The dramatic spread of COVID-19 poses a challenge to societies, governments and businesses across the globe. In a recent earnings call, AB InBev, which has operations in roughly 50 nations and sells beer in more than 150 countries, provided an overview of its emerging response to the crisis.
Marketing in the COVID-19 crisis
This article is part of a special WARC Snapshot focused on enabling brand marketers to re-strategise amid the unprecedented disruption caused by the novel coronavirus outbreak.
COVID-19 has now infected over 100,000 people worldwide, according to figures produced by John Hopkins University.
Along with the rising human toll, the rapidly-evolving crisis is making it hard for businesses – and, within these organizations, marketers – to map out their strategies, effectively allocate budgets, and start to plan for a hoped-for recovery, whenever it may come.
Some useful insights in this regard come from Anheuser-Busch InBev, the brewing giant which owns brands like Budweiser, Stella Artois and, of course, Corona.
The company recently detailed its latest quarterly earnings, and also briefly discussed the impact of COVID-19 on its Chinese business. This is the market where it has the greatest information concerning the financial impact of the disease, including the fact that consumers are spending less time drinking in on-premise locations like bars, and in other out-of-home venues where beer is key to the social fabric.
“For the first two months of 2020, we estimate that this outbreak has resulted in lost revenue of approximately $285m,” explained Carlos Brito, AB InBev’s chief executive. For earnings before interest, tax, depreciation and amortization (EBITDA), that total stood at $170m, he added.
While the first priority is making sure its staff, partners and consumers are safe, AB InBev is looking ahead, too. “The financial impact on our business in China is difficult to estimate given it’s dependent on the containment of the virus and, especially, the speed by which our customers and consumers resume their normal operations and lives, which can be different by channel and province,” Brito said.
“But once the government guidelines allow us to go back to business, we’re prepared … we’re very prepared, and we feel good about it in terms of the recovery.”
This confidence is based, in part, on a survey of Chinese consumers undertaken by Kantar, the research provider, about their “consumption patterns and what they intend to do once they are released from their confinement and quarantine,” Brito said.
Six of the ten most popular responses, he continued, fall within the “business realm” of AB InBev: “They want to go back to restaurants. They want to go back to meet friends, to dine out, to entertain, to go outdoors, indoor entertainment to do everything that they would normally do,” Brito said.
“That’s squarely within our dream of bringing people together.”
AB InBev has a “crisis room” in China as part of its day-to-day response to COVID-19, as well as regularly involving members of its global team in crafting its strategy. And this is no small undertaking, given the vast scale, and enormous diversity, of the Chinese market.
“In China, you have more than 30 provinces, and each province is adopting a slightly different way of going back to normal life. Some provinces were harder hit, so they’re taking a bit more time. Some others are going back to business a bit faster,” Brito said.
While anticipating that the situation may start to improve in the second quarter of this year, AB InBev will not be making any firm predictions, as it can only make decisions that reflect “what we know today”. But when the outlook does improve, the company wants to be primed for action.
“We’re monitoring province by province, channel by channel because we want to come back very fast – because we think, when it comes back, it will be very fast,” said Brito.
This perspective, he asserted, was premised to a degree on the bounce back that occurred following an outbreak of severe acute respiratory syndrome (SARS), a respiratory disease that spread between late 2002 and mid-2003, with almost 9,000 cases and 774 deaths in 17 countries.
Returning to COVID-19, Brito suggested that AB InBev will also lean in to the areas of its business where it can still serve customers who are not frequenting their usual drinking spots.
This includes e-commerce, which is likely to see an uptick in demand as caution among shoppers grows – thus accelerating a pre-existing shift towards direct-to-consumer business that is already worth around $1bn per year to AB InBev.
“We want to be an even stronger company in China after this crisis is over,” Brito said.