AB Inbev reports strong UK sales in spite of global woes

Shares in AB Inbev dropped by 11% after it announced it will cut its dividend in half in a bid to bring down its debt.

It represented the biggest decline since 2008 for the Budweiser and Stella Artois producer, wiping €16 billion off its market capitalisation.

“We can’t remember a more disappointing set of figures from AB Inbev,” said RBC market analyst James Edwardes Jones.

The brewer reported Q3 profit of $956 million, compared with $2.06 billion in the same period in the previous year. Revenue declined slightly, but rose 4.5% on an organic basis.

However, the brewer reported “mid single-digit growth” in western Europe and Jason Warner, president of its UK & Ireland business, was upbeat when discussing its UK performance.

“We have seen a strong third quarter for our UK business,” he said, referencing Nielsen and CGA data. “Year to date we have grown ahead of the market in both volume and value, helped by a summer of sport and big campaigns from our global brands.

“As the official beer of the World Cup, Budweiser lit up the globe’s biggest sporting event with our most ambitious campaign to date. Even post-tournament, Budweiser remained the number one contributor to volume and value growth across total trade.

“Bud Light also jumped in on the action, as it announced in August that it was becoming the official beer of the England men’s senior team. After the squad’s impressive World Cup run, Bud Light is the perfect partner to the team: a new player in its second year of launch and growing rapidly.   

“Corona has also had a fantastic summer, achieving double-digit growth as it toured the country with its sunset sessions and solar-powered DJ booths in the on-trade and ran a hugely popular promotion to win a Corona-branded cooler in the off-trade.

“Stella Artois reinforced its place as the nation’s favourite alcohol brands by introducing a gluten free variant in July, meaning even more people can enjoy the UK’s number one selling beer.

“Additionally within the wellness space, we announced in September that we were bringing Michelob Ultra to the UK from the US, where it has been the fastest-growing beer brand in terms of volume and value share for the past three years.

“A crisp, clean lager with 3.5% alcohol and 79 calories, it’s a beer for those who want to balance working out with going out. It also adds to our burgeoning no-and-low alcohol portfolio as we see demand for these beers increase. In the past year alone, sales of low-alcohol beer have risen 16% to over 86 million pints, and no-alcohol beer sales are up 27% to 43 million pints.

“ZX Ventures, our global growth and incubator group, is also seeing success in its craft  and speciality division in the UK – with Camden Town Brewery and Goose Island brands featuring in the list of the top five fastest-growing brands within the craft segment.

“Looking ahead, we know there are wider political and economic uncertainties facing the UK next year and have worked to innovate and insulate against risk. We have a significant local footprint with breweries in Wales, Lancashire and London and are continuing to build up a sustainable UK supply chain. For instance, we are working with farmers and agronomists to develop resilient grains as part of our SmartBarley programme, as we aim to source 100% of barley for British-brewed Budweiser from the UK by 2020.”

“From grain to glass, we are also backing Long Live the Local, the campaign from Britain’s Beer Alliance in calling for more support and less tax burden on our nation’s iconic pubs to halt the current closure rate of three pubs a day. It’s important for us to stand with the pub and beer sector, protect jobs and keep vital community hubs open across the country.”

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