AB InBev Hurt By Drop in Sales of Budweiser and Bud Light

Sales of Budweiser and Bud Light are continuing to drop faster than costs by Anheuser-Busch InBev can be slashed at the biggest brewer in the world.

The brewer, based in Belgium said it has lost 0.8% of its U.S. market share during the three-month period ending September 30. The U.S. is the company’s largest market. The market share loss was compared to the same period one year ago.

The drop in the core business for the brewer fueled concerns by investors as shares were down close to 3% in early Thursday trading.

One analyst said the underlying business continued to be very weak, as U.S. revenues dropped by 5.3%, adding he could not remember a quarter that was as bad as this one.

Bud Light, which is by far the top selling beer in the U.S., lost close to 1% of its market share during the quarter ending September 30, which was a much steeper than had been anticipated loss.

Budweiser lost some market share as well, as it suffered more than a third of a percentage point loss in the U.S.

CFO Felipe Dutra said the company was working on stabilizing its market share for both brands but knows it is going to be a journey doing that.

The market share losses were exacerbated by the hurricanes that hit Texas and Florida, but were just partially offset by strong performances by the more expensive beers of the company, including Michelob Ultra as well as Stella Artois.

AB InBev’s profit margins moved slightly higher because of aggressive cutting of costs following the takeover by the company of SABMiller last year. Cost savings due to that merger will likely reach a minimum of $3.2 billion in comparison with an earlier estimate of $2.8 billion, said company officials.

The brewers’ woes have become symptomatic of the shopping habits shift by consumers affecting many companies in the consumer goods industry. Younger customers have become more health conscious as well as being focused on today’s customization.

The brewer in turn responded by slashing costs and acquiring brands that were faster growing particularly imports and craft beers.

On Thursday, AB InBev said that its Michelob Ultra that is marketed as a low calorie beer for those that have an active lifestyle, is now accounting for close to 10% of its volume in the U.S.

AB InBev has shuffled its strategy for marketing Bud Light and Budweiser across the U.S., but those moves have not yet stabilized its business.

Leave a Reply

Your email address will not be published. Required fields are marked *