Not many people can say they work in their dream job, but for Brian Perkins, CEO of Budweiser Brewing Group in the UK and Ireland, the cliché rings true.
Having spent 12 years working across a range of functions for AB InBev – the owner of the Budweiser brand – Perkins is grateful that, for the first time in his career, he has the opportunity to “really run a business end-to-end”.
“This is the first experience I’ve had where you see how all of those functions connect. I’m finding it an extraordinarily fulfilling and enriching experience,” he says.
But his first year in the new role has not been without its challenges. From dealing with rising input costs and inflationary pressures to shifting customer tastes, Perkins admits that 2022 was “tough”.
“Our sector is still trying to recover from the pandemic,” he says. “Total consumption is not yet back to pre-Covid levels and, on top of that, there has been intense inflation, exacerbated by the war in Ukraine.
“That led to a wild year from a P&L standpoint; I feel I’ve gained about 10 years’ worth of experience in 12 months.”
This combination of economic headwinds created sizeable cost increases for Budweiser Brewing Group. The price of barley and grains, which are used in the brewing process, went up by “hundreds of percent”, following the invasion of Ukraine (the country was the third largest exporter of barley in the world, prior to the war).
“The prices of these items went so high that it forced us to fundamentally reassess our entire P&L structure and question how we manage pricing and our own costs,” Perkins adds.
Walking the fine line on price
Naturally, this also meant re-evaluating the pricing of its products. Perkins admit there is a fine line to be struck between preserving margins and keeping costs down to boost sales.
“I face a tension running this business. I want the beer category to be vibrant, attractive and inclusive – and to be growing. Therefore you want the product to be priced fairly for consumers, so they can enjoy it,” Perkins explains.
“But these huge increases in cost inputs make running a viable business that can continue to employ people and maintain their careers and livelihoods more difficult. To do that, you have to pass on some level of cost to retailers and consumers. That’s a fine line to walk.”
This line becomes even finer when one of your main customers is facing the same increased costs of doing business. The hospitality sector has faced severe financial pressures over the past year, with industry trade bodies warning that one in three pubs is at risk of failure in the next 12 months.
Perkins recognises the threat this represents to his operations. As a result, Budweiser has invested in initiatives to help support businesses in the sector, which he says will help “mitigate the tough impacts of raising prices”.
This includes Bees, an ecommerce platform that makes purchasing from wholesalers more efficient, and a personal safety app called Walk Safe, which helps people get home from the pub safely and will, hopefully, encourage more people to make the journey to these establishments, according to Perkins.
“If our customers are thriving and we can help them thrive, it will pay out for us as a business over the longer term,” he says. “It will hopefully generate a loyalty around the brand too as we get recognised for helping and supporting the hospitality industry.”
Qatar World Cup troubles
One of the more unique challenges faced by Budweiser during Perkins’ time in charge came in December 2022, during the Qatar World Cup. Despite the football competition taking place in a country where it is technically illegal to consume alcohol, as a partner for the 2022 event, and having spent $18m (around £14m) on sponsorship fees, AB InBev had reached an agreement to sell its most popular beer brand in designated parts of stadiums and fan zones.
It was caught off-guard, however, when a last-minute change of heart from the Qatari organisers meant that the tournament’s official beer sponsor would no longer be allowed to sell its alcoholic products at football stadiums.
Budweiser responded with a now deleted four-word tweet: “Well, this is awkward…”
Perkins remains unperturbed by the way things unfolded. He says: “Even though there was a hiccup around beer consumption at the stadiums, we worked very fast to turn it into an amazing marketing coup.”
After being told it would no longer be able to sell beer at the World Cup, two days before its start, Budweiser sent out a picture of the thousands of cans it had piled up in a Qatari warehouse.
The accompanying tweet, which promised that the winning nation would be sent all the cans of beer pictured, was one of the most viral tweets the brand has ever posted, according to Perkins. “We got more earned media from that than the rest of the campaign put together,” he says. “It was actually amazing for the brand; it has never had a higher share of the conversation than during the Qatar World Cup.”
With its sponsorship deal with FIFA coming up for renewal and the next World Cup to be jointly hosted by Canada, Mexico and the US, the question is, does Perkins think it’s still worth the money?
“The World Cup is the most watched event on the planet and it’s a natural beer occasion, so it’s a winner for us to be involved,” he says. “Life’s going to keep throwing curveballs at us, like it did at Qatar, and it will be our job to quickly flip those into opportunities to grow our brands.”
Perkins welcomes the many challenges he’s faced in his short tenure. Putting a positive spin on the current circumstances, he says: “Having gone through these experiences with my team has made us much stronger and more bulletproof than we were previously.”
It’s also brought several benefits. “It forces a much deeper understanding of the business,” Perkins adds. “Crises create opportunity in the market because it kills sacred cows and opens up new dynamics; it’s also helped my personal growth. How many leaders have had to go through those types of challenges in their first year?”
It’s brought surprising gains too. Budweiser’s push to be net zero in the UK by 2026 meant that it had already invested heavily in renewable energy production. This made the company less vulnerable to changes in oil and gas prices on the spot market.
“Although those were not the reasons we started our sustainability journey, it has been an additional benefit of making sure that all of our electricity is from solar and wind,” Perkins says. Currently, 100% of the electricity used in its brewing processes is renewable and the company is exploring the use of hydrogen to meet some of its heating and transport needs.
Parent company AB InBev recorded positive financial results for the previous year, with revenue up 11.2%. This meant that the beer producer was still able to post a 5.8% growth in profits, despite operating costs also rising 10.3%.
The growth of its premium and super premium brands, which include Goose Island, Leffe and Camden Town, was singled out as a key factor in its financial success.
Although the notion of consumers spending up to 50% more for a bottle of beer during a cost-of-living crisis may sound counterintuitive, it’s a well-known phenomenon in the retail industry. “It’s sometimes called the ‘lipstick effect’,” Perkins says. “Although people might cut down on bigger spending, they still treat themselves to small luxuries even when they’re under financial pressure.”
It’s been somewhat of a saviour for the business during a period when input costs have been rising. “It’s better for us and it’s better for our margins, because it’s a more premium product,” he adds.
It also speaks to some of the changes in consumer behaviour that the sector has experienced. Although still small, the non-alcoholic beer market is growing rapidly. AB InBev launched Corona Zero in June last year to join its Budweiser Zero and Stella Artois 0.0 products.
“We don’t want to be myopic about selling 5% ABV beer,” Perkins says. “If the consumer wants more non-alcoholic products, we’re going to start delivering them. If you have any mindset other than that, you’re going to atrophy really fast.”
Despite pointing out that consumers have “loved beer for 3,000 years” he notes that “interesting pockets of growth” do emerge in reaction to changes in consumer behaviour and market trends. By staying on top of these trends, Perkins hopes that Budweiser can navigate any more challenges that may come its way.