Inside Anheuser-Busch InBev’s $1b a year DTC business

Like many businesses, Anheuser-Busch InBev it taking a hit from the spread of the coronavirus. In AB InBev’s case to the tune of $285 million in lost revenue. But the silver lining: The health crisis is spurring further growth in AB InBev’s direct-to-consumer sales, which amount to around $1 billion annually.

“Our DTC business in China is growing very fast because people are at home are demanding more deliveries in a market where we have a large share of the e-commerce channel,”CEO Carlos Brito told Digiday on the earnings call.

In turn, some of brewer’s media dollars are following those consumers, Brito said. He added: “We’ve relocated resources where possible to home channels like the growing e-commerce one.”

As much as media budgets in China are in a state of flux as marketers grapple with the widespread impact of the virus, some marketers are doubling down on online media. Advertisers like P&G have noticed that those shoppers stuck at home are buying more of their goods online.

Moving money on the fly, however, isn’t always a straightforward process for CPG advertisers. The likes of AB InBev tend to have to make big upfront commitments to media owners to help secure shelf space with retailers, which makes it harder to subsequently move that money. If an advertiser knows an event is coming up an advertiser can plan ahead to minimize the risks.

“We have [DTC] connections with 250 million consumers per year, which is growing at double digits annually.”

All those interactions are happening across a network of roughly 1,300 stores, pop-ups and e-commerce ventures, said Brito. And while China is home to the fastest-growing parts of those DTC revenue streams, Brazil, Mexico, Colombia, Argentina, and the broader LATAM region are also bright spots. As Brito explained: “We took the learnings from what we did in China with our DTC business and built best practices that we’re implementing around the world.”

For example, in Brazil, the brewer has started using customer data from its “Ze Delivery” platform to give those same customers a more personalized experience when they visit one of its own stores there.

Looking forward, Brito said the business would eventually expand its DTC businesses into western markets like Europe. Traditionally, CPG advertisers tend to build their DTC businesses in Asia first. Unlike markets like Europe and the U.S. where CPG business models are dependent on lucrative wholesale contracts with retailers, a DTC business in Asia won’t cannibalize those sales in the same way — unless its a rival.

“CPG companies tend to spend a few years testing DTC models in markets like China and LATAM where they can start to understand things like the lifetime value of a customer and average customer orders,” said M&C Saatchi Performance’s CEO Christian Gladwell, who has previously launched DTC businesses for CPG companies. “Those CPG companies can prove the DTC model in a lower risk environment.”

Once AB InBev understands the commercial value of each of its DTC businesses, it can then weigh up whether the gains of translating them to western markets outweigh the costs of doing so. Without a DTC business, CPG companies like AB InBev can’t tackle some of the inherent problems of their commercial models. Those businesses struggle to understand what their customers are worth because they sell to them via an intermediary. So, instead of being able to clearly see how much their sales are worth, CPG companies are more reliant on proxies like the number of crates shipped to retailers.

“DTC enables us to be closer than ever to our consumers leveraging technology to personalize experiences,” said Brito.

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