When Belgian brewer InBev bought venerable beer-maker Anheuser-Busch last fall, we knew things were going to change. Then shortly after the acquisition, Bob Lachky, A-B's legendary chief creative officer, left the company, and we knew things were going to change a lot. What none of us could know, however, was just how far InBev was willing to go to damage the reputation of an iconic corporation.
InBev has replaced executive offices with bullpens. So what? It has cut jobs and dropped perks like first-class flights and baseball tickets. Yawn. It has pulled back on sports marketing, cut back on company cars, and even ended an agency relationship or two. Hey, times are tough.
But the company, which controls nearly half of the domestic beer market, has gone one step too far. InBev has unilaterally and summarily announced that it is going to take up to 120 days to pay its bills. That, my agency friends, sets a horrible precedent. And not only is it irresponsible, it's simply wrong.
Why the decision? InBev CEO Carlos Brito was quoted in The Wall Street Journal last month as saying, "We always say, the leaner the business, the more money we'll have at the end of the year to share." Well, Mr. Brito, that's true of any company, but we all still need to pay our bills. If every company decided to follow the same course of action, we'd drive our ailing economy to its grave.
'Machete-wielding investment bankers'
Morningstar analyst Ann Gilpin describes the InBev team as "ruthless" and "machete-wielding investment bankers." Unfortunately, most of InBev's vendors are unable to speak their minds as freely as Ms. Gilpin (which I think proves the point). One, a St. Louis corporation that makes brewing technology, decided to launch its own protest by purchasing beer for its corporate headquarters and stadium suites elsewhere. Dave Peacock, head of InBev's U.S. division, said that the company's decision is "surprising and one that we believe won't be well appreciated." Hmmm.
The government of Belgium is looking into a slightly more "formal" protest of its own, contending that InBev is abusing its power by forcing its much-smaller suppliers to bend to its will. Many ad agencies would certainly fit that bill, as would companies such as Supplied Industrial Solutions in Granite City, Illinois, which generates a whopping $700,000 in annual revenue and employs four people. Better make that three now.
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Steve McKee is president of McKee Wallwork Cleveland and author of "When Growth Stalls: How it Happens, Why You're Stuck and What to Do About It."
Times are tough, but InBev has crossed the line with this decision. By forcing other companies to finance its operations, InBev is tying up capital that doesn't belong to it. That hinders those companies' ability to invest in innovation -- not to mention meet their monthly payrolls. InBev is stealing their futures, plain and simple. And in plain sight.
Time for self-respect
I wonder if InBev will be withholding the paychecks of its in-house media-buying staff for months at a time. Of course not, because they know they'd face a walkout, followed by a lawsuit. I also wonder what would happen if all of InBev's retail customers started telling bartenders and checkout clerks that they'll enjoy their beer now and pay for it three or four months down the road. No, I don't.
It's time the advertising industry showed some self-respect. Instead of lying down and getting bullied -- there's no better term for it -- we should say enough is enough. Especially in light of the kinds of companies that reportedly won't be subjected to the InBev squeeze play: independent beer distributors. They, according to The Wall Street Journal, are "key partners in the company's efforts to sell more beer."
Well, InBev agencies, at least you know where you stand.