends. They don't live behind you. It's kind of hard for you to understand their suffering when the moment you connect to a brand. And people trust and you brought that in, said, hey, you want to help people on the other side of the world, you buy my six pack and this money will go to that or part of that money.

And yet to guarantee that that money will get there, that maybe at the rate of adoption of their cause goes through the roof because of a trusted brand. So brands are very powerful. They can get consumers attention and engage to do any of this.

Coming back to people again, it's obvious that you need incredible operators that are carefully aligned. What have you learned about implementing, I'm guessing, the meritocracy required to keep the right people there? We didn't go too much into it earlier. And moving on the right trajectory, my understanding is that in some cases, the people that have tons of responsibility are very young inside the company say a bit about meritocracy and what that means.

That's one of the hallmarks of our company, is that at a young age, if you're talented, you get to positions that in other countries that take years to get because in other companies, if you went to 10 years ago, they are going to be ahead of somebody within five years ago. So the older generations, the more senior generations have the courage to always be ahead of the more generations here know, the more talented people would be ahead of other people, no matter what generation or which they joined the company.

And that's something that's very important for talented people. Meritocracy, your value dropped by the year. With the time with the company, you're measured by your potential, what you've done by the teams you've built and by the culture embrace in your investor. That's what you measure. And if you're hit on all those cylinders, you're going to progress very fast because you don't have to respect seniority necessarily to progress. What we learn that is that great people like a couple of things.

First, they like to work at a place where they respect the values of the purpose, the other things they like a meritocracy we just spoke about. They like informality, not the way we work in jeans. We're working locally as anybody has access to make the walk to my desk. And that's informality. And the other thing people like is candor. So if your mouth is decided, you can ask questions, you can challenge others in an open fashion.

No hidden agenda and candor is this idea that you want to have feedback. You don't have mentors that will give you feedback because life's too short. You want people that just say you're great. You people that say, hey, this isn't this you great? Well, let me tell you, there's opportunities or gaps you have. Let's work together to become a leader in a progressive fashion and you evolve as a human being even faster. Feedback, the power, feedback, honest, constructive, respectful feedback is something that's very much part of our culture.

And whenever I go to college is because we do that a lot to go 90 percent of people we hire direct from college. So whenever I go there to talk about a business or principles, I talk more than how we do things and what we do that is important. I want people to self select people ask what was important to your career? And I said, other than the obvious things, do something I love in the right place, working hard and all that luck as well, but also say the power of feedback.

I was lucky that I always had bosses that were truly interested in my success and because of that they were willing to tell me what I needed to hear, not what I wanted to hear in a respectful, constructive way, but tough when they had to be tough and it had me tough. That's nice to have kids today, today after ten years. And the companies that are tough because whenever they're the requirements are always changing, the boys always be raised.

So what was good yesterday is not good anymore. You have to adapt. You have to learn to reinvent yourself. If people don't tell you that, it's going to take too long for you to conclude. And that's too short to waste all this time.

So power feedback, what's an example of something that you needed to hear? Feedback that that was not a very good active listener? That I would listen, but not really. Years ago when I saw something, I thought I had the solution or the the action plan to do it. I would just do it when I was more junior. And as you become more senior in the things you have to do or bigger, the gaps are bigger, the challenges are bigger.

You need a team to do it. It can be very simple. And if you have a team, you learn, at least I learn through the years. That's where to spend the time to bring the team with you also because you might not have the best solution, quite frankly. No, we don't have the best solution in interacting with the team and listening in an active way. You get to a better place in terms of plans than just going with your own idea.

It's always the case. Ninety nine percent of the time. But in order to do that, you really need to take the time to listen. You need to take the time to inspire people, to unite people so they okon they bullshit as opposed to being told what to do. But I understand why that's necessary or the best way to go to perceive it was that one. I had to hear that, I had to hear that many years, many, many, many years, and I still hear that from time to time.

You talked earlier about inorganic growth and then organic growth for a long time. I think early in your career, a lot of it was organic. And then you've been a part of some just enormous iconic acquisitions and M&A activity to create the company that exists today. What advice would you give other business leaders for learning how to decide whether to focus on organic versus inorganic growth, maybe with a special emphasis on M&A?

What I learned in time and again is that life is all about and not about war. So it's not about organic growth or most business going to be a combination like anything in life. It was only your life would be, you know, it's this and that. You know, a company, 99 percent of the people more are focused on the organic side of the business. But some people are focused on opportunities that might show up. And when they show up first, we ask ourselves the same question.

Do we have the people to reintegrate these businesses? Are they willing to go places because this is in other countries or the regions? There's a culture. Can the culture be implemented there? As much as we know with the public information we have or interviews or stuff we do? Does it make financial sense? We'll create that. I'm sure everybody has the same question. But we start with people, because when we were in just a few countries, one or two, and we decided to start expanding to the countries, the biggest motivator was not size was people.

At that time we were tracking talent. We said men in one country, the career choices we can offer are not very appealing because there's a big funnel. There's only one country had one had a market at the end and we can lose a lot of these people that we invested so much back to the market. And then somebody thought, hey, if we go to a different country, we're going to have to pass to country, has to country micromanagers to this, to that.

And we're going to learn from different environments and feedback in a feedback loop back and forth. So we started doing that, but we had doubts whether our culture would travel well. So whether the first country said, OK, we want to have one company or culture travel, well, then we say, yeah, it does travel because our stuff is about common sense. Our company became more attractive because now you could develop an international and then global career within our company.

Growing every time you move, the company is its people and its culture. That's what defines the company. So if we are more attractive now to attract talent and to retain talent, the company has better prospects to the future.

What are you most proud of in your career?

I think this thing I'm most proud of, of the people we develop here, the people that I remember in college setting, talking to them about joining our company, they came join us because they believe in what we're saying and they prosper here. They blossom here. I think for me that's amazing and that because I've been here for 31 years, I've had multiple chances of experiencing that. And that's one of the biggest pleasures I have is remembering that person, not going to hire everybody here.

I was there at the very early stages of their career in a mentorship position, which is part of my team. We're just interacting meetings or market visits and then to see those people in meetings a lot of time thinking about people in our company. So twice a year we sit with our liking and we talk about the top leaders of the company and they stretched a bit of it and they excited about the future and they rightly informed about their feedback loops and how their careers are going and stuff.

What should be the next step and how soon should that be? And social force? We spent a lot of time what we call the people, just because we don't have career tracks, we have career options. There's no set path for you. If you join us here tomorrow, it could be elsewhere unless you're a specialist. We have lots of people that will go from sales to marketing to supply chain to other things in the company so they know the business.

We both both specialist engineers as well. But going back to your point, that's what I think a lot of pleasure is seen as people develop.

Is there anything about the business that you think is central to its success and its distinctiveness that we haven't covered so far that you think is important, your love for beer?

Yeah, it's a good one to say a bit more about that. What's your favorite beer? Well, it's yeah, my short Budweiser. You go Bud Light or whatever, but traditional Budweiser, the red. But what I said histologies and again, as a company, we're far from perfect. We have gaps in many places and always learning. We built our company actually by getting inspiration from others. We try not to reinvent what's already available. But one thing that from day one and who continues to amaze is that other companies don't do the same is invest in people.

That's the only sustainable competitive advantage in everything. And a company comes from the people you have and the culture they all subscribe to. Is it anything else, the consequence to fund closing questions for you? The first, is there an example of a beer that when you tried it for the first time, is the most memorable to you? Oh, yeah.

The draft beer we have in Brazil called Brother Ramadorai. What's the memory? When did you first taste it?

It was amazing because when I joined the company, how is not really a beer drinker. When you start look at the process in the brewing process and the quality of the care and the history and the return of all that you drink, draft fresh beer from the tank in the brewery. That's what's hard to forget because you have the brewery, you go through the whole process and then at the end you try the final product from the tank fresh. That's amazing.

You talk so much about ownership. I think that's a nice place to turn to my final question, because I think the way you defined ownership, which I'll remember, is do you take pride in the thing that you're offering to the consumer? Are you proud that you are part of the process? And I love the draft straight from the tank is a great mental model for that. I ask everybody that I talk to you the same closing question.

That question is what is the kindest thing that anyone's ever done for you people that bet on the people that believe that I could go places and decided to bet on me? I've always had mentors throughout my life and I always tell people when I go to college again to recruit, if there is one important thing in life is to have a great mentor. As you progress, you have different mentors. But to have mentors, people are willing to that truly interested in your success and they are willing to take the risk to tell you in a constructive, respectful way what you need to hear.

This is invaluable. And if you find people that are interested in your success and willing to tell you what you need to hear, this is good because most people are afraid of telling you what you need to hear because they don't have that kind of relationship with you or they're not really interested in your success because you're afraid of competition, because they have a role. When I was so people that are great mentors, they're they're really good. But I think the kindest thing is really my family and the people that put up with me every day at home, my wife and kids, my parents, I mean, they're the kinds of people on earth.

Carlos has been such a phone conversation. I think the principles that you've laid out are going to help anybody listening run their businesses better. Thank you so much for your time today.

You're welcome.

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