AB InBev & US Beer Distribution

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

As a bit of context, I've been mainly focused on spirits and spirits distribution. I've looked at the brewers loosely, but I'm curious about learning more about how beer distribution works in the US. I'm using AB ONE as a case study to explore the history and how it works, what works, what doesn't. I'm hoping to use your experience to help me learn more about how this business functions. I'd love to know a bit more about yourself. How did you even end up in this industry? That would be a great place to start.

So, I took a bit of an odd path. I studied mechanical engineering in undergrad at MIT, and AB InBev actually came on campus and did recruiting at our career fair. I was thinking I was going to go into consulting or potentially finance. I stumbled upon them, and they have a great global management training program that InBev has scaled globally. 3G has implemented it in many of their different companies. They basically rotate you around different aspects of the company for a little shy of a year and then place you in a certain part of the business. Typically, you can expect an accelerated growth trajectory out of that program, assuming you perform to expectations. I thought the program was quite interesting, and I wanted to be in leadership roles pretty early. There were many good examples of people who had joined the program and gotten into leadership roles, so I figured it was worth a little bit of an odd move out of engineering, right?

So they rotate you around sales, distribution, manufacturing, or how does it work?

Yes, pretty much everything. I spent six weeks working in our brewery in Los Angeles, a month in a distributor we own in Oklahoma, a month in the New York office learning from marketing leaders, and two weeks with the venture arm. They try to give you at least some level of visibility into pretty much every aspect of the business in the US, which is great context to start with.

Why did you stay so long?

I stayed for almost seven years, about six and a half. It was a very good experience. It's an extremely meritocratic environment, and if you're performing well, there are many opportunities. I was placed in AB InBev's beer department right out of the program, and I remained in that department until I left. On average, I stayed in a role for about a year and three months. Whenever I felt comfortable in a role, they would suggest moving to another one. I felt continually challenged and saw opportunities for upward mobility, which made it worthwhile to stay for a long time. I gained a lot of responsibility and learning that I couldn't have found elsewhere.

Where does this culture at AB InBev stem from? You mentioned 3G earlier. Where does this meritocracy and leadership culture originate?

It very much comes from 3G. I'm in business school now, and we've done a case study on 3G. I have friends who have gone through similar programs, and they instill a very serious, metrics-driven approach in their companies. They not only say that but also implement it. People who deliver targets year over year get to move up, and those who don't, don't. They're willing to take risks on less experienced people if they've shown results. For example, in my final role, I moved people around and suggested putting a 26-year-old in charge of a 50 or 80-person team. That was acceptable as long as the person had delivered results in previous years. This approach is rare in other corporations, which often prefer more traditional experience. My path from planning and performance management to director of sales and marketing was rare, but they trusted me because I had delivered before. This comes from 3G principles.

How involved is 3G?

I'm not sure, to be honest. That would probably be at the global CEO or global chief people officer level. But when you step back and read about their principles, you see they are effectively implemented day-to-day. The guiding principles come from them, but more at the top level.

What are those principles? How would you describe them?

The principles are extremely results-driven, which is probably the top priority. They are very people-oriented. AB InBev is good at having a cohesive people cycle. Employees receive ratings every year, and there's a big focus on people and employee engagement. This focus comes from 3G.

What do you mean by ratings? How does that work?

It's called OPR, Organizational People Review. Once a year, you sit down with your manager to discuss what went well and what didn't. Then, they attend a meeting. When I was in the general manager role, I would fly to St. Louis and meet with all the other general managers for two full days. I would present to them, the president of the business unit, and typically his manager, a page on each team member, highlighting their strengths, weaknesses, potential career paths, and how I wanted to rate them. The ratings are tied to promotions, such as ready to promote today, ready to promote within a year, needs to stay in the role longer but will eventually be promoted, needs to stay in the role probably forever, or might go on a PIP. It's a very organized structure.

Why did you leave?

AB InBev is very good at giving you a lot of responsibility. However, one of their biggest weaknesses is the lack of knowledge center training and mentorship. They gave me an 80-person team when I was 25, and I reported to someone who lived a four-hour flight away and had 18 direct reports. You learn a lot by doing, but having studied engineering as an undergrad, I felt that the way we were doing things might not be the best. We were continually losing market share, and I was worried that even if I had a chance to make it to the C-suite, I wouldn't excel because I wasn't receiving the training and fundamentals I thought were necessary.

Why do you think AB InBev was losing market share?

I believe we are very behind on trends and not overly willing to take risks when it comes to them. Seltzers are a great example. When AB InBev when seltzers like White Claw and others were on the market, we recognized that early and acquired Spiked Seltzer, the first entrant. However, the sales and distribution network showed a lack of comfort and willingness to prioritize it.

The reality is the distribution system can prioritize only three to five things at a time at true scale. If something like that requires a lot of firepower, it needs everyone on board, fully committed. I think the organization is a bit too risk-averse to support something small, young, and unproven. But that's necessary to help these things grow.

Generally, I don't think AB InBev focused on growing trends until it was too late. Once White Claw and Truly started eating into our market share, we realized we needed a big seltzer. But the time to act is before that. There's also the macro trend of declining domestic sales nationally, including ours and others, while imports continue to accelerate. Our focus is on domestics, and we have almost nothing in imports, especially Mexican imports. The macro trends are not in our favor, and our ability to get ahead of both macro and micro trends is lacking due to risk aversion.

Why do you think they're risk-averse when you've laid out logical reasons for volume challenges?

This is more of a personal opinion, but I think it's related to how the distribution network operates. Many people in these roles have been there for a long time, and there's a traditional way of doing things. When I say the distribution network needs to support seltzers, we're talking about 50 to 65-year-old men who inherited businesses from their parents and have been selling Bud Light and Budweiser for a long time. Convincing them that something that's 1% of the market, now 2%, and growing, is real and will stick is challenging.

Can't you give them more gross profit to incentivize them?

You can, but focusing on a seltzer takes focus away from Bud Light. When 40% of what they're selling is Bud Light, and they think the cap for seltzers is 3%, it's challenging. By the time I left, depending on the market, it was 10% to 15%. If you can increase Bud Light sales slightly, it yields a lot because it's already big. Betting on something smaller and nascent takes longer to see returns, and it needs to grow significantly to make an impact.

Many people want proof of concept in other geographies or from their neighbors before fully committing to something new. There's a cost to shifting your team's focus from existing priorities to something else that might become a priority.

What was the message from the top regarding driving hard seltzers? This seems to be a challenge for every big brewer. The majority of revenue comes from their best brands. The more attention and marketing dollars you divert from Bud Light, for example, the more you risk a net negative impact. How are they navigating that challenge?

Compared to other products, I think seltzers are unique. The two that captured the majority of the market share came from small players. White Claw, the largest, came from Mark Anthony, whose only real brand was Mike's Hard. White Claw is now significantly larger. Similarly, Truly came from Boston Beer. None of the big brewers have managed to do it effectively.

It's now a priority, but it wasn't when seltzers had no distribution and were at 1% market share, creeping up to 2%. It became a priority once seltzers reached about 8% of the market, making it clear they were here to stay. That's when it became a real priority for Anheuser-Busch, at least, once it had already eaten into the market share, not before when the competition was seeding it.

How do you view the distribution moat? 3G might argue that they have the distribution network. When a trend becomes significant, whether that's at 5% or 15% of the market, they can acquire one of these companies, integrate it into their distribution network, and maintain share. Does the distribution moat outweigh missing out on the first 5% to 10%? How do you view that trade-off?

I don't think so, because within the US, Anheuser-Busch only owns about 8.5% or 9% of the distribution. When I left, it was around that figure. In key markets, and not all, but many key markets are in-house, but it's not the entire country. If the CEO and the chief sales officer prioritize something and request distribution everywhere within a month or two, the network accomplishes it. However, there are always competing priorities. For example, Michelob Ultra is the number one priority in the US or North American zones. It's large, growing, and has a chance to take some share from the Mexican import category. If there's a massive push, then the distribution is there. But they have to be selective with how many big initiatives they can execute overnight. They don't have infinite choices for that.

Additionally, they need a good player for it. At least AB InBev was struggling to find that good player. It started to become neutral by the time I left, but that has its own challenges because it's liquor-based, so it can't go through all distributors. Within the malt-based seltzers, before Bud Light Seltzer, which was the largest in the portfolio, everyone knew Bud Light Seltzer was a guaranteed success due to the Bud Light name. However, the Bud Light name also means it will never be trendy or cool. It was never going to dethrone White Claw or Truly. It was always going to be around 10% of the seltzer market and stay there, never reaching 50% or 60%. There wasn't anything else in the portfolio with the pull-through and customer testing needed.

They tried CACTI with Travis Scott, which was a big hit and then a big flop. We didn't have something that made sense to pull the trigger on saying, "Hey, everybody needs to do this overnight." We did that with Bud Light Seltzer, which was a massive launch. That one was easier because every retailer immediately included it in their sets due to the Bud Light name.

Can you provide a brief history of AB ONE?

A little bit. As much as I know, a lot of it is legacy ownership. To the best of my knowledge, some have been owned much longer than others, and they're constantly buying and selling distributors. About once or twice a year, we'll buy or sell a new location. During my time there, we used to have the majority of distribution in Colorado, but that entire entity was sold off. We purchased several in LA and merged them into one large division. The Bay Area was sold off, and we added one north of Seattle in Arlington. Geographically speaking, they're shifting.

Why? Is that due to performance or what?

I think each situation has a different story. For example, in LA, there was interest in a proof of concept for one large distributor. Profitability can be challenging in California due to the lower market share. So, the idea was to create one mega distributor to really own the geography and make it cohesive. Some situations involve specifics, like a family-owned distributor wanting to sell, so we buy it. If there's another buyer or a neighboring wholesaler performing well, they might buy the neighboring AB ONE. It depends on the specific distributor.

How does the regulation work compared to spirits? Why can you own distributors, unlike in spirits?

It's state by state. Some states allow it, and some don't. Some are frozen, where we can't buy more. Nationally, there's an understanding, though not written, that we have a soft agreement with the Department of Justice not to exceed 10% of the US volume in owned distribution. We were around 8.5% to 9%, so we had room to buy another large state or two. We weren't near the cap.

Is that for your total volume or revenue?

I believe it was volume.

So, state by state, based on the laws, you can own a brewer and a distributor?

Exactly. Different states have different laws. California was open for buying and selling, but because we owned Cutwater, which makes liquor in San Diego, AB couldn't get a liquor license for distributors. So, Neutral couldn't be sold through California distributors. In Seattle, Washington, we could have a liquor license, even though Anheuser-Busch produced liquor, so we had Neutral. In Oregon, part of the same division as Washington, they couldn't have a liquor license, and all liquor sales go through state-owned stores. A separate distributor had to bring it in. In Oregon, we owned 80% of the distribution, but when AB purchased Widmer and 10 Barrel Brewing, they had to shut down a brewpub due to a law limiting brewers to three brewpubs. This wasn't an issue in California. It varies by state and can be complicated.

If you're not distributing via AB ONE directly, are you mainly using small independents across the US?

Some are quite large, but mostly family-run independent businesses.

Is there a distributor in the beer world as big as Southern Glazer's in spirits? I've seen some beer distributors, but Southern Glazer's is huge in spirits.

There isn't anything like that on the AB side. In California, specifically, Reyes Co. continued to acquire our competitive distributors. I think they were aiming to become a mega national distributor. However, from an Anheuser-Busch distributor perspective, there's no one of that magnitude. I'm trying to think if there's anyone who even crosses state lines, and I'm struggling to come up with a name. At most, they might cover the majority of a state. Typically, they are much smaller.

How many distributors does AB ONE typically own?

It depends on how you count. When I started, AB was a collection of individual branches with separate reporting structures for operations and sales. These didn't merge in the organizational chart until reaching the North American CEO. About halfway through my time there, they restructured, called it AB ONE, and installed general managers. They merged a handful of nearby locations into what they called divisions. When I left, there were 10 divisions across the country. A division could be as small as the one I ran in Oakland, which was just one warehouse and a cross-dock an hour away. In contrast, when I moved to the Pacific Northwest, I managed five fully functioning distributors—one north of Seattle, one south, and three in Oregon—plus eight smaller warehouse cross-docks. This was also considered one division, but they were geographically close, so they were grouped together.

Are these family-owned distributors typically? How does the agreement work with AB ONE? Do you buy them out 100%, or is there a different equity agreement?

It's 100%. When AB ONE owns them, it's like an AB employee is running them. People can move from AB roles into these roles. When we buy or sell, it's either 100% from the family or sold 100%, and it becomes just another department.

And do you also deal with third-party distributors at AB ONE?

In my specific role, I wasn't involved in deciding which ones we buy or sell. However, the one I was in Oakland was sold, so I helped with the sale a bit.

For example, you mentioned that 8% of AB's volume is going directly through AB ONE -owned distributors. So, the other 92% in the US goes through third-party distributors. Does AB ONE handle that distribution as well, or is that a different division of AB ONE or AB that deals with other distributors?

It's a different division. The country is divided into six regions, each managed by regional vice presidents who oversee sales and marketing for their region. Their primary focus is working with independents. AB ONE general managers collaborate with the VP because they are in the same geography, but there's a separate commercial director based in Seattle who works with the Washington independent distributors. We would coordinate and work together, but it's a distinct operating division.

How would you compare this distribution strategy to other major brewers in the US?

It seems a bit more controlled. I don't have a comprehensive view of their high-level strategy, and it varies by market. I spend most of my time in California, and what they're doing with Reyes there is different. We had one type of competition before Reyes and another after they came in.

How did that change?

It became a lot lower touch. Reyes operates more like a machine. For instance, if there was a low-volume store they visited twice a week, Reyes would switch to visiting every other week, reducing delivery frequencies. They understood their brand power and market share in California and used that to lower costs.

What's their market share in California?

Are you asking about Modelo specifically?

Or Reyes?

I would be guessing if I provided a number.

How would you compare the advantage that AB ONE might have, or AB might have, distributing via AB ONE versus other brands for Reyes?

The biggest difference is that AB doesn't sell anything through it. So you mean AB ONE versus independent?

Yes.

The main difference is the level of focus and control. As the general manager of an AB ONE, my bonus targets align with whatever Anheuser-Busch's chief sales officer sets. I'm laser-focused on those targets. An independent might carry Modelo or other brands, like our neighboring independents in the Pacific Northwest, who carried our craft brands but also competing craft brands. The sales team's focus on Anheuser-Busch products at an independent is unlikely to be 100%. The alignment on priorities is generally good, but you have to sell it in, and you won't always get full alignment. In contrast, AB ONEs are 100% aligned.

And they only carry your brands?

For the most part, yes. However, that was shifting as I left. In an effort to mitigate and implement a new strategy, when AB InBev transitioned from being what it was before to AB ONE, the new strategy was to bring in brands that were not Anheuser-Busch. We focused specifically on non-competing brands, typically non-alcoholic ones. For instance, we brought in a water brand, something that could fill the truck but not compete with the brands we already had in-house. This was a massive strategy and a significant part of the growth plan, especially in the last two years or so that I was there.

What type of categories? You mentioned water.

Yes, brands like water and energy drinks, such as Ghost, which I recently saw in the news that they sold. Ghost was starting to represent a significant volume for us.

Was this for on and off-premise, or just off-premise?

Mostly just off-premise. If a bar wanted to buy Ghost, we would certainly sell it to them. However, the volume was primarily going through chains, grocery stores, and convenience stores, specifically for energy drinks. We were also looking at tea brands and some coffee brands, so we had quite a wide variety.

Did you ever consider premium mixers, like Fever-Tree or Q Mixers?

We did consider Fever-Tree. However, larger brands can be expensive to bring on. Unless they are unhappy with their current distributors, they are harder to acquire. We generally had more success with smaller, growing brands like Ghost. A great example of a successful alcoholic brand is Beatbox, a convenience store punch that's highly alcoholic. Their VP of sales is an ex-AB guy. They brought it on since it doesn't compete with Anheuser-Busch products and grew it significantly. It's easier and cheaper to get small brands and allow them to grow within your distribution network. If you're acquiring something big like Fever-Tree, you have to buy those rights from the current seller, which was not a strategy we were willing to pay for. Jarritos is another example. Many of our distributors carried Jarritos, and they were hoping to close a deal to bring them on to more distributors around the time I finished.

This strategy was to drive more volume growth in off-premise locations, like big grocery stores and small retail and liquor stores?

Yes, it was to grow the volume there. As the volume had declined over the years, our warehouses, for example, were larger than needed. We sold a lot more products five to eight years ago. The goal was to fill the warehouse and trucks, so when the salesperson visits, they sell more. It's about the whole economy of scale.

How much spare capacity do you think they have in the warehouse for these different products? What's the utilization of the warehouses?

It really depends on the warehouse. Some were relatively tight. For instance, I had some in the Pacific Northwest that were over 90% capacity, very full. But there were others with quite a bit of room. Part of the context is declining sales, but also when AB InBev buys from independent family-run businesses, they try to keep the brands on board. For example, in Oakland, when I was managing that distributor, they carried many non-AB craft brands. When Hydro bought it, not all craft brands liked that. Most did not want to be in an AB house anymore. Some stayed, but others chose to move to another distributor. So, when we purchase distributors, they might be running with a different capacity and brand set than AB can realistically maintain. That is also part of the capacity issue.

You mentioned an arbitrary 10% volume limit. Is that an open secret with the DOJ, or how do you see them evolving over the years in terms of owning distribution versus going through independents?

Unless there's a major regulatory change, I don't think AB InBev would be interested in exceeding that limit. The relationship with independents is critical. They need to feel valued and assured that they can run their businesses for generations. If AB did what Reyes did in California and forced distributors to sell, creating a mega distributor, it would cause panic and shift focus to other brands. It wouldn't have a positive effect. Strategically, it makes sense to buy or sell a few distributors where it is beneficial. I don't see much interest in exceeding the limit, as it would scare the rest of the country and cause a loss of focus.

What's the mix between on-premise and off-premise distribution? How is AB InBev devising its strategy between these channels? Is there a major difference in their strategy, or are they both going through independents and AB ONE where it makes sense, with merchandising accordingly?

At a high level, they're quite similar. I think Michelob Ultra is a huge focus across on-premise, off-premise, everywhere. The same goes for seltzers, although it took a bit longer. Initially, there was a sense that seltzers were only for off-premise, but in the last year I was there, they became a focus on-premise as well, especially in craft where it's relevant. The strategy is mostly similar but can be nuanced market to market, depending on what's stronger. One major problem AB InBev faces on-premise is the significant amount of non-buys, bars that don't purchase AB products at all. This issue doesn't exist in grocery stores, and it's rare in convenience stores, maybe one out of a thousand, but it's quite common in certain markets.

Why is that?

If you're a grocery store, you have to sell Bud Light. It's anywhere from 25% of the market, depending on the location.

But for bars, what's the missing piece? Why aren't they buying any AB products?

Bars don't have to. It depends on the bar. Some cool craft bars prefer local products, and AB InBev, being the largest in the US, is seen as the big behemoth. Bars have a lower SKU count, maybe five to 10 on draft or in bottles, which they can get from one or two distributors. In grocery stores, you're expected to carry 100 SKUs, including AB's, due to customer demand. It also depends on the market. For instance, AB InBev owns their distribution in Oklahoma, where they have a 65% to 68% market share, so they likely have zero or very few non-buys. In Northern California, with a 25% market share, there are many non-buys. A significant strategic difference, not brand-wise, is the ordering method. There's an app called BEES, which was a massive priority to get all retailers to use for viewing invoices, products, and placing orders. The goal was to implement it across the system, starting with every bar and restaurant.

How many accounts are using that? Roughly what percentage would you guess?

At this point, I would bet nearly every on-premise account is involved. When I left, we were nationally at maybe 15% or 20%, but it varied significantly. That's where AB InBev really benefits from AB ONEs as pilots. We had some AB ONEs reaching 90% of their on-premise accounts, ordering regularly on BEES before we could even get every independent distributor to agree to use it. AB InBev can push a pilot within one AB ONE, achieve phenomenal proof of concept, great execution, and then use those results to persuade others who might be more skeptical.

Take California, for example. What percentage of accounts do you think are non-buyers?

In the on-premise?

Yes.

Probably 30%, if I were guessing, maybe 20%.

What's the missing SKU? What's the missing part of the portfolio here to reduce that?

I think the missing part is that there's nothing the bar has to have. If you're the distributor that carries Modelo, most bars have to have Modelo. So when they need an IPA, they'll just get it from the Modelo distributor. There's nothing within AB InBev's portfolio that a bar can't live without. AB InBev can supply a domestic, plenty of craft, plenty of options. Any gap they need to fill, AB InBev has the ability to fill. But there's no essential product within the portfolio.

How would you compare the way you merchandise? Let's say I'm a brewer, or let's say AB InBev, for example. You're at AB ONE, selling AB InBev's portfolio on-premise. How can you merchandise it more effectively with your distributors than, say, a competitor going through Reyes in California, for example? What's the advantage of owning?

I'm trying to understand the advantages of owning your distribution. You get more control, you're pushing your own brand. How does that drive more volume and a higher rate of sale at the on-premise account compared to going through Reyes, which has more scale and might provide better terms or be more efficient than AB ONE?

Yes, I think it's about the share of mind. Reyes can probably warehouse it more cheaply than AB InBev could, but you need the sales rep to walk in and pitch five AB products. If you go with Reyes, you have no control over what that person pitches. They're likely to pitch something like Modelo, which is an easy pitch these days.

For example, let's say Constellation Brands. How much power do they have? Let's say you've got AB InBev and Constellation going through Reyes. The distributor wants to earn as much gross profit as possible. How do you see them battling it out in distribution strategy between Modelo and AB InBev brands?

Do you mean if they both went through Reyes?

Yes, exactly.

If they were to do something like that, they would need to set up very strong incentives. Anyone running a distributor, even with an AB ONE, looks at what's growing and has the most potential. You want something large and growing, and you want your team to focus on that. If both are within the same house and someone's running it, like Modelo, - Bud Light's not growing. - Modelo, at least when I left, was growing at a really rapid pace. Naturally, as someone who wants to grow a business and profits, if that's your selection set, you'll choose more from the Modelo side than the AB side, which will exacerbate the trend.

What can AB do about Modelo?

Buy a mid-size brand, like Pacifico or Dos Equis, and put AB's distribution power behind it. The Hispanic population is growing a lot, and trends towards Mexican imports are increasing. I don't think they can stop that wave. Within the portfolio, the only Mexican import is Estrella Jalisco, which is very small. They've tried to grow it, but it doesn't resonate the same way. In my opinion, they should buy something that resonates and accelerates.

Why doesn't it resonate?

Honestly, I don't know. It just doesn't have the brand recognition that others have. I don't think it's ever gotten the marketing dollars needed. When there were pilots and pushes to get it out, the pull-through and rate of sale didn't always justify a full-blown campaign like a Super Bowl ad. It can be a bit of a death spiral for the brand.

Looking at off-premise, how have you seen the shelf space or overall SKU count, in beer, change over the last 10 years?

Within grocery or convenience?

Both.

In grocery, whether you count the seltzer category matters because it's cut into the space and is often overspaced relative to its sales. It's trendy, so they want many SKUs. The same has happened with craft in any craft-heavy market. Domestics have been scaled back a lot, Mexican imports have grown, and value has been scaled back significantly. Value is one of the most under-spaced products compared to its sales. Similar trends are in convenience stores, but singles have exploded there. 25-ounce singles or three-packs of 25-ounce are common. In most convenience stores, especially in the west markets I was in, they'll have a full door or two of them.

Why is that? Why are singles growing?

I think people are just drinking from convenience stores more frequently and more immediately. Previously, these options weren't really available. It was a newer format. I believe three packs were introduced maybe five or seven years ago. They weren't common in the Pacific Northwest but have recently started to gain traction.

You never saw singles, like single beers, in convenience stores five or 10 years ago.

Never singles. Those have grown over time. There are three packs where you get three 25-ounce cans in a pack. This three-pack 25-ounce format has grown significantly and was a newer venture.

So you're saying that seltzers and beer have too much space, mainly because grocers want to appear trendy. Domestic value is declining. How long has this been overspaced, and how long will it continue if it's not selling?

I would bet by now, I left a year and a half ago, that seltzers have started to scale back a little. They needed all the different flavors and options. It's easier to scale back domestics because they used to carry just Bud Light in various pack sizes. You're not going to lose that consumer if you scale back the 18-pack; they'll buy a 12 or 24-pack instead. With seltzers, there are so many flavors and brands, so they're cautious. When I was leaving, we were starting to see some of that space and brands get cut. It seemed to be moving towards where craft beer went, with fewer options but more stable ones. I imagine that shift has happened or is still happening. It's the natural progression of a growing category, figuring out what works, and keeping the winners once it stabilizes.

How do you see the category mix evolving? What's the end game for seltzers and beers over the next five years?

I think innovations will continue to play a role. Everyone is trying to figure out the next trend. Some thought it would be tea or tequila-based drinks. My guess is seltzers will scale back a bit. I wouldn't call it a fad, but if they were 10% or 12% percent of the market, I bet they'll come down to 6% to 8% over time. I don't know what will take their place, but continued innovations will emerge, like craft beer and seltzers did.

How can AB InBev use Bud Light and its scale to drive more volume growth?

They tend to keep innovating and attaching the Bud Light label to other products. Bud Light Delta is a great example. The issue is that Bud Light in the US isn't perceived as cool anymore. The value of building off the Bud Light brand is that the entire key accounts team and distribution network will support it. The moment you put Bud Light on something, everyone agrees, and you can get it into every store overnight, unlike a new, unproven brand. However, once the Bud Light name is on it, it won't be a home run, similar to Bud Light Seltzer. It might be a first or second base hit. I imagine this has worsened, especially after the Dylan Mulvaney controversy with Bud Light, which happened a month after I left. I don't know the aftermath, but it certainly didn't help the brand. Although it's still massive, it lacks the cool factor. The brand's strength is more for the retailer than the consumer.

How much bargaining power do they have with grocers? You're suggesting they've been risk-averse in their portfolio strategy, aiming for first and second base hits that may diminish over time. How much power do they have with Bud Light to persuade retailers to list new products?

It depends on the geography and the chain. In a state like Oklahoma, where they have a 65% market share and a great relationship, they can prioritize anything, and retailers will agree. In California, it can be different. Sometimes it depends on the tenure and relationship with the key account manager. Some can get anything through if they have a strong relationship, even with a lower share. If there's been an issue with AB InBev in the past, they might be resistant. It's very market-specific. On average, if AB InBev prioritizes something and makes it their number one focus, retailers generally get on board because they know there will be marketing behind it. There is a fear of missing out. Generally, things can be done, but not everything can always be achieved.

What was the key message to you in the last year when you were there? Instead of driving volume growth throughout the business, you mentioned introducing new brands into the portfolio.

The new brands were more of an AB ONE. I would say it was sometimes contentious with Anheuser-Busch leadership. Michelob Ultra was, by far, the number one priority. Neutral was starting to become a strong number two when I left, and it was beginning to perform quite well. But yes, Michelob Ultra was definitely the focus. Generally, there was a lot of emphasis on premiumizing in the US, focusing on selling higher margin, higher revenue brands.

What do you think is the biggest risk to the company over the next five years?

I think not getting ahead of some of these trends and the lack of willingness to take risks are significant concerns. There was a continued half a share point decline every single year. Something significant needs to happen to change that.