The trickle down from Bud Light’s sales declines are beginning to materialize in its supply chain partners’ earnings.
On the same day that Anheuser-Busch InBev (A-B) reported double-digit declines in revenue, shipments and depletions in the U.S., Ball Corporation shared that its second quarter volumes declined -8.5% in North and Central America, which the company attributed to “customer mix, particularly in the domestic mass beer category.”
Although Ball’s Q2 call featured a lot of discussion of “mass beer” and the “marketing issue” that customers are facing, Ball chairman and CEO Daniel Fisher never mentioned A-B by name. However, the customer in question is the world’s largest beer manufacturer, which accounted for 13% of Ball’s net sales in 2022, according to Reuters.
“We’re overweight to the beer space and overweight to one customer within that space,” he said. “That’s the delta.”
Fisher noted that Ball has come to an agreement with the beer company “having the marketing issue” in order to “have a stable go forward position where we understand what the bottom is.”
Ball’s beverage packaging business in North and Central America brought in $175 million in earnings on sales of $1.54 billion, compared to $164 million on sales of $1.78 billion during the same period in 2022. The company said Q2 sales reflected “lower shipments and the contractual pass through of lower aluminum costs favorably offset by incremental inflation recovery.”
Fisher said he believes volumes are in a “trough” for Q2 and the company isn’t expecting appreciable changes in Q3. However, he expects the business to pick up in Q4 and improve in 2024, as the benefit of resets begin to set in.
After advocating for beer producers to increase promotional activity on previous calls, Fisher noted that the promotions implemented haven’t moved volume and are “coming after staggering price increases over the last few years.”
For full-year 2023, Ball is estimating flat global volume growth, with North America down low-single digits, Fisher said.