Americans are ditching beer — here’s how Anheuser Busch’s new incoming marketing chief plans to fix it

AB
InBev

• Beer has an image problem, and giants
  like Anheuser-Busch InBev know that they must shake things
  up and innovate in order to survive.
• AB InBev is trying to tackle the challenge by, among
  other things, appointing a new marketing chief who hails
  from ZX Ventures, the company’s global innovation
  unit.
• Earp told Business Insider that he will focus on
  consumer empathy, design and prototyping for its marketing
  efforts.
• Improving technology and building deeper relationships
  with consumers is also a huge focus for the incoming brand
  chief.

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Beer has an image problem. Americans are increasingly opting
for wine, cocktails and other spirits over beer — and brewers are
facing an existential crisis with
declining sales and consumption.

Adult beverage giants like Anheuser-Busch InBev know that
they must make huge changes in order to survive.  Perhaps
that is why the mass-market brewer has appointed Pedro Earp
as its next chief marketing officer.

Earp has spent his entire career at AB InBev since starting at
the company in 2000, with stints across marketing, consumer
connections and mergers and acquisitions.

Most recently, he led
ZX Ventures, AB InBev’s New York-based global innovation
unit, helping it spearhead new initiatives in e-commerce, craft
and specialty beers as well as retail activations. 

Business Insider caught up with the incoming marketing chief of
brands like Budweiser and Corona for a chat. Here’s an
edited version of the conversation.

Tanya Dua: How has your time at ZX prepared
you for your next role?

Pedro Earp: In 2015, we decided to create
ZX as a sort of a separate independent arm, because when you’re
trying to be innovative and fast, you can’t compete for resources
with the big machine. We came to the conclusion that at some
point in time, we needed to separate resources, not let them
compete, and really strengthen our capabilities in coming out
fast with new things.

Now, going back to the core business, we’ll be able to apply some
of the things that we have learned, and figure out how they can
work together.

Dua: You’ve been working at the forefront
of innovation. What do you think are the top skills that you have
learned here, that you will bring to the CMO role?

Earp: When you are creating a business from
scratch and trying to transform it into a big business, it’s
really important to have a big consumer obsession. It’s good to
almost be like a great designer of new products, and understand
what’s gonna click with consumers. You need to prototype
really fast. You need to be brave enough to put products on the
market that maybe are not ready. Consumer empathy, design and
prototype, those are the main skills you learn when you’re at the
front end of innovation.

In the big machine, it’s much more about scaling a known business
model. So once you’ve found something that clicks, then you’ve
got to go there and scale that. It’s much more about sales and
marketing, much more about efficiency. What we’ve learned here is
to get as much data at the front-end of things as possible, and
now we have to sync that with the core.

Dua: Why do you think it’s important for
kind of marketing and innovation to go hand-in-hand now? How do
they influence each other?

Earp: I don’t even know how to separate
those two things anymore, because the world is changing really
fast and products that don’t change at the pace of the world will
lag behind. If your product has to be relevant and reach the
world of marketing, it has to change over time. That’s a rule of
innovation. I think those two things now are basically
inseparable.

Dua: Beer is struggling, and even craft beers
are seeing a decline now. Do you see this as a marketing problem
or an innovation problem? 

Earp: The role of marketing is to evolve as
the needs of consumers evolve. Consumers are getting more
sophisticated, and they want variety. And that’s causing every
industry, especially the CPG industry, to become more fragmented.
There are many more players. So it is a marketing problem in the
sense that there are many more people trying to address
consumer’s needs better, the market is super cluttered. People’s
attention span is limited and you really don’t stand out if you
don’t do something to touch people. Either make them laugh,
think, or cry.

Dua: You’re one of the biggest consumer
goods giants and you have a huge budget in terms of ad spend.
Where would you want to spend that?

Earp: I think for me it’s less about the
amount of money or where you spend the money, but how you spend
the money. Brands that are successful today, they make a
meaningful difference in people’s lives. So how can you always
make sure that your brand has a great purpose and is really
making a difference in people’s lives? That’s the most important
thing. Having purpose is fundamental. But another thing that we
need to do is to understand our consumers better.

Dua: And how do you plan to do that?

Earp: Look at technology companies. Because
they have a direct relationship with their consumers, they have
massive amounts of data and they improve their platforms every
single day. That’s something, for CPGs, that’s a bit harder to
do. That’s a big focus for us. To give you an example, we now
have an e-commerce business that is growing fast. That is giving
us 10 times more data than we’ve had in the past to really go
there and improve all products almost on a weekly basis. The
second one is how to use technology in order to be simple to make
sure you can to fulfill that purpose.

Dua: Do you see your relationship with your
agency partners change? Do you still rely on them as much or are
you evolving that model?

Earp: Agencies are real specialists in
creativity, which is exactly what’s going to make a difference in
the future. But the way to operate with the agency, in order to
unleash the best of creativity, is something that I think will
evolve over time. Same thing with media agencies. Again, as
technology plays a much more important role into delivering the
right message to the right people at the right time, the
relationships with media agencies are going to change. Like we
have to evolve our product every day to keep ourselves relevant,
the same thing goes with agencies and the work that they do to
help us do that.

Dua: What keeps you up at night?

Earp: My concerns are more fundamental. The
world is getting much faster and much more complex. The companies
that don’t adapt and don’t move as fast as the world are going to
die. It’s hard because the bigger you get, the harder it is.
That’s what keeps me awake at night. How do I build an
organization for the next thirty years that is going to be able
to move at the pace of the market?

Dua: Even if that means moving away from beer?
You did buy a company that owns other liquors recently?

Earp: Look, we love beer. Beer is the bulk
of our portfolio. We think that beer is the original social
network. But yes, we are open to that. We’re exploring all
spaces. There are some specific locations, some specific
consumers that don’t like the taste of beer. And that’s fine. But
our goal is to bring people together, and so we should be
flexible to say, look, it doesn’t matter if this consumer doesn’t
like the taste of beer, we have to strive to fulfill their needs.

It’s a massive opportunity if you think about it. I mean, AB
InBev is a $54 billion dollar company in terms of revenue, and
the total revenue of alcoholic beverages in the world is like
$1.2  trillion. Think about all of the opportunities to go
there, and do a better job for consumers with things that are not
necessarily beer.