AB InBev offsets falling beer sales with premiumization strategy

02 Mar 2023 --- Anheuser-Busch InBev has reported that it sold less beer in the last three months of 2022. However, the company managed to boost revenues by 10.2%, reaching US$14.67 billion and 11.2% for the entire year (US$57.79 billion).

The double-digit revenue increase is watered-down compared to the over 30% growth of Heineken or the 15.6% acceleration of Carlsberg.

By region, the beer business saw steep US sales decline during the last quarter of the year, with volume sold declining 8.3%. South America was the only area that topped 1% volume growth in the quarter, with 3.1% more hectoliters sold. In total the company sold 0.6% less volume of beer in the quarter.

“While 2022 was not without its challenges, including economic uncertainties, elevated input costs and supply chain disruptions which continued to constrain our full growth potential, we are pleased that our company once again delivered EBITDA growth at the upper end of our medium-term growth ambition and outlook for the year,” the company highlights.

Earlier this week, Innova Market Insights told us that consumer demand for premium RTDs will drive the beer category, with value growth outpacing volume growth at 8% vs. 5% CAGR 2022–2026.

Full-year results
For the complete 2022, AB InBev’s revenue accelerated 11.2% to US$57.79 billion and volume sold went up 2.3%, with beer sales up 1.8% and non-beer products 5.2%.

The company grew in every region, in volume of beer sold, except in North America.

Industry expects inflationary challenges to continue into 2023.Corona and Stella Artois displayed particular strength outside of the US – with revenue increases of 18.6% and 11.7%, respectively. Budweiser grew less rapidly, accelerating 2.5% from last year, as the brand’s largest market, China, was impacted by COVID-19 restrictions. 

The brand also highlights it saw significant growth in its number of female consumers, driven by the expansion of its premium brands and Beyond Beer portfolio. 

The Beyond Beer portfolio – the company’s non-beer sales – grew by low-single digits as “growth globally was partially offset by a soft malt-based seltzer industry in the US,” says the business. However, the spirits-based RTD segment in the US saw over 70% yearly combined growth.

Molson Coors sales slump
The company reported it sold 2% less volume of beer in 2022 and 5.2% less in the last quarter of the year. Nonetheless, it increased its quarterly (up 0.4%) and yearly sales (up 4.1%) through price increases.

“We are proud of our accomplishments in 2022, particularly given the challenging inflationary and operating environment. While we expect these challenges to continue to impact us and our industry in 2023, we are issuing guidance for the year that anticipates continued growth while investing prudently in the long-term health of the business and returning cash to shareholders,” comments Tracey Joubert, CFO of the business.

European beer waters down US success
While US brewers posted solid results European Heineken and Carlsberg outpaced its American counterparts.

Heineken reported 30.4% revenue growth to reach €34.68 billion (US$36.84 billion), with beer volume growing 6.9%. The company achieved its growth through price increases and premiumization. Heineken reported 30.4% revenue growth in 2022.

The company expects to apply its strategy of price increases this year as well as inflation bites.

“Heineken anticipates an increase in its input costs in the high teens per hectolitre and significantly higher energy costs, particularly in Europe,” the company explains.

Danish Carlsberg achieved organic revenue growth of 15.6% in 2022, with volume sold up by 5.7%.

“2023 will be another challenging year. Due to our and our suppliers’ rolling hedging, last year’s commodity and energy price increases will significantly impact our 2023 cost of sales and logistics costs. We intend to offset the higher costs in absolute terms through pricing, mix and continued tight focus on costs,” explains the business.

According to the German Brewers Association, beer makers face 100% higher costs for brewing malt, 100% higher prices for pallets, 80% more for glass, and 70% increases in crown corks. 

“While beer historically has been a resilient consumer category, the higher prices in combination with generally high inflation may have a negative impact on beer consumption in some of our markets, particularly in Europe,” concludes Carlsberg.

By Marc Cervera