Americans are ditching beer — here's how Anheuser-Busch InBev's new incoming marketing chief plans to fix it

Pedro Earp_March2018

Beer has an image problem, and giants like Anheuser-Busch InBev know that they must shake things up and innovate in order to survive.
AB InBev is trying to tackle the challenge by, among other things, appointing a new marketing chief who hails from ZX Ventures, the company's global innovation unit.
Earp told Business Insider that he will focus on consumer empathy, design and prototyping for its marketing efforts.
Improving technology and building deeper relationships with consumers is also a huge focus for the incoming brand chief.

Beer has an image problem. Americans are increasingly opting for wine, cocktails and other spirits over beer — and brewers are facing an existential crisis with declining sales and consumption.

Adult beverage giants like Anheuser-Busch InBev know that they must make huge changes in order to survive. Perhaps that is why the mass-market brewer has appointed Pedro Earp as its next chief marketing officer.

Earp has spent his entire career at AB InBev since starting at the company in 2000, with stints across marketing, consumer connections and mergers and acquisitions.

Most recently, he led ZX Ventures, AB InBev's New York-based global innovation unit, helping it spearhead new initiatives in e-commerce, craft and specialty beers as well as retail activations.

Business Insider caught up with the incoming marketing chief of brands like Budweiser and Corona for a chat. Here's an edited version of the conversation.

Tanya Dua: How has your time at ZX prepared you for your next role?

Pedro Earp: In 2015, we decided to create ZX as a sort of a separate independent arm, because when you're trying to be innovative and fast, you can't compete for resources with the big machine. We came to the conclusion that at some point in time, we needed to separate resources, not let them compete, and really strengthen our capabilities in coming out fast with new things.

Now, going back to the core business, we'll be able to apply some of the things that we have learned, and figure out how they can work together.

Dua: You've been working at the forefront of innovation. What do you think are the top skills that you have learned here, that you will bring to the CMO role?

Earp: When you are creating a business from scratch and trying to transform it into a big business, it's really important to have a big consumer obsession. It's good to almost be like a great designer of new products, and understand what's gonna click with consumers. You need to prototype really fast. You need to be brave enough to put products on the market that maybe are not ready. Consumer empathy, design and prototype, those are the main skills you learn when you're at the front end of innovation.

In the big machine, it's much more about scaling a known business model. So once you've found something that clicks, then you've got to go there and scale that. It's much more about sales and marketing, much more about efficiency. What we've learned here is to get as much data at the front-end of things as possible, and now we have to sync that with the core.

Dua: Why do you think it's important for kind of marketing and innovation to go hand-in-hand now? How do they influence each other?

Earp: I don't even know how to separate those two things anymore, because the world is changing really fast and products that don't change at the pace of the world will lag behind. If your product has to be relevant and reach the world of marketing, it has to change over time. That's a rule of innovation. I think those two things now are basically inseparable.

Dua: Beer is struggling, and even craft beers are seeing a decline now. Do you see this as a marketing problem or an innovation problem?

Earp: The role of marketing is to evolve as the needs of consumers evolve. Consumers are getting more sophisticated, and they want variety. And that's causing every industry, especially the CPG industry, to become more fragmented. There are many more players. So it is a marketing problem in the sense that there are many more people trying to address consumer's needs better, the market is super cluttered. People's attention span is limited and you really don't stand out if you don't do something to touch people. Either make them laugh, think, or cry.

Dua: You're one of the biggest consumer goods giants and you have a huge budget in terms of ad spend. Where would you want to spend that?

Earp: I think for me it's less about the amount of money or where you spend the money, but how you spend the money. Brands that are successful today, they make a meaningful difference in people's lives. So how can you always make sure that your brand has a great purpose and is really making a difference in people's lives? That's the most important thing. Having purpose is fundamental. But another thing that we need to do is to understand our consumers better.

Dua: And how do you plan to do that?

Earp: Look at technology companies. Because they have a direct relationship with their consumers, they have massive amounts of data and they improve their platforms every single day. That's something, for CPGs, that's a bit harder to do. That's a big focus for us. To give you an example, we now have an e-commerce business that is growing fast. That is giving us 10 times more data than we've had in the past to really go there and improve all products almost on a weekly basis. The second one is how to use technology in order to be simple to make sure you can to fulfill that purpose.

Dua: Do you see your relationship with your agency partners change? Do you still rely on them as much or are you evolving that model?

Earp: Agencies are real specialists in creativity, which is exactly what's going to make a difference in the future. But the way to operate with the agency, in order to unleash the best of creativity, is something that I think will evolve over time. Same thing with media agencies. Again, as technology plays a much more important role into delivering the right message to the right people at the right time, the relationships with media agencies are going to change. Like we have to evolve our product every day to keep ourselves relevant, the same thing goes with agencies and the work that they do to help us do that.

Dua: What keeps you up at night?

Earp: My concerns are more fundamental. The world is getting much faster and much more complex. The companies that don't adapt and don't move as fast as the world are going to die. It's hard because the bigger you get, the harder it is. That's what keeps me awake at night. How do I build an organization for the next thirty years that is going to be able to move at the pace of the market?

Dua: Even if that means moving away from beer? You did buy a company that owns other liquors recently?

Earp: Look, we love beer. Beer is the bulk of our portfolio. We think that beer is the original social network. But yes, we are open to that. We're exploring all spaces. There are some specific locations, some specific consumers that don't like the taste of beer. And that's fine. But our goal is to bring people together, and so we should be flexible to say, look, it doesn't matter if this consumer doesn't like the taste of beer, we have to strive to fulfill their needs.

It's a massive opportunity if you think about it. I mean, AB InBev is a $54 billion dollar company in terms of revenue, and the total revenue of alcoholic beverages in the world is like $1.2 trillion. Think about all of the opportunities to go there, and do a better job for consumers with things that are not necessarily beer.

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