C&B Notes

Burgers, Beers and Billions

An interesting article in the November issue of the Bloomberg Markets magazine touches on a variety of topics of interest, including branding, management styles and approaches, and international business:

The Burger King hamburger chain made a dramatic decision in August.  It dethroned the King — the mascot who had danced through its advertising in various guises for more than 50 years.  The marketing move was made by the struggling company’s new management, appointed after it was taken private in 2010 by 3G Capital Inc., a New York-based investment firm with roots in Brazil.

The takeover of Burger King Holdings Inc. by 3G Capital means the chain has a new monarch: Jorge Paulo Lemann, the founder of 3G. Lemann, 72, is an iconic figure in Brazilian finance.  In 1971, when Brazil was under military rule, he founded the country’s first modern investment bank, Banco de Investimentos Garantia SA, Bloomberg Markets magazine reports in its November issue.  In subsequent decades, he emerged as one of Brazil’s most prolific dealmakers.  Lemann’s biggest transaction: the $52 billion 2008 takeover of Anheuser-Busch Cos. by InBev NV.

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“Jorge Paulo created a whole management culture in Brazil that is extraordinary,” [oil-and-mining magnate Erik] Batista, 54, says.  “He motivated employees by letting them share the profits — aggressive, but that leads to results.”

“Garantia was a paradise for ambitious, entrepreneurial people,” [Jose Olympio] Pereira says. “This ‘virus’ of the Garantia culture infected the Brazilian corporate world.  It is amazing the number of businessmen I work with who admire the Garantia model.”

[Arminio] Fraga says Lemann made Garantia home to Brazil’s best and brightest.

“He always led by example,” Fraga says. “It was clearly a meritocracy, capable of attracting and keeping people with great talent and energy.”

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“They are not about beer,” says Tom Pirko, founder and president of Bevmark LLC, an adviser to the food and beverage industries.  “And they are not about hamburgers.  They are about money.  They know how to cut costs.  They know how to very aggressively push something.”

Pirko doesn’t think it’s a coincidence that Lemann and his partners first took control of a beverage company and then a restaurant chain.  They’ve already moved to begin cross selling between the two businesses.  In April, Burger King signed up PepsiCo Inc. as the exclusive soft-drink provider for its restaurants in Latin America and the Caribbean.  AmBev is the producer and distributor of Pepsi products in Brazil.

Hees has told investors and analysts that his plan is to make Burger King a top brand in Latin America during the next five years.  He wants to open 1,000 restaurants in Brazil alone, up from 108 in mid-September.

>> Click here for the full article from Bloomberg