Today’s Q3 earnings by Anheuser-Busch InBev (A-B) were less spooky than last Halloween’s results, with the company’s total U.S. trends now returning to patterns similar to those before the 2023 Bud Light boycott.
A-B’s U.S. shipments (sales to wholesalers) declined -0.2% year-over-year (YoY), helped by one extra selling day in the quarter, while depletions (sales to retailers) declined -3% when adjusted for the extra selling day, “outperforming the industry,” the company reported.
U.S. revenue increased +1.8%, with revenue per hectoliter increasing +2%, “driven by revenue management initiatives.”
Recall, in Q3 2023, A-B’s U.S. shipments declined -17.6% and depletions -16.6%, while U.S. revenue declined -13.5%. The declines were primarily due to volume loss from Bud Light, following a conservative-led boycott of the brand after the product was touted by influencer Dylan Mulvaney, a transgender woman.
The latest quarter was more in line with Q3 trends from 2022, when U.S. shipments declined -1.8% and depletions -1.7% – below industry trends at the time – while revenue increased +1.9%.
Q3 2024 trends also improved versus Q2, when shipments declined -2.7% and depletions -4.1%. Through the first nine months of 2024, A-B’s U.S. shipments have now declined -4.5% and depletions -6.8%, with revenue declining -2.8%.
A-B also gained market share in Q3, driven by volume gains from Michelob Ultra and Busch Light, which were “two of the top three volume share gainers in the industry,” the company reported.
In the last 12 weeks (ending October 6), A-B increased share of total beer volume, measured by case sales, +0.11 share points, to 36.83%, in Circana-tracked off-premise channels (total U.S. multi-outlet plus convenience).
Michelob Ultra, the company’s top brand by YTD dollar sales, increased volume share +0.64 points in the 12-week period, to 8.07%. The brand is also growing faster in the on-premise than in the off-premise, A-B CEO Michel Doukeris said during today’s call with investors and analysts.
Busch Light, the fourth largest brand in A-B’s U.S. portfolio, increased share +0.4 points, to 4.64%. The brand claims up to 10% share of beer in its core markets in Middle America, including the Great Lakes and the Corn Belt, according to Doukeris. Meanwhile, in the rest of the country, Busch Light has about 2% to 3% share, representing “a massive opportunity” for continued growth.
Busch Light also over-indexes with the youngest legal-drinking-age consumers, Doukeris said.
“This is also very important, because it shows that the brand has a headroom that is very big outside of the core states, but also has a profile of consumers that can carry the brand for a very long term,” he continued.
Bud Light continues to record declines, but the brand has traded in its double-digit losses for single-digit declines. In the last 12 weeks, the company’s No. 2 brand recorded a -5.4% decline in dollar sales and -0.3 point decline in share of total beer dollars, to 7.19%. Volume declined -7.2% in the period, and volume share declined -0.35 points, to 8.81%.
Year-to-date (YTD) through October 6, Bud Light has lost -1.11 share points of total beer dollar sales, to 7.35%, and -1.3 points of beer volume share, to 8.97%. During the same period in 2023 (ending October 8), Bud Light’s share of YTD dollar sales declined -2.05 points, to 8.48%, and volume -2.45 points, to 10.3%.
A-B leadership also highlighted volume contributions from its spirits-based ready-to-drink cocktail (RTD) brands, including Cutwater and Nütrl. The two brands have a combined 1.8% share of the spirits category in the U.S., and are “punching well above their weight” in growth, representing more than one-third of spirits growth in the U.S. in Q3, Doukeris said.
Similar to Busch Light, Cutwater and Nütrl also have plenty of distribution gaps providing opportunities for growth. Cutwater has a “massive” share of spirits-based RTDs in California, and still has room to expand in the state, while also expanding eastward, Doukeris said. On the other side of the country, Nütrl has more than 20% share of RTD hard seltzers in the southeast, and is starting to expand to the central and western parts of the U.S.
“So there is huge headroom for growth for both brands,” Doukeris said. “Distribution gaps today are massive, and production is not an issue, so we’re going to continue to deliver while the brands grow.”
A-B’s U.S. strategy continues to be “rebalancing” its portfolio to focus on growth segments – including non-alcoholic beer with the introduction of Michelob Ultra Zero next year – and “stabilizing” its mainstream brands.
“Our U.S. business is regaining momentum, and we are investing to fill growth where we have the biggest opportunities to grow our business and our brands in the U.S.,” Doukeris said.
“Having these brands to stabilize and even grow, like Busch Light, is an important part of the job, and then we need to continue to develop our brands in the segments of the industry where there is more growth,” he continued.
A-B’s total enterprise recorded a -2.4% YoY decline in volume in Q3. Its own beer volume declined -3.1%, while non-beer volumes increased +0.6%. Total revenue increased +2.1% (+4.6% revenue per hectoliter), recording revenue growth in more than 60% of the company’s markets.
In the last nine months, A-B’s total volume has declined -1.3% (own beer -1.9%, non-beer +2.5%). Total revenue has increased +2.5% in the period (+3.9% per hectoliter).
With the enterprise growth, A-B has narrowed its full-year guidance to +6% to +8% EBITDA growth. Previous projections had growth between +4% and +8%. Q3 EBITDA increased +7.1%, to $5.4 billion.
The company also announced a $2 billion share buyback program that will be executed within the next 12 months.