US: Revived domestic sales cheer A-B
Revitalised domestic beer volumes have buoyed first-half sales and earnings at US brewing giant Anheuser-Busch.
The Budweiser brewer yesterday (27 July) posted a 3.9% rise in net income to US$1.1bn, on the back of a 5.7% increase in net sales.
A-B said the increase in sales during the six months to the end of June had come from "all business segments" but it was notable that the brewer had seen US beer volumes rise after months of stagnation.
International beer sales rose 10% while earnings from A-B's businesses overseas were boosted by its 50% stake in Mexico's leading brewer Grupo Modelo. The brewer enjoyed rising volumes in Canada, China and the UK but profits in the latter two markets were down.
"We are off to a good start this year," said Patrick Stokes, A-B's president and CEO. "Our domestic beer volume momentum continues to be positive into the key summer selling season. We had the largest sales-to-retailers volume in June of any month in the company's history. The domestic beer pricing environment is favourable, and our productivity improvement initiatives are helping mitigate continuing cost pressures."
Stokes added: "Based on these positive factors we are optimistic concerning our sales and earnings outlook for 2006."
The US beer industry has suffered in recent years as consumers have increasingly turned to premium spirits and wine. Within the beer market, craft and import beers have fared better at the expense of domestic brands.
Last summer, A-B and fierce domestic rival Miller Brewing embarked on a price war to regain share lost to distillers and wine producers. However, analysts then warned that sustained price discounting would hurt the "equity" of the beer category in the minds of consumers. In February, A-B reported falling profits for 2005.
Randy Baker, CFO at A-B, said yesterday that the brewer had been able to charge "significantly higher" prices this year.
"The company is well positioned at the halfway point of the key summer selling season," he said. "We have restored our beer volume momentum."
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