Food, Beverage And Tobacco
By now anyone on Earth minimally interested in business and finance has heard about the Heinz + Kraft deal. Buffett went on CNBC to speak briefly about the deal and said especifically about Berkshire and 3G (actual quote): “We look at everything. There is no finish line in either Berkshire’s investments or 3G’s investments.”
This Fortune post about Warren Buffett supposedly ditching his usual playbook, now that Bernardo Hees is set to be Heinz’s new CEO, is just another example of people just not getting 3G’s/Lemann’s/AmBev’s way. Replacing the CEO with someone from the usual team should have been expected from day one – and is an integral part of this whole deal. Another interesting mistake is the insistence in looking at this as a Buffett deal.
Very interesting article in Fortune Magazine about See’s Candies, the candy company owned by Berkshire Hathaway. There’s also a nice companion piece about the reporter’s experience interviewing both Charlie Munger and Warren Buffett. Buffett discussed See’s Candies in detail in the 2007 annual report, and we except from that inside.
An interview with Tom Russo highlights an interesting and recurring theme: sometimes stocks get hammered because they’re associated with out-of-favor geographic regions despite being much more globally exposed. In Mr. Russo’s example, big-brand “European” companies.
Japanese food & beverage company acquires Brazil beer maker Schincariol for US$ 2.6 billion. We posted in October 2009 that “it doesn’t make sense to think about beer/soft drinks without thinking about FMCG companies – especially food companies”. Interestingly, the theme of developed-world companies seeking the growth of Latin America and Asia was also clear in HSBC’s announcement yesterday that it would fire some 30,000 employees in Europe & the US and hire about 15,000 in LatAm & Asia. We hope managers are keeping this in mind: “what price growth”?
Yesterday was Christmas eve and we had a bonus post, but we have more: a great 52-minute video with Carlos Brito, CEO of AB-InBev, on High-Performance Culture. It’s very interesting to note that the “speech” doesn’t really change over the years – but why should it change? The “recipe” of Dream, People, Culture resonates well and in their case has been implemented with so much discipline and energy that they have achieved huge success over +20 years in the brewing business (even longer than that if you count the Banco Garantia golden age).
The 1st one regards AB-InBev and the fact that it’s still hard for “foreigners” to fully grasp it. Yesterday’s LEX column on the company has flattering but less than enlightened comments and puts way too much weight on the P/E ratio. The 2nd one is about Netflix, and this NYT story sheds some (more) light on the company. It’s about creative destruction stimulated by the company itself. It doesn’t guarantee Netflix will win as the technology shifts continually challenge its business model, but it gives the company a fighting chance. Again, such a shifting business model is probably not the best playground for investors, but Netflix is still worth tracking for all the other reasons.
The WSJ had an interview in late June with Carlos Brito about his plans for Anheuser-Busch Inbev. The video inside is focused on the corporate culture aspect, and it’s always refreshing to watch. That said, we wonder if the video registers for foreign investors as much as it registers for investors who have been exposed for so many years to the effects that Brahma’s/ AmBev’s/ InBev’s and now ABI’s culture really has over time.
The brazilian management of AB-InBev is surprising even americans for their fiercely-enforced operational efficiency measures. Their surprise is, well, surprising to us in light of what the same people did in Europe at Interbrew, and highlights the advantages of looking at companies globally.
Judging by the recent troubles in Belgium and the article at Valor (in portuguese), the love-hate relationship with InBev in Belgium has gone to hell. And there’s the “socialism vs. capitalism” conflict in Europe again. If it weren’t for the image deterioration risk – and it seems that they’re handling it by going as far as they can, but no further – the union representative’s words would be music to shareholders’ ears.