AB InBev Reports "Better-than-Expected" Profits, Despite Challenges in Brazil

b459431d-5a8e-4e8e-96df-9293eaf583efarticleimage.jpg

08 May 2017 --- Anheuser-Busch InBev reported an increase in underlying Q1 profits and a return to growth in Brazil but failed to stem the decline of Bud Light in the US.

 

Revenue for the company grew by 3.7% in the quarter, with revenue per hl growth of 4.3%, driven by revenue management initiatives as well as strong premium brand performance. On a constant geographic basis, revenue per hl grew by 4.5%.

Total volumes declined by 0.5%, while own beer volumes were down by 0.2%. Good growth in own beer volumes was achieved in China, Brazil and Mexico, while declines were recorded in the US, Colombia and South Africa.

Brazil is AB InBev’s second-biggest market after the US, with 15 per cent of group sales, and a slump in demand last year hit group profits. 

Combined revenues of three global brands, Budweiser, Stella Artois and Corona, grew by 12.1%. Budweiser revenues grew by 7.3%, with 16.4% growth in revenues outside of the US.

Stella Artois revenues grew by 21.1%, driven mainly by growth in the US and Argentina. Corona had a solid quarter as well, with revenues growing 18.2%, with 48.2%. 

The first quarter of 2017, which was also the second quarter as a combined company, saw organic revenue growth of 3.7%, with volumes down marginally. Global revenue growth was driven by higher volumes in Latin America North, Latin America South, and Asia Pacific, and further supported by revenue management and premiumization initiatives throughout their markets.

Organic EBITDA grew by 5.8%, with EBITDA margin expansion of 76 bps, driven by top-line growth and the realization of synergies, offsetting an anticipated weak performance in Brazil, where EBITDA was down by 23.3%. This was due to the combined impact of a significant cost of sales per hl increase and a decline in revenue per hl.

Excluding Brazil, business delivered solid results with revenue up 4.2% and EBITDA growing by 12.3%. Ab InBev remain optimistic about Brazil in the long run, and more specifically regarding 2017, we will soon begin cycling more favorable revenue per hl comparables, while cost of sales per hl growth will decelerate to between a flattish and low single-digit increase in the second half of 2017.

Global brands continued to show solid growth, with the combined portfolio growing revenue by over 12%. Budweiser continued to perform well, supported by a powerful Chinese New Year campaign, as well as Super Bowl activations introduced for the first time in international markets such as the UK and Brazil.

Stella Artois grew revenues by more than 20%, with good volume-led performances coming from the US and Argentina. This quarter was especially exciting for the brand, as its Buy a Lady a Drink partnership with Water.org, which is aimed at ending the global water crisis, was scaled out to 7 markets.

Corona continued its impressive track record of growth with revenues up by over 18% and by almost 50% outside of Mexico, driven primarily by China, the UK and Colombia.

Ab InBev will continue fueling the growth of their global brands by leveraging their respective commercial platforms with consistent communication and execution around the world, while expanding to new markets such as Australia, Peru, Colombia and South Africa.

The SAB integration continues at a fast pace, with 252 million USD of synergies captured in 1Q17.

Beyond the cost synergies, AB InBev are every day more excited about the top-line growth opportunities arising from the combination of these two great companies.

Sales in the US underperformed in the market despite relaunch of best-selling brand Bud Light. 

AB InBev purchased its 10th craft brewery, Wicked Weed, on May 3. The buyout sent shock waves rippling through the beer world. Craft beer bars across the US are refusing to sell Wicked Weed or any other AB InBev-owned beer.

To contact our editorial team please email us at editorial@cnsmedia.com

Related Articles

Business News

Weekly Digest: ADM receives recognition for diversity, AB InBev develops energy-efficient brewing method

20 Apr 2018 --- This week in business, ADM was named by USG Corporation (USG) as its Diversity & Inclusion Supplier of the Year for 2018. The Supervisory Board of GEA Group and the Chief Financial Officer of GEA Group mutually agreed that Helmut Schmale would step down from the Executive Board before the termination of his appointment, which is due to expire at the end of March 2021. Meanwhile, Ireland’s largest exporter of Irish dairy products, Ornua announced the appointment of John Jordan as Chief Executive Designate and Tate & Lyle appointed of Imran Nawaz to the position of Chief Financial Officer, and to the Board of Tate & Lyle, with effect from August 1, 2018. Mondelēz International has inaugurated its newest “Factory of the Future” in the Kingdom of Bahrain as it aims to meet the growing consumer demand and Bell & Evans will invest US$260 million in building a new poultry harvesting facility in Pennsylvania in its new expansion strategy in the US.

Business News

Sustainability goals 2025: AB InBev commits to smart agriculture and circular packaging

22 Mar 2018 --- Anheuser-Busch InBev (AB InBev) is committing to 2025 Sustainability Goals in smart agriculture, water stewardship, circular packaging, and climate action. The delivery of the goals will have the wide-reaching impact that includes connecting thousands of farmers to technologies and skills, ensuring water access and quality in high-stress communities, partnering with suppliers to increase recycling content, and adding renewable electricity capacity to regional grids.

Food Ingredients News

Budweiser boosts climate change credentials with new renewable energy symbol

26 Jan 2018 --- Budweiser has revealed a new symbol on its beer that shows it has been brewed with 100 percent renewable electricity. It’s all part of a grand plan to brew Budweiser around the world with 100 percent renewable electricity by 2025, in line with parent company AB InBev’s commitment to source all purchased electricity from renewable sources.

Regulatory News

Plain packaging could lead to billions in food industry losses, says new study

12 Dec 2017 --- Following the introduction of plain packaging for tobacco products in some countries and calls to extend the legislation to other sectors, marketing consultancy Brand Finance has analyzed the potential financial impact of such a policy on food and beverage brands.

Food Ingredients News

AB InBev acquires Australian craft brand Pirate Life

05 Dec 2017 --- Brewing giants AB InBev has snapped up “lifestyle” canned beer brand Pirate Life which is based on a carefree and relaxed attitude that founders say will not change despite the acquisition by one of the biggest names in the industry.

More Articles