Anheuser-Busch InBev Grows Global Revenue as US Shipments Decline

Anheuser-Busch InBev today reported global revenue growth of 4.7 percent in the first quarter of 2018 even as the company’s domestic shipments and depletions decreased due to continued declines of the its flagship lager brands.

A-B, the world’s largest beer manufacturer, recorded global revenue of more than $13 billion during the quarter and a gross profit of more than $8 billion. The company’s revenue per hectoliter increased 4.9 percent.

However, U.S. sales-to-wholesalers (STWs) declined 4.4 percent while sales-to-retailers (STRs) dipped 2.3 percent, which the company attributed to “colder-than-average temperatures.”

During a call with analysts and investors Wednesday, A-B InBev CEO Carlos Brito called the quarter “better than initially expected.”

“We remain confident that growth will accelerate for the balance of the year primarily in the second half,” he said. “We remain committed to further enhancing our leadership position in the premium space with the support of our complementary global brand portfolio to fuel the growth of the global beer category.”

Throughout the call, Brito touted the company’s exclusive beer sponsorship — via its Budweiser brand — of the FIFA World Cup in Russia. He said the company will launch its “biggest commercial campaign ever, called “Light Up the FIFA World Cup,” with activations in more than 50 countries and TV ads depicting drones delivering Budweiser to fans attending a match. As part of the sponsorship, Brito said the “only way beer will be served in World Cup stadiums” is via Budweiser-branded red cups that light up as sound in the stadium increases.

“We’re leveraging this sponsorship to tap into consumer excitement around this unparalleled occasion,” Brito said.

Worldwide revenues for the company’s global brands — Budweiser, Stella Artois and Corona (outside of the U.S.) — grew 7.9 percent overall and 12.2 percent outside of those brands’ home markets.

“We believe the journey of our global brand portfolio is only just beginning, especially given the increased access to high-growth markets following the combination with SAB,” Brito said. “What makes us even more excited is that in 2017 the brands represented only 11.4 percent of our total revenue outside of our home markets, but more than 35 percent of our net revenue growth.”

In the U.S., however, Budweiser revenues declined 1.3 percent during the quarter.

And even though both revenue and volume declined in the U.S., market share trends for Budweiser and Bud Light were “improved” during the quarter, as the brands lost 35 and 70 basis points, respectively.

“That’s good news,” Brito said.

He added that the company is working to stabilize Bud Light’s negative volume trends and share performance, noting that the “Dilly Dilly” ad campaign has helped improve the brand’s health and market share trends.

According to Brito, the relaunch of Bud Light Lime and the introduction of a Bud Light Orange line extension could help second-quarter performance.

Meanwhile, Stella Artois global revenues grew 12.3 percent during the quarter, and Brito said the brand has the opportunity to win dining occasions, which he estimates account for 40 percent of the total alcohol occasions globally.

“Stella Artois is the perfect beer to gain share of alcohol volume in these occasions, especially from wine as markets mature,” he said.

Outside of the U.S., where the company owns the Corona brand, revenue for the Mexican lager grew 25.1 percent overall and 40.3 percent outside of Mexico, due to increased sales in Western Europe and China, where it is the No.1 imported beer brand. Brito said Corona, which only has a market share of 3 percent or greater in three countries where A-B owns the brand (Chile, Australia and Mexico), has room to grow.

“With the brand continuing to grow double-digits globally, it’s still very far from reaching its full potential,” he said.

In the U.S., A-B’s revenue declined 2.5 percent in Q1 2018 compared to the same time last year. However, the company’s revenue per hectoliter increased 1.9 percent, boosted by the acceleration of A-B’s “above premium” brand portfolio, which was led by double-digit volume growth of Michelob Ultra. The 95-calorie, low-carb offering was the top share gainer in the U.S. for the 12th consecutive quarter, which A-B credited to increased awareness after featuring the brand in two Super Bowl commercials.

A-B estimated its market share declined about 50 bps in the first quarter, which Brito called “much better” than the last three quarters of 2017.

A press release with additional information is available here.

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