AB InBev FY18
AB InBev: ‘We have the best portfolio to lead the premiumization trend'
The world’s largest brewer this morning reported revenue growth of 4.8% for FY18, while volumes grew 0.3%. In the US, the company delivered its best annual share trend performance since 2012.
“2018 was another step forward in our company’s transformational journey. We had many successes to celebrate, though the year was not without its challenges,” says the company.
“Today we are a stronger, more diversified company applying our learnings across our global business. While there is more work to be done, we are confident in our strategy and plans to grow our business by creating value from seed to sip and delivering sustainable top and bottom line growth in 2019 and beyond.”
Premium to grow 5x faster than core and value
Premiumization continues to be key to growing the beer category, says AB InBev.
“We see a significant opportunity for premiumization around the world and we have the best portfolio to lead this trend. Compared to wine and spirits, beer is in its early stages of premiumization globally, providing us with the opportunity to capture beer’s fair share.
“For instance, Corona currently has a market share of 3% or higher in just three countries where we own the brand. With the brand growing double digits globally, we believe it is still far from reaching its full potential and see an opportunity for further growth.
“We expect the premium segment to grow about five times faster than core and value in the years to come. Our High End Company is well positioned to capitalize on this trend and deliver high growth and profitability.”
At-a-glance: AB InBev FY18
Revenue grew by 4.8% in FY18, boosted by 5.8% growth in the fourth quarter. Revenue per hl grew 4.5% in FY18, driven by premiumization and revenue management initiatives.
Volumes grew by 0.3% in FY 2018, with own beer volumes up 0.8% and non-beer volumes down 3.6%.
Combined revenues of AB InBev’s three global brands, Budweiser, Stella Artois and Corona, grew by 9.0% in FY18. Outside of their respective home markets, the global brands grew by 13.1%.
EBITDA increased by 7.9% in FY18 as a result of top-line growth and enhanced by cost discipline and synergy capture. EBITDA margin expanded by 118 bps to 40.4%.
AB InBev saw volume, revenue and market share growth in important markets such as Mexico, China, Western Europe, Colombia and Nigeria in FY18. “Each of these markets delivered strong performances in their respective premium portfolios while simultaneously evolving their core portfolios in line with the category expansion framework.”
Performances were ‘below expectations’, however, in Argentina, Brazil and South Africa, due to a weak macroeconomic environment.
Premium focus with US Super Bowl
In the US, revenues declines by 0.7% over the year but grew 1.3% in the latest quarter. Revenue per hl grew by 1.9% in FY18, driven by revenue management initiatives and continued premiumization of the portfolio.
Premiumization continues to be a key driver in the US: particularly with brands like Michelob Ultra and craft-style brands in its High End portfolio (the High End saw revenue grow 18.3% in 2018).
Tapping into consumer trends
Budweiser is to source all electricity from renewable sources in the US, and has launched a ‘100% renewable electricity’ label on pack to ‘lead the conversation on sustainability and renewable energy’ (it has made similar commitments in the US and Canada).
Meanwhile, Bud Light will put serving facts and an ingredients label on pack, meeting consumer demand for information.
“Our above core portfolio continues to outperform the industry; driven by Michelob Ultra, our regional craft portfolio, the recently rebranded Bon & Viv Spiked Seltzer and our innovations in the segment," says AB InBev.
“Michelob Ultra accelerated its growth this quarter, solidifying its position as the top share gainer in the US for the past four years. Our 2018 innovation pipeline contributed 50% of total industry innovation volume, up from 10% in the previous year, and included Michelob Ultra Pure Gold, Bud Light Orange and the Budweiser Reserve series. These innovations had a strong year and continue to gain share, enhancing the premiumization of our portfolio.”
“Within their segments, Budweiser and Bud Light are performing better than prior year trends. However, the core and core light segments remain under pressure as consumers trade up to higher price tiers.
“Our Super Bowl advertising was in line with our strategy to strengthen the beer category. We drove stronger consumer awareness of our premium brands and innovations including Stella Artois, Bon & Viv Spiked Seltzer, Michelob Ultra and Michelob Ultra Pure Gold.”
Michelob Ultra launches in the UK
AB InBev’s UK business achieved double-digit top line growth in 2018, with strong performances from global brands, the craft portfolio and Bud Light.
Capitalizing on the demand for premium brands, Michelob Ultra was introduced to the UK last year. “In the States, Michelob ULTRA has been the fastest-growing beer brand in terms of volume and value share for the past three years and we have big ambitions for it in the UK,” said Paula Lindenberg, president, AB InBev UK & Ireland.
Stella Artois – the UK’s top selling alcohol brand – was the fastest growing beer brand in retail last year. The premium brand launched a gluten-free variant and continued its partnership with sporting events such as Wimbledon, and unveiled a new Joie de Biere advertising campaign.
Big brand boom: Budweiser, Stella Artois and Corona
Budweiser revenue grew 5.3% globally and 10.0% outside of the US, driven by continued expansion into new geographies as well as activation during the 2018 FIFA World Cup Russia
“Budweiser was the most “talked about” brand on digital and social media during the 2018 FIFA World Cup Russia, with an estimated five billion social media impressions,” reports AB InBev.
“It was the biggest commercial campaign in our company’s history, with activations across more than 50 markets and 565 000 points-of-consumption.
“We were successful in building brand awareness in many of our new markets and are using this awareness to propel the brand toward future growth. We further maximized this sponsorship by activating more than 40 of our local brands in more than 40 markets.”
Meanwhile, Stella Artois grew 5.2% globally, driven by increased penetration of the meal occasion.
Corona leads the way as the most premium brand amongst the three, growing double digits for the fourth consecutive year, with revenue up 17.6% globally and 28.5% outside of Mexico.
“We believe in offering a customized portfolio of brands to lead the premium segment in order to reach more consumers in different occasions. Our complementary global brands give consumers premium options defined by occasion, taste profile and price point.”
