A Billionaire's Tough Strategy Goes Awry

Jorge Paulo Lemann set stiff cost-cutting goals. Did Americanas brass go too far to meet them?

- By Daniel Maxwell

It wasn’t too long ago that Jorge Paulo Lemann was arguably the most respected—and feared—corporate baron on Earth. The Brazilian billionaire and his two longtime business partners were scooping up multinational giants at a frenetic clip and folding them into the vast empire they built from Rio de Janeiro.

In 2008 it was Anheuser-Busch InBev. In 2010, Burger King. Then came H.J. Heinz, Tim Hortons, Kraft Foods Group and, finally, in 2016, the biggest of them all: brewer SABMiller. With each new acquisition, Lemann, inspired by his idol, former General Electric Co. Chief Executive Officer Jack Welch, would order up deep cost cuts. Perks were eliminated, payrolls slashed, factories shuttered.

It was excruciating for rank-and-file employees but thrilling for Lemann’s financial backers, who pocketed windfall gains as the new, leaner companies churned out ever-bigger profits. The 3G model, as it was dubbed on Wall Street in honor of Lemann’s principal investment company, 3G Capital Inc., was so ruthlessly effective that it began to revolutionize thinking in C-suites across America. Even Warren Buffett, who invested in a couple of the deals Lemann struck, seemed mesmerized. “Jorge Paulo and his associates are extraordinary managers,” he gushed in 2013.