AB InBev, which is the world’s largest brewer, saw good performances from its global brands during the year. However, the company says it faced tough conditions in Brazil and China.
Revenue grew by 6.3% in FY2015 and by 7% in the fourth quarter, with revenue per hl growing 7% in FY2015 and 7.7% in the fourth quarter. On a constant geographic basis, revenue per hl grew by 7.7% over the year and by 8.6% in the fourth quarter, driven by strong premium brand volumes.
Total volumes declined by 0.6% in FY15.
Global brands, premiumization and craft
AB InBev’s key global brands performed well in the year, with revenues growing 12.6%. Global revenues for Budweiser grew by 7.6%; Stella Artois revenues were up 12.5%; and Corona revenues increased by 23%.
Volumes of global brands grew by 7.3% in FY15 and by 6.7% in the fourth quarter.
AB InBev’s strategic priorities include growing its global brands, and it promises to increase investment in sales and marketing programs to build on each brand’s image and consumer positioning.
Premiumization is another priority, with a particular focus on millennial consumers.
“The development of the craft category in the US, and increasingly around the world, is a prime example of how new vigor and energy can be brought to the consumer’s experience with beer,” says AB InBev.
It notes its craft portfolio in the US has been complemented in 2015 with acquisitions in countries such as the UK, Mexico, Canada, Colombia and Brazil.
SABMiller takeover on track
AB InBev confirmed that the acquisition of SABMiller (announced in November 2015) is still expected to close in the second half of 2016, subject to regulatory clearances and other terms and conditions. It says the deal will create the world’s ‘first truly global brewer.’
“By pooling our resources, we would build one of the world’s leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base. Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world,” says AB InBev.
“In particular, the combination would strengthen our position in emerging regions with strong growth prospects, such as Asia, Central and South America and Africa.”
With the resulting entity set to control around 30% of global beer volumes, the need to meet regulatory approval is key. Earlier this month, Asahi bid to buy Peroni, Grolsch and Meantime (conditional on the successful closing of AB InBev’s acquisition of SABMiller).
Key markets for AB InBev
US: Total volumes struggle; double digit growth for Goose Island
Michelob Ultra, Stella Artois and Goose Island all saw double digit volume growth in FY2015.
Bud Light saw sales to retailers decrease during FY2015, with some share loss in the premium segment. However, AB InBev is confident a refreshed visual brand identity and its ‘Raise One to Right Now’ campaign will boost the brand’s fortunes in 2016.
Total volumes over the year decreased by 2.2%, while revenue was down 0.7%.
Mexico: Volumes up
Volumes in Mexico grew by more than 7% in FY2015 (and 11% in the latest quarter). AB InBev attributes this to a favorable macroeconomic environment, and good performances by Corona, Bud Light and Victoria.
AB InBev predicts ‘another year of solid growth in industry volumes’ in 2016.
Brazil: Volumes down
AB InBev notes a tough macroeconomic environment in Brazil, which it expects to see continue in 2016.
“Our total volumes in Brazil decreased by 2.7% in FY15, with beer volumes down 1.8%, and soft drinks volumes down 5.2%. These results were delivered despite a very challenging macroeconomic environment and unfavorable weather in the fourth quarter.”
Premium and near beer brands (malt beverage alternatives to wine and liquor) delivered good growth, in particular Budweiser, Stella Artois, Corona, Original and Skol Beats Senses.
China: Under pressure
China, too, has seen economic headwinds, with the impact most noticeable in the value and core segments, says AB InBev. It estimates that total industry volumes declined around 6% in the year.
AB InBev’s own beer volumes grew by 0.4% across the year. The Core+, premium and super premium brands grew double digits (volume) in the year, and now account for more than 50% of AB InBev’s Chinese volumes.
“We expect industry volumes to remain under pressure in FY16. We expect our own volumes to perform better than the industry, driven by our premium and super premium brands,” says AB InBev.