Brazil’s richest man Jorge Paulo Lemann does not eat burgers.
A former tennis player, who competed in Wimbledon in the 1960s, he is an advocate of healthy eating.
But when it comes to business it appears he has a rather different appetite, one that stretches to ready meals and processed foods.
His company 3G Capital – which already owned Heinz and Burger King – bought the US food giant Kraft last month, in partnership with billionaire investor Warren Buffett.
The products may have a tendency to stretch your waistline, but Lemann, who was born in Rio de Janeiro, is obsessed with lean companies.
In late 2008, barely months after acquiring Anheuser-Busch, makers of Budweiser beer, Lemann and his associates overhauled the company, shedding 1,400 jobs, some 6% of its workforce.
In one year, 3G Capital found $10bn in savings and divestments.
Executives lost all sorts of privileges: walls were torn down and personal offices were joined together in open plan spaces.
The number of company Blackberries issued to employees fell from 1,200 to 720.
Freebies like free baseball tickets, free beer or first-class tickets were cut. Private jets belonging to Anheuser-Busch were sold.
“They take cost-cutting very seriously,” says Cristiane Correa, a journalist and author of Dream Big, a book on the rise of Lemann and his two fellow countrymen and partners Marcel Telles and Beto Sicupira.
“Some people get really scared by that. Afterwards, of course, the company grows and they end up hiring again, but at start it is ugly.”
Desire to get rich
Cost-cutting is one of 3G Capital’s obsessions.
But there are others too, such as meritocracy and investing in the right people.
Some of 3G Capital’s top executives that today are in charge of leading global brands have been with Lemann since the early days of Garantia – the bank he founded in the 1970s.
Back then, the magnate had already coined the term PSD to describes his ideal employees: “Poor, Smart, with a Deep Desire to Get Rich.”
Marcel Telles, one of 3G’s three strongmen and with a net fortune estimated upwards of $13bn, started out his career as a sort of office boy in Garantia.
One trait that is conspicuously absent in 3G Capital’s business model is innovation.
The company makes its fortunes by finding optimum ways of producing something simple – like a burger or ketchup – and repeating that formula on a larger scale, without requiring much creativity.
“This model is well-suited to the food industry, where you can make a lot of money if you are disciplined enough to avoid waste when producing,” says Leni Hidalgo, a professor at Brazil’s Insper business school, who worked in one of Lemann, Telles and Sicupira’s businesses in the 1990s.
Last month’s Heinz-Kraft merger turned Lemann into a food tycoon, now leading the third largest food and beverage conglomerate in the US.