AB Unveils 3 Yr “Win Together” Plan Developed With Distribs; A “Turning Point,” Sez João

AB’s Nov 17 “Win Together” meeting with distribs in St Louis is “a turning point in our relationship,” said AB ceo João Castro Neves, adding it’s “a new beginning” and “a chance for change.”  Those were João’s opening words as he intro’d 3 yr plan developed jointly with AB wholesaler panel.  AB “worked closely” with panel to “build our future together,” João said. During q&a session, several distribs on panel spoke of the depth of give-and-take and how AB and its distribs jointly developed plan in close, collaborative process that involved 12 long working sessions over last 8 mos.  Immediate past-panel chairman Don Klopcic described his initial “skepticism” and how he gradually developed “hope that we’ve made a turn in our relationship.” 

$150+ Mil Incremental Spending in 2016 Next yr, AB’s focus will be on four pillars of its commercial strategy: “elevate the core,” “win the high end,” “evolve the innovation model” and “win together attitude.”  In effort to “win together,” and execute against those other objectives, AB will bring lotsa incremental resources to bear in 2016.  Indeed, AB will spend an incremental $150 mil on mktg and sales next yr.  It will spend an incremental $100 mil on mktg, including 17% more on core brands, 4% more on innovations and brands like the Ritas, and 20% more against its growing high end.  AB will also spend $50 mil more on sales investments, including doubling its investments on premise.  AB has gained share in tuff on-premise channel for last 9 months. 

Revamped VAIP; Voluntary Incentive for Performance A major component of the meeting was a new more “inclusive” VAIP, or voluntary Anheuser Busch incentive for performance program.  AB is trying to get more “focus” and “performance” on its brands, said veep Bob Tallett.  The current VAIP has become “outdated,” AB acknowledged.  Only 38% of distribs participate, down from 61% just 3 yrs ago.  AB used to fund $15 mil, but that’s now down to $7 mil.  And the average distrib only gets $30,000.  To get the incentives under old program, a distrib had to be either 100% AB volume or greater than 97% AB volume.  That “doesn’t reflect the realities of the marketplace.”  Unlike in old 100% share of mind days, the word “exclusive” wasn’t used once.  

Broader Reach; Increased Funds Available With the new VAIP, “there is something for everyone,” said João.  AB expects that 70% or more of distribs will participate and they will get benefits that average $200,000.  How does it work?  The program will be simplified so that wholesalers who qualify will simply get reimbursed from their minimum marketing spend commitments.  The value varies per wholesaler.  So if a distrib is 98% or greater aligned (A+), it will get 75% reimbursement of its minimum marketing spend on an annual basis.  If distrib is “A” level, at 95%, it’s eligible for 50% reimbursement.  And even those who are 90% aligned, would still get 10% reimbursement.  That 3d level is new.  

Relaxed Restrictions; Accommodating Local Craft In addition to those enhanced elements of VAIP, AB tried in several ways to make funds available even to distribs whose portfolios are less than 90% aligned.  For distribs who score 850 on AB’s Ambassadors of Excellence program, the benefit is a 25% reimbursement of their minimum marketing spend. That’s available regardless of % of volume that’s AB.  Incidentally, CBA brands are aligned and Constellation aligned but only through Jun 2016. AB also will give 50% reimbursement to distribs who have separate sales force for AB brands regardless of alignment.  And in concession to importance of small craft at the A+ level, wholesalers can sell all the small craft brewers they want provided they are 15,000 bbls or less or if they only sell beer in 1 state.  And they won’t be counted against their % of aligned volume.  

In another change, wine, spirits, NAs, don’t affect a distrib’s standing.  But selling other brands outside AB territorial footprint disqualifies a distrib from getting any of these incentives.  So a number of AB’s larger distribs won’t get VAIP benefits.  A number of others are only 60% or so AB and unlikely to participate. Same for most who sell Constellation after June 2016.  Etc.  Yet AB did try to craft the VAIP to appeal to a much larger # of distribs. 

Facilitating Consolidation AB also implemented several new incentives to facilitate consolidation.  It will help finance deals where allowed. It will double the minimum marketing spend investment to consolidating wholesalers for 2 yrs.  And at its discretion, it will allow distribs to have equity agreement managers with less than 25% ownership for a period of time.  

“Encouraging” New Direction; Resetting the Relationship  All of these moves taken together with an improved tone and enhanced dialogue showed AB headed in a new direction.  Several distribs called this “encouraging” and “positive” during Q&A at the end.  And another e-mailed: “At least they’re trying to build a relationship.”  Privately, some distribs complained of high inventories again, but nobody brought that up during Q&A as if they didn’t want to rain on parade. Interestingly, very little said about actual business trends at this meeting.  It was more about resetting the relationship, and offering a “framework” that can be built upon through the 3-yr plan.  And tho there’s still mistrust in the network, and many statements along the lines of “proof will be in the pudding,” AB did take an early but significant step in improving its relationships and dialogue with wholesalers through this “Winning Together” platform.  

New Bud Light Packaging Will Be “Revolution”; Gets Good Reaction  AB didn’t yet debut new creative (that will be early next yr), but Bud Light veep Alex Lambrecht did say that 2016 “will be a revolution for the brand in 2 ways: the way we act; the way we look.”  And so Alex did debut well-received new Bud Light look, with lotsa murmurs, folks snapping photos and applause.  It’s first major package redesign since 2008.  “We will seize the blue,” said Alex.  “Bud Light is about blue,” which signifies “refreshment” and “drinkability.”  Tho current Bud Light packaging already outperforms on the shelf, new package has even more “winning design” in terms of “findability,” “purchase intent” and “standout.”  Recall, commercials will go back to Bud Light roots with humor and celebrities and “will shape the culture once again,” asserted Alex.  

Publishing Info

  • Newsletter: INSIGHTS Express
  • Published: 11/19/2015
  • Volume: 17
  • Issue #: 177