AB InBev’s forecast remains stable due to China’s positive performance, which offsets the negative impact of Bud Light in the US.

AB InBev's forecast remains stable due to China's positive performance, which offsets the negative impact of Bud Light in the US.

AB InBev Beats Earnings Forecasts, Overcomes Backlash Over Transgender Promotion

Anheuser-Busch InBev (AB InBev), the world’s largest brewer, has surpassed quarterly earnings expectations, and despite facing backlash over a transgender promotion in the US, the company has held steady to its 2023 guidance. The positive results can be attributed to a post-COVID recovery in China, which helped offset the impact of the conservative criticism against Bud Light.

Shares in AB InBev rose 2.6% to 52.40 euros in early trading, making it one of the top-performing stocks in the FTSEurofirst 300 index of leading European stocks.

Although global beer volumes for the second quarter fell by 1.4%, most markets experienced growth. The decline in volume was offset by a 9.0% increase in average prices, resulting from price hikes and a shift in consumer preference towards more expensive drinks.

AB InBev reported a 5.0% year-on-year increase in core profit (EBITDA) for the April-June period, reaching $4.91 billion. This exceeded the company-compiled poll that predicted a mere 0.4% increase. On the other hand, Heineken, the world’s second-largest brewer, reported worse-than-expected results and lowered its 2023 forecast due to a slowdown in Vietnam and decreased volume caused by price hikes.

In China, AB InBev sold 11% more beer by volume, with over 20% of the volume coming from higher-priced “premium” beers. This significant growth in volume and revenue pushed the company’s profits in China above pre-pandemic levels. Additionally, major markets such as Brazil and Mexico also reported higher revenue and profits, with a substantial increase in profit margins. The trend continued in Colombia and Europe, as AB InBev witnessed an upward trajectory in revenue and profits.

• EU banks to undergo liquidity checks in 2024 following the 2023 cri...
• Fannie Mae and Freddie Mac downgraded by Fitch after US rating cut.
• Merck, Germany, predicts bigger decline in earnings.

In contrast, the United States, which is typically AB InBev’s largest market, presented some challenges. Bud Light, one of the company’s flagship brands, lost its top spot to Constellation Brands’ Modelo Especial due to a conservative backlash over a social media promotion featuring transgender influencer Dylan Mulvaney. As a result, Bud Light sales through retail channels plummeted by 25% or more since April. However, recent reports indicate that sales have stabilized, with approximately 80% of surveyed consumers expressing a favorable or neutral opinion about the brand.

While Bud Light suffered setbacks, competitors like Coors Light and Miller Lite, both of which are brands of Molson Coors, reaped the benefits. Molson Coors raised its outlook following its strongest sales quarter since the merger between Molson and Coors in 2005.

In light of the overall performance, AB InBev stands firm in its 2023 forecast. The company maintains its expectation of EBITDA growth at a rate aligned with its medium-term outlook of between 4% and 8%, with revenue projected to exceed EBITDA growth.

Through strategic efforts and a resilient recovery in China, AB InBev has successfully navigated the challenges faced in the beer industry. Despite the conservative backlash and temporary decline in market share in the United States, the company’s solid performance globally allows it to maintain a positive outlook for the future.

• AMERS
• ASIA
• ASXPAC
• BACT
• BE
• BEER
• BEER1
• BEV
• BEVS
• BIZ
• BL
• BLUX
• CARIBN
• CMPNY
• CN
• EASIA
• EMRG
• EUROP
• EZC
• FIN
• FOBE
• FR
• LATAM
• MTPIX
• NAMER
• NCYC
• NEWS1
• NL
• PRIVT
• PUBL
• PXP
• RES
• RESF
• STX
• TOPCMB
• TOPNWS
• US
• WEU