The future’s bright for beer, says AB InBev, thanks to power brands and premiumization

AB InBev’s Q4 results beat forecasts and full-year results bought in all-time high revenue, with the company’s shares rocketing 8% as a result.

While the beer category has taken a hit over the last few years with sluggish performances, the world’s largest brewer is now forecasting profit growth of around 4-8% over the next year, generating a new boost of optimism.

And AB InBev is doing what it does best: focusing on the power of its big brands.

Beer is still a ‘passion point’ for consumers

Long-term headwinds for the beer category – such as competition from spirits and RTD alcohol and a general momentum towards moderation – have led to much doom and gloom for the industry.

But AB InBev remains bullish about the future of the beer category: pointing to its FY2024 results as evidence.

“We remain confident in the growth opportunities for beer and continue to invest for the long term,” says CEO Michel Doukeris, in the company’s FY2024 earnings call.

That, he says, is because beer remains a much-loved drink of choice for so many consumers. Adapt that to some of the biggest consumer trends - such as drinking less but better - and the category remains strong.

“The category and our brands are a passion point for consumers,” he said. “We believe beer has a long runway for future volume growth in premiumization across our footprint, supported by favorable demographics, economic growth, and significant opportunities to increase category participation.”

In 2024, according to IWSR, the beer and Beyond Beer category continued to gain share of total alcohol by volume globally. And looking ahead, beer is expected to grow volumes globally and continue to gain share of total alcohol, said Doukeris.

Its strength starts with its portfolio: including megabrands such as Budweiser, Michelob Ultra, Stella Artois, Modelo and many more. These megabrands represent 57% of the company’s revenue: leading growth with revenue growth of nearly 40% since 2021.

This power portfolio holds 20 iconic billion-dollar revenue beer brands and 8 out of the top 10 most valuable beer brands in the world, according to Kantar’s BrandZ.

In 2024, AB InBev invested $7.2bn in sales and marketing behind the megabrands, mega platforms and brand building capabilities as a driver for long-term growth (the company has consistently invested similar amounts annually over the last few years).

Like other brewers (including Molson Coors and Heineken), it’s seeing a ‘significant opportunity for premiumization’, led by brands such as Stella Artois and Michelob Ultra.

AB InBev’s above core beer portfolio represented 35% of its FY24 revenue and grew revenue by low-single digits.

And these power brands include Corona: the most valuable beer brand in the world. This brand grew volumes 9.4% in 2024, with double-digit volume growth in more than 30 markets. And in fact, the brand has seen 87% volume growth since 2018.

“Our investments are more effective than ever as we have concentrated behind mega brands and mega platforms and have leveraged the data and our digital platforms to drive efficiency,” Doukeris told analysts in the company’s FY2024 earnings call this week.

“Led by our global brands, we are the leader in the premium beer segment globally and see a long runway for the category to continue to premiumize. The premium beer segment is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall.”

Alcohol-free potential

Corona also illustrates the potential AB InBev sees in alcohol-free beer: with Corona Cero leading the charge.

Quoting stats from IWSR, AB InBev expected the category to see 5x the volume growth of the overall beer category (2023-2028).

“While non-alcohol beer is currently a relatively small portion of our global beer volume, we believe it is a key opportunity to develop new beer consumption occasions, increase category participation and drive incremental volume growth,” Doukeris said.

Another benefit of the power brands is that they translate across markets, accompanied by local propositions.

And AB InBev is looking outside the developed US and European markets for growth.

“Developing markets represent 55% of our volume, are mostly comprised of countries where we have strong leadership positions, and are expected to account for 34% of the category volume growth over the next five years,” said Doukeris.

“This cluster has been a key growth engine for our business over the last three years with record-high volumes in key markets such as Brazil, Mexico, Colombia and South Africa and double-digit top and bottom-line growth in US dollars.

“Emerging markets represent only 10% of our volumes: but are expected to drive nearly 50% of the category volume growth. We have leadership positions across Africa and lead the fast-growing premium and super premium segments in India. Our volumes across this cluster have grown by 10% over the last three years with significant opportunities to increase category participation as these economies develop.”