US: Goldman Sachs cautious on brewing recovery

By just-drinks.com editorial team | 29 June 2007

US investment bank Goldman Sachs has warned that top brewers in the US will be facing tough conditions for the foreseeable future.

Goldman Sachs analyst Judy E. Hong said that the major brewers will face major headwinds for the foreseeable future, even as overall trends in the US beer market improve.

Hong said that even though the outlook in the beer market was "a bit sunnier", this may not mean brewers will see a dramatic improvement in profitability.

"The pace of share declines for beer actually moderated in 2006 versus the prior year, and distributor channel checks support our expectation that improved trends are sustainable," Hong said in a note. But pointedly she added: "We remain sceptical that the large traditional brewers can successfully offset slower growth in their core brands by entering (the) craft and imported beer segment."

Hong said brewers should be able to raise prices to keep pace with inflation, but warned that the three largest domestic brewers, Anheuser-Busch, Molson Coors and SABMiller, may still struggle in the next few years as craft beers were gaining share.