Anheuser-Busch InBev (A-B) recorded double-digit shipments and depletions declines for its U.S. business in 2023, drawing to a close a tumultuous year for the company, A-B reported today.
U.S. shipments (sales to wholesalers) ended the year down -12.7%, due primarily to the market decline of Bud Light, while depletions (sales to retailers) were down -11.9%. The declines followed shipments and depletion losses in 2022: -8.6% and -7.6%, respectively.
U.S. revenue declined -9.5% versus 2022 (+3.7% when calculating revenue per hectoliter), a significant change from the +2.3% revenue increase recorded last year (+6.7% for revenue per hectoliter). Earnings before interest, taxes, depreciation and amortization (EBITDA) declined -23.4% versus 2022.
However, A-B leadership reminded investors and analysts during an earnings call that A-B is a “global business,” and noted that the company recorded all-time high total revenue of $59.4 billion in 2023, a +14% increase from 2019, when revenue was $52.2 billion, before declining the following year due to the COVID-19 pandemic.
In Q4, A-B’s U.S. revenue declined -17.3% year-over-year (YoY), while EBITDA declined a whopping -34.2%. Two-thirds of that EBITDA loss was “due to market share performance,” while the rest was from productivity loss, increases in sales and marketing investment, and support given to wholesale partners, according to the earning release published ahead of today’s call.
Q4 U.S. depletions declined -12.1% YoY, again “primarily due to the volume decline of Bud Light,” while shipments declined -16.1%, “as shipments lagged stronger depletions in December,” the company wrote in the release.
A-B continues to “gradually” improve its market share of the U.S. beer market following the rapid declines of last spring, claiming 38.3% market share at the end of 2023, CEO Michel Doukeris told investors. He noted that the company recovered 120 basis points of share from what it lost in May 2023, to February 2024, and is now averaging a recovery of 10-20 basis points every three-to-four weeks.
“We are making progress,” Doukeris said. “It is not at the fast pace that we were expecting or that we’ve been working for, but nevertheless, progress is in place.”
Doukeris also noted the shelf space adjustments are not expected to drastically change for the spring, with a loss of 1.5 facings for every 20 facings that A-B has in retailers – a slight increase from the 1 in 20 number Doukeris cited ahead of fall resets.
“What we lost is on Bud Light, and we recovered across the portfolio with Michelob Ultra, Busch Light, Cutwater, NÜTRL, Kona, Stella all gaining share of shelf,” Doukeris said.
He added that A-B also has a “big calendar of activations” for 2024 that it projects will counteract losses in retail.
“We expect to have a massive execution with extra displays and programming with the retailers that should more than compensate the 1.5 for every 20 front shelves that we are missing or losing during this adjustment now during spring,” Doukeris said. “Our mega brands are very well positioned for the year, because they have some of the most relevant mega platforms for interacting with consumers and activating the category together for our wholesalers and retailer partners.”
Doukeris admitted that 2023 was “a challenging year for our business in the U.S.,” but commended the “remarkable resilience and agility” the company showed. A-B began facing double-digit declines of Bud Light in April following a social media post from influencer Dylan Mulvaney, a transgender woman, that sparked a conservative-led boycott.
“I’m proud of the many actions we took to support our people, our wholesaler partners and our brands,” Doukeris said. “We stepped it up to support our frontline employees and provided financial assistance to our wholesaler partners.”
Following the Bud Light backlash, two of A-B’s top marketing executives “decided to take a leave of absence:” Bud Light VP of marketing Alissa Heinerscheid and ABI group VP of marketing for mainstream brands Daniel Blake. Heinerscheid – the first woman to lead the brand – and another female communications employee became targets of online harassment at the height of the boycott, as social media users criticized Henerscheid’s previous categorization of Bud Light as “fratty” and “out of touch.” A-B installed Todd Allen as senior VP of marketing for Bud Light in place of Heinerscheid.
A-B began rolling out financial support to its wholesalers in June to help counteract some of the losses felt by Bud Light’s declines. In July, the company cut just under 2% of its U.S. workforce – equivalent to about 380 employees – to “simplify and reduce layers within its organization.”
Two more leadership departures were announced in recent months. A.B. U.S. CMO Benoit Garbe resigned at the end of the year to “embark on a new chapter in his career,” and VP of communications Jennifer Morris departed the company in January after nearly five years.
Bud Light ended 2023 with dollar sales down -20.4% and volume down -23.4% in NIQ-tracked off-premise channels (total U.S. xAOC + liquor plus + convenience), according to data shared by the market research firm with Brewbound.
A-B added that the company’s spirits-based, ready-to-drink (RTD) portfolio, including Cutwater Spirits and NÜTRL Vodka Seltzer, “delivered strong double-digit volume growth, outperforming the industry.” Cutwater’s 2023 dollar sales increased +29.3% and volume +26.6% in NIQ-tracked off-premise channels, while NÜTRL dollar sales increased +185.7% and volume increased +186.8%.
Additionally, A-B noted in the release that the company recorded a loss of approximately $300 million from the disposal of eight of its beverage brands to Tilray Brands in Q3 2023. Tilray acquired Shock Top, Breckenridge Brewery, Blue Point Brewing, Redhook Brewery, 10 Barrel Brewing, Widmer Brothers Brewing, Square Mile Cider and Hiball Energy in an $83.4 million cash deal closed in the fall.
Leadership did not comment on the strike threats from Teamsters, who reached a tentative agreement with the company yesterday. However, Doukeris noted that A-B employs “65,000 hard working people across the U.S.” and touted that “99% of what we sell in the U.S., we make in the U.S.”
A-B Records Increase in Underlying Profit Despite Down Q4
A-B’s global revenue increased +7.8% in 2023 (revenue per hectoliter +9.9%), with revenue growth in 85% of the company’s markets, driven by “pricing actions, ongoing premiumization and other revenue management initiatives,” according to the report.
Global shipments declined -1.7%, with shipment growth from beyond beer brands (+2.1%) outweighed by shipment declines for its “own beer” brands (-2.3%), and “growth in many of our emerging and developing markets was primarily offset by performance in the U.S. and a soft industry in Europe,” the company wrote.
Global underlying profit was $6.158 billion, up from $6.093 billion in 2022 and in-line with the company’s “medium-term growth ambition.” Full-year EBITDA increased +7%, to $19.976 billion, while margin was down -23 basis points, to 33.6%. Underlying earnings per share increased from 3.03 in FY 2022, to 3.05 in FY 2023.
“While our full growth potential was constrained by the performance of our U.S. business, we remained true to our purpose and laser focused on the execution of our strategy,” the company wrote in the report.
For Q4, A-B’s total revenue increased +6.2% (revenue per hectoliter +9.3%), bolstered by a combined global revenue increase of +18.2% by some of the company’s core brands outside of their home markets, including Budweiser, Stella Artois, Corona and Michelob Ultra.
Q4 shipments declined -2.6% YoY. Beer volume was down -2.6%, while non-beer volume increased +3%.
The company’s underlying profit for Q4 reached $1.661 billion, a decline from Q4 2022 ($1.739 billion). EBITDA increased +6.2%, to $4.877 billion, while earnings per share declined from 0.86 in Q4 2022, to 0.82 in Q4 2023.
2024 Forecast
A-B will continue to invest in its “mega brands” and in “mega platforms” in 2024, including continuing to support sports and music partnerships that “all consumers love,” such as partnerships with the National Football League, National Basketball Association, Lollapalooza, Ultimate Fighting Championship, Copa America and Team USA, Doukeris said.
A-B is already seeing gains for Michelob Ultra in 2024, with the company seeing “the highest investment” yet behind the brand from its wholesaler partners, ahead of activations with the Olympics and Copa America.
“This whole events from April to the end of the year caused trouble not only for Bud Light, but for Anheuser-Busch as a whole,” Doukeris said. “But we see very health[y] signs [and] the brand is already on the positive territory again.”
In the last 52 weeks (ending January 30), Michelob Ultra dollar sales were about flat (-0.1%) in NIQ-tracked off-premise channels, while volume was down -2.5%. The brand ended 2023 with dollar sales up +1.1% and volume down -1.8%, while the overall Michelob family recorded a -1.4% decline in dollar sales and -4% decline in volume.
A-B also plans to continue investing behind innovation, which contributed 10.4% of the company’s global net revenue in 2023, up from 8.6% in 2022 and 9.9% in 2021.
“As we move forward, we continue to focus on what we do best: Brewing great beer for everyone, actively engaging with our consumers, supporting our partners and impacting the communities we serve,” Doukeris said.
A-B is projecting global EBITDA organic growth in the range of +4% to +8%, the same projection it initially gave for 2023.