Gustavo Ballvé on May 11th, 2010
Corporate Strategy, Food for thought, Food, beverage and tobacco, Home, Industries, Mental models

Brazilian business magazine Exame has translated the story they ran a few months ago on AB-Inbev, about the culture “massacre” imposed by the newcomers. It reminded us that many years ago, when the brazilians were set to take over key management positions at Interbrew, we had an edge over foreign investors (and took advantage of it) because we knew how relentless these guys could be in terms of operational efficiency – especially when well aligned. They did an incredible job at InBev, which makes it surprising to us that Anheuser-Busch investors and employees (and suppliers, much to their loss) were, well, so surprised with the changes they’ve made and are making.

Foreign investors are starting to catch on. At the latest Value Investing Congress – West, one presenter had AB-Inbev as his long case and said: “Amazing how unfamiliar the market is with the management story behind AB-InBev; like Rose Blumkin at Nebraska Furniture Mart.”

This is another example of looking at companies “globally”. From just this angle, that of the “local” investor: How could an US investor really understand Anheuser-Busch’s competitive environment if he ignored that such a revolution was going on in Europe? It was “common sense” in the US that Anheuser-Busch was “very efficient”, yet a closer look at what the InBev people understood as “efficient” would have made them reconsider. And the inverse is also true: how can a brazilian investor really understand a local company’s challenges if he ignores what’s going on in the world, best practices, trends and so on?

The payoff has always been clear to us, even before the authorization for local funds to invest abroad up to a certain percentage of the portfolio.

OTHER LINKS:

Luiz Fernando Edmond goes public, sort of – St. Louis Journal – April 28th, 2010

St. Louis Journal profiles Edmond and other key managers – April 24th, 2009

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