Dive Brief:
- AB InBev’s flagship brands, Michelob Ultra and Busch Light, have significantly contributed to the company’s sales growth in the U.S., even as the overall beer category has seen a decline, noted CEO Michel Doukeris during the brewer’s recent earnings call.
- During the last quarter of 2024, both brands achieved the highest market share growth in the beer sector. However, Doukeris expressed caution regarding anticipated sales trends in 2025, citing economic pressures on consumers and adverse weather conditions that could affect the industry.
- As demand for beer remains sluggish, leading brewers are increasingly dependent on their premium and widely distributed brands to sustain growth.
Dive Insight:
Following a tumultuous period marked by a boycott of Bud Light, AB InBev has managed to rebound and reported that its growth strategy is yielding positive results. This comes against the backdrop of persistent challenges in the domestic beer market, which experienced a 4.2% sales decline last year, according to a report from TD Cowen.
Doukeris informed analysts that the company is witnessing favorable momentum in the U.S., with several of its brands gaining market share in 2024. AB InBev has invested approximately $7.2 billion in marketing while simultaneously reducing its debt by $6.9 billion, showcasing a strategic financial approach.
Despite some positive indicators, AB InBev’s 2024 earnings report presented a mixed picture. Revenues from U.S. and Canadian markets increased by 2%, whereas the volume of beer sold declined by 3.8%. According to the CEO, various factors, including inflation, colder weather, and demographic shifts in certain regions, are affecting the company’s profitability.
Doukeris remarked, “I don’t think that the industry is at a positive volume point yet, but we’ve been seeing dollar-wise, the industry is stable, growing. Let’s see what the tailwinds are during the summer.”
He also highlighted the success of AB InBev’s beyond beer portfolio, with Cutwater emerging as the leading canned cocktail brand in the U.S., while Nutrl ranks as the second-largest vodka seltzer brand, trailing High Noon.
While AB InBev’s sales remain heavily influenced by its top brands, Doukeris pointed out that approximately 10% of the company’s revenue now comes from products that provide alternative experiences, such as non-alcoholic, low-carb, and zero-sugar beverages.
Recent earnings reports from competing beer giants have underscored the broader challenges facing the industry. For instance, Molson is increasingly focusing on spirits and premium beers like Blue Moon, while Heineken is making substantial investments in its non-alcoholic product line, Heineken 0.0.
In a note to investors, TD Cowen analyst Robert Moskow acknowledged that AB InBev has successfully navigated the fallout from the Bud Light boycott. He noted that the growth of brands like Michelob Ultra and Busch Light could serve as a buffer against the industry-wide challenges. However, he cautioned that AB InBev has not yet diversified sufficiently into beyond beer brands to fully insulate itself from these ongoing issues.