A-B InBev's global volumes decline 4.1 percent in Q1 - LakeExpo.com: News

A-B InBev's global volumes decline 4.1 percent in Q1

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Posted: Tuesday, April 30, 2013 10:58 pm

Anheuser-Busch InBev saw its volumes drop both in the U.S. and in some of its largest global markets in the first quarter, with weather dragging down beer sales for the world's largest brewer.

The Belgium-based maker of Budweiser, Beck's, Stella Artois and more than 200 other brands said its volume dropped 4.1 percent for the quarter, including a 5 percent decline in the U.S., even as its profits and organic revenue grew. The world's largest brewer's North American headquarters is based in St. Louis.

Higher gas prices put a damper on consumer spending in the U.S., coupled with colder temperatures versus a year ago, which contributed to the volume declines domestically, company executives said in a conference call with analysts Tuesday morning.

In Brazil, A-B InBev reported an 8.2 percent volume decline, and company executives said the poor results were due to an early Carnival, high food inflation and bad weather. A-B InBev also saw volume declines in Europe and Russia. In China, however, A-B InBev's volume grew 15.5 percent, and the company said it expects strong growth there for the rest of 2013.

A-B InBev said that it now expects beer volume in 2013 "will be either flat or down low single-digits" compared to 2012.

But even with volume declines, A-B InBev's revenue grew 1.5 percent as the company has focused on growing its premium brands. Net profit for the company rose to $2.05 billion compared to $1.67 billion a year earlier.

"The strategy of positioning our innovations at higher price points continues to have a very positive effect on the revenue per hectoliter performance of the brand families," CEO Carlos Brito said in an analysts' conference call Tuesday morning.

And, A-B's innovation pipeline remains strong, with several new products and packaging launching this year, Brito said. Referencing the new Budweiser bowtie-shaped can that will debut in the U.S. in May, Brito called it a "conversation starter" that research shows appeals to young adults. The bowtie-shaped can will complement, not replace traditional cans.

Brito also noted that sales from a new product launched earlier this year, Bud Light Lime Straw-Ber-Rita, have been strong.

The new products and packaging in the U.S. are designed to reverse volume share losses over the past decade since A-B InBev's market share peaked in 2003 at almost 50 percent, compared to its current 47 percent market share, according to Bernstein Research.

"A-B InBev's core issue in our view is that its brands have failed to capture the imagination of key demographics such as young women and aspirational young men who have instead beaten a path to the spirits and wine categories, as well as craft beer and imports," Bernstein Research senior analyst Trevor Stirling wrote in an analysts' note Monday.

However, the company's increasing focus on its innovation pipeline is promising, according to Stirling, who called Bud Light Platinum and Bud Light Lime-A-Rita "home runs."

Successful launches of Bud Light Platinum and Bud Light Lime-A-Rita last year and Budweiser Black Crown and Bud Light Lime Straw-ber-Rita this year "is in our view good revenue management as those innovations are typically priced at 30 to 35 percent premium to (Budweiser)," Stirling wrote in the note. "So even if there is a little bit of cannibalization, mix and gross margins should continue to improve."

Also in the call, Brito said he expects A-B InBev's $20.1 billion acquisition of the half of Mexico-based Grupo Modelo that it doesn't already own to close in June. A-B InBev plans to add Corona as its fourth global brand, along with Budweiser, Stella Artois and Beck's, that it's positioning to sell around the world. Budweiser's global volume grew 8.4 percent in the quarter, due to strong sales in China, Russia and Brazil.

The Associated Press contributed to this story.

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