The world’s largest brewer says revenues from its three global brands grew by 12.6% in 2015 with Budweiser posting a 7.6% increase, Stella Artois 12.5% and Corona 23%. Its beer volumes were flat
Various analysts report that the results are disappointing as they missed analysts’ estimates. Thomas Buckley of Bloomberg News says as: “US consumers drank less beer, underlining the need for the brewer to complete its acquisition of SABMiller Plc to expand in emerging markets like Africa.
“A 15-year slump in the US beer market shows no sign of recovery as drinkers turn to spirits. The brewer is seeking growth via SABMiller, which is strong in emerging markets in Africa and Latin America. A-B InBev has also acquired fast-growing craft beer brands including Colorado’s Breckenbridge brewery to regain share in the US as demand for mainstream beer dries up,” says Buckley.
Duncan Robinson of the Financial Times comments: “AB InBev launched the sector's biggest M&A deal in a bid to stave off the effects of stagnant growth in key markets, such as North America and Europe. Although AB InBev has focused predominantly on cutting costs and increasing prices rather than sales growth, a further drop in volumes in the Americas hit the group on Thursday.
“Volumes in the US fell 3.3% to 25m hectolitres in the final quarter as mainstream brands such as Budweiser, struggled to attract younger drinkers. In 2015, the brewer lost 65 basis points of market share in the US - its largest division. In Brazil, a massive recession hit beer consumption, with volumes down 3.5% in the fourth quarter,” says Robinson.
He concludes: “Regulators across the world are still going over the tie-up with SABMiller. Management at AB InBev nodded to concerns that its takeover might face stiff resistance from African unions which fear job losses, insisting that it was "very excited about the prospects of making a significant investment and commitment to the African continent," says Robinson.
On trends in beer, the results report says: “Premiumising and invigorating beer involves creating more excitement and aspiration around beer, especially among millennial consumers. The development of the craft category in the US, and increasingly around the world, is a prime example of how new vigor and energy can be brought to the consumer’s experience with beer. In recent years, we have been building a position in the craft space with acquisitions in the US. In 2015, we also expanded our global craft portfolio with acquisitions in other countries such as the UK, Mexico, Canada, Colombia and Brazil.
“Getting consumers to see beer in new and fresh ways means we must do the same. To encourage this behavior, we have created a Disruptive Growth team to explore opportunities beyond the traditional areas of brands, brewing or marketing campaigns. One area being explored by the team is how technology can enhance distribution, packaging, and other aspects of the consumer’s experience. The team has identified a number of “bets” which, while initially small, could eventually become game-changers in the years ahead. For example, digital solutions and craft e-commerce platforms that allow consumers to order beer for quick delivery are being piloted in several countries, including Mexico, Brazil and Canada,” says the results report.
On the proposed takeover of SABMiller, it goes on the say: “In November 2015 we announced a proposal to acquire SABMiller. We believe that a combination of our two companies would build the first truly global brewer and that this transaction would be in the best interests of both companies' consumers, shareholders, employees, wholesalers, business partners and the communities we serve.
“Both companies have deep roots in some of the most historic beer cultures around the world and share a strong passion for brewing as well as an enduring tradition of quality. By bringing together our rich heritage, brands and people, we aim to provide more opportunities for consumers to taste and enjoy the world’s best beers. We believe this combination would generate significant growth opportunities and create enhanced value to benefit all stakeholders, ” says A-B InBev’s results roundup.
