AB InBev: ‘Our Q3 results show our strengths as a company and the resilience of the global beer category’
AB InBev’s revenue grew by 4% in 3Q20, positively impacted by a healthy volume performance and revenue per hl growth of 2.3%. Across the first three quarters of the year, however, revenue declined by 6.8% - hit by the pandemic - with revenue per hl growth of 1.6%.
Total volumes grew by 1.9% in 3Q20, with own beer volumes up by 2.6% and non-beer volumes down by 2.5%. In the year to date, total volumes declined by 8.2%.
“Our global brands [Budweiser, Stella Artois, Corona] and High End Company [specialty and craft] outperformed this quarter, with the global brand portfolio revenue increasing by 8.1% (outside of the brands’ home markets) and the High End Company revenue up by 6.5%, demonstrating the continued strength of the premiumization trend," said AB InBev as it releases its Q3 results this morning.
"We also improved our performance in our core portfolio, as consumers gravitated toward established brands that they know and trust. Growth was further enhanced by highly successful innovations, including Brahma Duplo Malte in Brazil and Bud Light Seltzer in the US.”
The world's largest brewer, however, warns that the market remains unpredictable: particularly in areas such as Europe where increased restrictions and renewed lockdowns are coming into force.
"While we expect our performance in the second half of this year to be better than the first, the environment remains volatile and uncertain, especially as some governments are renewing restrictions in several markets.
"We will leverage the fundamental strengths of our company – our diverse geographic footprint with access to high-growth regions, our clear commercial strategy, the world’s most valuable portfolio of beer brands, industry-leading profitability and, most importantly, our talented team of true owners – to continue our momentum in this fast-changing environment and drive the business forward toward a strong recovery."
Key market performances
US: Seltzer success
“Our business in the US delivered a strong quarter, driven by consistent execution of our consumer-focused commercial strategy that is centered on driving innovation and rebalancing our portfolio toward growing segments,” says AB InBev.
In 3Q20, sales-to-retailers (STRs) grew by 1.4%, outperforming the industry that was up by 0.8%.
Sales-to-wholesalers (STWs) increased 1.0% and total revenue grew by 4.5%. Revenue per hl was up 3.5% driven by revenue management initiatives and favorable brand mix, enhanced by the strong performance of its seltzer brands during the summer.
Brazil: volumes up 25%
"We saw a very healthy performance of our beer business in Brazil in the third quarter, with volumes up by 25.4%," says AB InBev.
"We estimate we meaningfully outperformed the industry, due to successful implementation of our commercial strategy: (i) resilience of the core, (ii) success of our innovations, particularly Brahma Duplo Malte, (iii) accelerated growth of our premium portfolio, (iv) operational excellence and improved service level across the country."
Europe: renewed lockdowns cast caution
The business in Europe delivered a ‘healthy performance’ this quarter with revenue growth of mid-single digits, supported by the continued strength of brands in the off-premise channel and the gradual re-opening of the on-premise channel.
Premiumization continued to accelerate across the region.
“We are encouraged by the performance of our business in the third quarter, while remaining cautious as we are now seeing renewed COVID-19 restrictions across Europe,” says AB InBev.
South Africa: impact of alcohol ban
“Our business in South Africa was significantly impacted by the second outright ban on the sale of alcohol beverages from mid-July to mid-August, resulting in volume and revenue declines of nearly 25% in 3Q20," reports AB InBev.
“We observed robust consumer demand once the government lifted the ban with volume growth resuming in September.”
AB InBev notes consumers are shifting to more affordable brands and bulk returnable packages: benefiting its core portfolio, particularly Castle Lager and Carling Black Label. Flavored alcohol beverages, Brutal Fruit and Flying Fish, also outperformed in the quarter.
China: e-commerce business grows double digits
Growth in China is being driven by premium and super premium portfolio and success in the in-home and e-commerce channels
“We delivered volume growth of 3.1% in China this quarter, supported by the ongoing recovery of the market, particularly in the on-premise channel. Our super premium brands grew by double-digits, and our premium brands, led by Budweiser, increased by high single digits this quarter supported by a favorable comparable. Our e-commerce business continued to grow by double-digits, and we grew the most market share among brewers in the increasingly relevant in-home channel, according to Nielsen.”
Revenue grew by 4.8%, with revenue per hl up by 1.6% on top of a challenging comparable, driven by the improving channel mix and continued premiumization.