AB InBev: ‘We’ve come out of Q2 with reinforced confidence in the resilience of the global beer category’

By Staff reporter

- Last updated on GMT

Beer sales have shifted across to the off-trade during lockdowns. Pic: getty/Taveesaksri
Beer sales have shifted across to the off-trade during lockdowns. Pic: getty/Taveesaksri

Related tags: Beer, Ab inbev

While AB InBev’s Q2 performance was materially impacted by the COVID-19 pandemic as expected, it has seen ‘considerable improvement’ over the course of the quarter.

April volumes declined by 32.4%; May volumes declined by 21.4%; and June volumes grew by 0.7%. 

AB InBev – the world’s largest brewer – says it will use its global footprint to apply learnings from one market to another as the pandemic evolves.  

China: highest ever monthly volume in June

“Our performance in the second quarter was materially impacted by the COVID-19 pandemic, as expected,” ​says the beer giant, releasing its Q2 2020 results this morning. 

“As the quarter progressed, however, we saw considerable improvement in performance from month to month. We came out of the quarter with reinforced confidence in the resilience of our business and the global beer category.”

Declines and increases in volumes have been shaped by the nature of shutdowns around the world.

“In April, our volumes declined by 32.4%, as we faced a shutdown of our beer operations in key markets such as Mexico, South Africa and Peru, and the closure of the on-premise channel in most of our markets," ​says AB InBev.

“We saw a sequential improvement in May, with a volume decline of 21.1%. While we continued to face a shutdown of our beer operations in markets such as Mexico and South Africa, this improvement was driven by a return to positive volume growth in China, a healthy performance from our beer business in Brazil, the gradual reopening of the on-premise channel in certain markets, particularly in Europe, and the strength of the off-premise channel in both developed and developing markets.

“In June, we delivered volume growth of 0.7%, despite cycling a strong performance from the prior year. We saw a significant recovery in June in Mexico and South Africa, where the resumption of operations was met with robust consumer demand.

"Brazil accelerated its healthy performance with meaningful beer volume growth as we leveraged our best-in-class distribution network, innovations and digital capabilities to reach consumers in new ways.

"In the US, we delivered top and bottom-line growth through the success of our premium brands, known and trusted mainstream brands and the strength of the off-premise channel.

"China delivered exceptional results, with its highest ever monthly volume.”

Off-trade sales thrive

The improvement in volumes mirror those seen across the beverage category: Coca-Cola saw a 25% volume decline in April but a 10% volume decline in June, with volumes continuing to improve this month.

And as with other beverage companies, AB InBev has seen a rise in off-trade sales since the pandemic started.

“The trajectory of the business throughout the second quarter reinforced our confidence in the resilience of the beer category, particularly in the off-premise channel, where we saw healthy growth in both developed and developing markets. The continued reopening of the on-premise channel around the world also contributed to an improved performance, especially in May and June.

“We are excited about the return of these consumption occasions, while remaining cautious as we are now seeing renewed on-premise restrictions in certain markets. South Africa implemented a second ban on alcohol sales in mid-July, which will impact our results in 3Q20.”

The road to recovery

AB InBev says it will use its global footprint to apply learnings from similar markets to each other: helping accelerate recovery.

When the COVID-19 pandemic began spreading across the world, it grouped its markets into four clusters, allowing it to share learnings and best practice across similar markets.  

The four clusters are defined as: Recovering Markets, Less Restrictive Developed Markets, Less Restrictive Developing Markets, and More Restrictive Developing Markets.

“As the pandemic evolved throughout the second quarter, we reclassified some of our markets between clusters.

"For example, many European countries became 'Recovering Markets' as restrictions began to ease in May and June, inspiring our colleagues in Europe to replicate best practices from our teams in China and South Korea to support our customers in the on-premise channel for a successful re-opening.

"Welcome Kits were provided with personal protective equipment, such as branded masks and hand sanitizer produced with our surplus alcohol, and manuals with guidelines to help prevent the spread of COVID-19.

“In addition, we offered digital solutions to our customers that supported increased efficiency while reassuring consumers in the new environment.

“Our global footprint is truly an asset as we leveraged learnings from across our business to position our markets for a strong and swift recovery.”

Key figures: AB InBev Q2 2020

Revenue: Revenue declined by 17.7% in 2Q20 with a revenue per hl decline of 0.6%, driven by restrictions related to the COVID-19 pandemic. In HY20, revenue declined by 12% with revenue per hl growth of 1.6%.

Volume: Total volumes declined by 17.1% in 2Q20. In HY20, total volumes declined by 13.4%. The decline was primarily driven by impact of the COVID-19 pandemic.

Global Brands: Combined revenues of AB InBev’s global brands - Budweiser, Stella Artois and Corona - declined by 16.6% globally. In HY20, the combined revenues of these brands declined by 14.1% globally.

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