AB InBev tells an intriguing Q2 tale of two Buds…
Reporting its Q2 results for the year to June 30, AB InBev noted revenue up 4.7% year-over-year to $9.871bn and 5.4% in H1, net income grew 22% in Q2 to $1.955bn.
However, total volumes fell 0.1% in Q2, with beer volumes down 0.5%, although AB InBev’s non-beer volumes grew 4.2% in the quarter.
AB InBev management blamed soft quarterly volumes on the US market, due to adjustments made to ensure more cost-efficient shipments to wholesale clients, which led to a 2.1% volume decline in this channel.
But management hailed the best US volume performance – for H1 as a whole – since 2008, due to favorable weather and an economic improvement in Q1, as well as industry innovations in H1.
Bud Light Platinum
US retail sales rose 0.2% in H1, with AB InBev attributing it to strong execution and innovations, in particular Bud Light Platinum and Bud Light Lime Lime-A-Rita.
Both these line extensions sell at a premium to Bud Light (the brand overall grew 3.5% in Q2) while AB InBev also claimed good results for Micehelob Ultra and other high-end brands.
Star performer was Bud Light Platinum, which AB InBev launched in January 2012; it now has an estimated 1.1% market share (based on retail sales), with over 1.1m hectoliters shipped by early July.
“Our research on cannabalisation also shows positive results, indicating that less than 50% of Bud Light Platinum volume is being sourced from our own brands, with a significant proportion coming from hard liquor and other beverages,” AB InBev management said.
The firm added that it planned to launch Bud Light Platinum in 22oz bottles and a 12oz bottle 18-pack during Q3.
Stabilizing brand Budweiser
However, this feel-good factor was dented by Budweiser US market share loss, with brand retail sales down 6.5% year-over-year in Q2.
“We continue to focus on stabilizing the brand, and in our value brands, as a result of our strategy to close the price gap with our premium brands,” management said.
In Brazil, AB InBev’s beer volumes grew 3.1% in Q2, with its premium brands growing double-digits led by Stella Artois and Budweiser.
According to AB InBev:“We continue to roll-out Budweiser in carefully selected outlets, with distribution of the brand increasing by over 60% in the last three months.”
Q2 beer volumes rose 7.6% in China, with AB InBev estimating a 40bps (0.4%) market share gain in the first five months of the year.
Discussing AB InBev’s Chinese Q2, management said:“Innovation plays a key role in building connections with our consumers. During the quarter we announced the introduction of a fully opening lid designed for the nightlife occasion, making Budweiser even more relevant to the young adult drinker.”
