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AmBev’s style is explained

by the "Brahma gene"



Since the company’s incorporation eight years ago, management at Compañía de Bebidas de las Américas (AmBev) strives daily to become an even more dreadful employer and consolidate itself as a paradigm of arrogance, cynicism and lack of ethics. Now it’s the turn of Peru. Let’s look at the most significant events in this far from edifying story.


AmBev was born in 1999, the result of a merger between the Brazilian companies Brahma and Antarctica, manufacturers of soft drinks and beers. More than a merger, it was a takeover by Brahma of its old competitor, who had been experiencing problems for some time. Simultaneously, a scandal broke out over rumors that information on the merger had leaked out early, a breach of confidentiality that was said to benefit three large shareholders. The gravity of the case led to an intervention by the Securities Commission, and following three years of investigation the case was closed after requiring that the shareholders involved pay the equivalent of 115 thousand dollars and agree to publish a corporate best practices handbook, sponsored by AmBev.


According to the experience of the Brazilian unions, it had been relatively easy to negotiate with Antarctica, while negotiating with Brahma always turned into a frustrating dialogue. “It wasn’t that the company refused to negotiate, it just never resolved anything and it never yielded an inch,” Brahma workers recall. After the merger, AmBev inherited the malignant Brahma gene which, among other things, has an adverse effect on the company’s labor relations policy.


AmBev continued to grow and spread throughout Latin America, and as it developed it closed factories and laid off workers. Then, in the year 2004, it merged with the Belgian company Interbrew, thus giving birth to InBev, the world’s largest beer manufacturer. And once again, the same three shareholders of 1999 appeared involved in somewhat muddy maneuvers designed for their benefit, but which resulted in approximately US$ 448 million in losses for minority shareholders. In 20 months, the Brahma gene had turned the handbook of corporate best practices into wet paper.


The agreement between AmBev and Interbrew to create InBev was a difficult one, but in the end the Belgian company retained control over the new company. In spite of that, the Brahma gene and AmBev’s style of layoffs, plant closures, disregard of unions, and breaching of agreements contaminated the new company, and it wasn’t long before these practices were felt by the unions in Europe, including Belgium.


In May 2003, AmBev had began operating in Peru as Compañía AmBev-Perú, through a soft drink factory. In 2005, with the Brazilian ambassador in attendance –mixing, as it so likes to do, flag-waving with business- it inaugurated a brewery plant in the industrial region of Huachipa, with a production capacity of one million hectoliters of beer a year, and launched the Brahma beer in the market, having secured today an 18 percent share of the Lima market.


In March 2006, the Peruvian conglomerate Grupo Romero -which includes the Banco de Crédito and investments in the food and logistics industries, in addition to 30,000 hectares of African oil palm crops that entailed felling the indigenous tropical forest- acquired a 25 percent stake in AmBev-Perú. Through a press release, the company announced that this deal “would enable AmBev to access the know-how of a strategic local partner, thus strengthening operations in Peru.” However, as we will see, when it comes to negotiating with the union, the company will not draw on this “know-how” provided by the local partners.


August 1st through the 31st, 2006 was the term given to sign up for the Trainee AmBev 2007, a program for young professionals that was launched in 1990 and includes all the subsidiaries of AmBev. In 2005, 17 thousand Brazilians and 4 thousand young people from other countries of Latin America signed up. In 2004, 9,500 Peruvians applied for the Program, but just four were selected. After only 5 months of training in Brazil, the selected applicants assume a specific role in the company, either in Peru or in another country.


The training in Brazil is conducted in the already infamous AmBev University, responsible for transmitting the Company’s philosophy, which according to its web page focuses on “results and meritocracy.” Let’s look at just one example of what is taught there. Last December, the High Labor Court of Brazil -the maximum judicial authority in labor matters- ruled that an AmBev worker who had been subjected to daily humiliations and abuse was to receive 70 thousand reais (approximately US$ 33,000) in damages. The worker had joined the company in 1998 as sales promotion assistant and communications supervisor, and was fired in 2004. In his complaint he described how employees would be assessed every day in two meetings -dubbed motivational in the company’s jargon-, one in the morning and the other in the evening. The second meeting was used to dole out punishments to all those who didn’t meet the targets. The punishments consisted in forcing these workers to do push-ups, squats and other exercises until they were exhausted. In one such punishment the complainant was even forced to do push-ups with his boss stepping on his back. Other punishments consisted in photographing penalized employees with prizes shaped like human excrements and posting the photographs on the company bulletin board for a month. In the defense presented to the Court, AmBev -influenced by the Brahma gene- argued that “the amount of the damages exceeded the limits of rationality and proportionality,” as if the abuses that it subjected its employees to were themselves rational and proportional.


AmBev-Perú has just launched -with a significant monetary investment- its 2007 summer campaign, under the slogan “Tú mismo eres” (“Be yourself”), through which it promotes the new Brahma Beat beer. In the advertisements the company highlights the beer’s higher alcohol content (5.2 percent), breaching the stipulations of the Code of Commercial Communications of its parent company InBev -mandatory for all the subsidiaries- which prohibits any reference of its brands’ alcohol content in advertising campaigns, but as we know there is no code strong enough to inhibit the Brahma gene.


Meanwhile, last year on May 7, AmBev-Perú’s workers formed the Sole Union of Compañía Cervecera AmBev-Perú S.A.C. (SUTAMBEV) and from the very day of its creation the company began to harass the workers with the aim of undermining the union. In July, pursuant to applicable legislation, the union filed a list of demands towards reaching a collective agreement for the 2006/2007 period. In line with the Brahma gene, the company’s stance was to ignore the union and its demands, leading to a 48-hour task strike on November 14 and 15.


Finally, on January 11, 2007 the union, the company and a representative of AmBev Brasil met to discuss the list of demands, with a special focus on those relating to wages. The company offered a three-percent raise in compensations and a bonus of 500 soles (US$ 156.64) in exchange for closing the list of demands. The union proposed a bonus of 3,000 soles to be paid in January and June. The company made a counteroffer of 1,000 soles, and then a final offer of a bonus of 1,400 soles to be paid in February and October, establishing a two-year term for the application for the collective agreement. At this point the union delegation walked out of the meeting. The AmBev representative returned to Brazil and sent an ultimatum to the union, repeating the final offer with a warning that if this was rejected, it would be forced to close the company. A few hours later, AmBev-Perú managers were informing the union that if they wanted to keep their jobs they had to act accordingly, as the company’s budget was not enough to meet the workers’ demands and they ran the risk of closing down the plant.


The Brahma gene can, of course, be combated and its influence on corporate behavior altered. The unions have realized that the best instruments for this task are unity and organization, which is why the labor unions affiliated to IUF have just formed the Latin American Federation of AmBev Workers, and even though SUTAMBEV is not yet a member of IUF, its case has been taken on by the Federation.

From Montevideo, Enildo Iglesias

© Rel-UITA

january 26, 2007

Enildo Iglesias




Illustration: Photocomposition by Rel-UITA





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