AB InBev Sobered Up Last Quarter

AB InBev Sobered Up Last Quarter
Daniel Johnston

4 months ago1 min

What’s going on here?

AB InBev, the world’s biggest brewer, sobered up after a marketing hangover last quarter.

What does this mean?

AB InBev might be the world’s biggest brewer, but last quarter it hit a snag. The firm found itself in hot water after a marketing decision led some customers to boycott its best-selling Bud Light beer – and with a 28% drop in US profit, we think we’ve found the culprit. Luckily, AB InBev had other irons in the fire (including global brands Budweiser, Stella Artois, and Corona), and they offset some of the damage: profit in China, Brazil, and Colombia all grew more than 20%. That meant that AB InBev’s overall profit actually rose at double the rate analysts were expecting. And with the company’s outlook for the year holding firm, relieved investors sent the stock up by 5%.

AB InBev stock
Source: Google Finance

Why should I care?

Zooming in: A brewed awakening.

Regardless of how this all shakes out, Modelo’s now dethroned Bud Light as the US’s best-selling beer – a change that analysts reckon could be permanent. But AB InBev isn’t taking this lying down: it’s tripling its media spend on branding and sponsoring music concerts to try and win back that crown.

Bud Light vs Modelo
Source: The Wall Street Journal, Bump Williams Consulting, NIQ

The bigger picture: And a brewing storm.

Despite the earnings beat, beer drinkers are feeling the pinch from higher prices. After all, the amount of beer sold last quarter fell at both AB InBev and its rival Heineken. And while barflies tend to stay loyal to their favorite brands and just drink less to save money, companies will still want to stem this spillage sooner rather than later.

AB InBev sales fall
Source: The Wall Street Journal


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