In response to an article about Budweiser watering down their beer, I uncovered several reasons why consumers may have noticed a difference (http://www.forbes.com/sites/rogerdooley/2013/02/27/water-budweiser/)

. I also discovered the incentive for the changes in AB InBev’s Budweiser products appear to be linked to executive compensation.

Consumer perceptions concerning AB InBev’s Budweiser beers may be due to cost cutting measures impacting raw ingredients. If you read the article “The Plot to Destroy America’s Beer” http://www.businessweek.com/articles/2012-10-25/the-plot-to-destroy-americas-beer, it indicates that Beck’s is now made domestically in the U.S. Ingredients used in their Budweiser products such as the rice, hops and beech wood have all been changed. In fact, a former executive at InBev said, “the company saved about $55 million a year substituting cheaper hops in Budweiser and other U.S. beers for more expensive ones like Hallertauer Mittelfrüh”.

I know that changing one ingredient in a beer can have a profound impact and “Bud and Stella” have also had their alcohol content reduced. It is not too surprising that consumers are beginning to notice a difference! It is interesting amid so many flavorful beers in the craft market that InBev has decided go in the other direction with their flagship brands. It will be interesting to see if their exports continue to grow while the U.S. market shrinks for them.

Take a look at http://www.reuters.com/article/2012/03/28/abinbev-pay-idUSL6E8ES2GU20120328. This article reveals that AB InBev’s CEO (Brito) will receive 144 million Euros from his bonus package which is based on reducing company debt. Also, about 40 other executives will receive bonuses as well for a total of 1 billion Euros.

This is a problem many companies create by linking executive compensation to stock performance instead of key performance indicators (KPI) inline with a strategic company vision. KPI would give a more balanced approach to assessing performance. Also interesting to note is that the chairman for the remuneration committee is Brazilian and has worked for AmBev for years with Brito so it is reasonable to question whether there is a conflict of interest!

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