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Anheuser-Busch InBev Performance Trends 2013-2017 - results data

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In early-March, Anheuser-Busch InBev released its full-year results for 2017. The group posted a 5.1% lift in sales from the year, thanks in part to a bumper final quarter. Here, just-drinks considers A-B InBev's performance over the last five years.

What a five years it has been for Anheuser-Busch InBev and CEO Carlos Brito

What a five years it has been for Anheuser-Busch InBev and CEO Carlos Brito

If global brewing has an equivalent of those cartoonish cinema villains who sit in a swivel chair, overlooking a rocket launch-pad on a remote island idyll, stroking an implausibly furry cat and planning world domination, then it is surely Anheuser-Busch InBev. That's not to suggest that either A-B InBev or anyone in it is engaged in nefarious activity, but it's increasingly hard to take in its regular acquisitions without hearing a sinister voice inside your head saying: "Soon all day this will be ours."

The days when the company that was once Interbrew could accurately be described with the epithet "Belgian brewer" have long gone, with the mergers with AmBev of Brazil in 2004 and Anheuser-Busch in 2008, followed by the 2013 acquisition of Grupo Modelo turning A-B InBev into a truly global giant. More recent years have seen it swallow up both big and small rival brewers, as A-B InBev fashions a long-term future built on global mega-brands and positive trends in high-margin niches.

The biggest of all brewing deals was, of course, the acquisition of SABMiller in 2016, strengthening A-B InBev's hand considerably in Africa and Central & South America, and reinforcing its status in Europe and Asia despite the regulator-satisfying pre-completion sell-offs of Snow, Peroni Nastro Azzuro and Grolsch.

On completion, the deal brought together distribution operations that were largely complementary and gave the brewer a combined portfolio of more than 500 beers, including seven of the world's top ten and 18 that generate more than US$1bn a year each in retail sales.

Further down the brewing pecking order, A-B InBev has skilfully muscled into the craft beer space on both sides of the Atlantic, but in such a low-key way that many casual beer drinkers might probably be unaware of its hand as they sip on their pints of Goose Island IPA or Camden Town Hells.

In the US, it has embarked on a state-by-state acquisition programme, taking in the likes of Elysian in Washington, 10 Barrel in Oregon, Golden Road in California and Karbach in Texas, to name just a few. It's also increased its presence in Asia-Pacific with the acquisition of Oriental in South Korea - the maker of the market-leading Cass brans - and made craft acquisitions in Mexico, Canada, Colombia and Brazil.

By calendar-2017, its The High End division, which looks after speciality and craft brands, was established in 22 markets, with its latest annual growth performance in the segment put at 25.8%. The unit contributed revenue of $4.6bn in 2017, around 8% of group turnover.

But, it's the three designated global brands - Stella Artois, Budweiser and Corona - that have been the main engines of growth. Although their positioning differs subtly between markets, the three are sold as premium or super-premium brands around the world and have all helped A-B InBev consistently improve margins and profitability, even if that has meant sacrificing volume growth on some occasions.

A-B InBev has also been helped by competing mostly in relatively-stable beer markets, relying less on some more volatile environments - Russia, for example - that have made life difficult for some other global players.

The company's top four markets - the US, Brazil, China and Mexico - together account for almost half of the world's total beer volumes. In China, a focus on super-premium beer trends and affluent consumers has kept the group out of the beer market's worst travails. At the same time, it has had torrid times in Brazil, but has tried to stay nimble, with short-term actions on brands and packaging to adapt, while keeping its eye on the long-term prize.

Anheuser-Busch InBev's Full-Year Sales 2013-2017

2013201420152016 (Ref Base)2017
Sales4319547063436045394256444

Source: Company results

A-B InBev started the five-year period with year-on-year sales growth of 3.3% in 2013 to $43.2bn, though the group's own-beer volumes saw a drop of 2%. The volumes dip was blamed on macro-economic challenges in some markets. The year saw the completion of the integration of Mexico's Grupo Modelo and there was growth for Modelo's Corona and the group's other global brands, Budweiser and Stella Artois.

Cost savings of $460m were reported from the Modelo deal. This rose to $730m by the end of 2014, with a target set to achieve $1bn in cost benefits from the merger by the end of 2016.

Sales in 2014 then rose by 5.9% to edge over the $47bn mark, with gross profits up 7.9% to $28.3bn. Total volumes grew 0.6% and own-beer volumes were up 0.5% with combined growth of 5.4% for the global brand trio.

A year later, in 2015, group revenue increased 6.3%, with premium trends driving strong revenue-per-hectolitre growth of 7%, though volumes overall were more or less flat. Revenue for the global brands grew by 12.6%. 

The SAB deal aside, 2016 was billed as a disappointing trading year and main board member bonuses were withheld as a result of the under-par performance. Revenue was up 2.4%, but own-beer volumes dropped 1.4%. Revenue growth-per-hl of 4.5%, however, was still indicative of the importance of margin improvement. Combined sales from the three global brands bucked the trends of the rest of the portfolio, with a lift of 6.5%.

The start of the integration of the SAB business brought $262m of cost savings between 1 April and 31 December, 2016. The deal was formally completed in October and, by the time of reporting in February 2017, expected eventual synergy and cost savings had been upgraded from the initial figure of $2.4bn to $2.8bn.

Political and economic turmoil in Brazil put a dent in consumer spending and had a big impact on A-B InBev's performance in 2016; Excluding the numbers from the country, group sales would have been up for the year by 4%.

Revenue did actually grow by 5.1% in 2017 to $56.4bn, unsurprising in the first full-year contribution from SAB business. Savings from the SAB integration reached $1.3bn.

Total volumes were up 0.2% and own-beer volumes were ahead by 0.6%. Combined revenue from the global brands grew by 9.8% - and by 16.8% outside of their respective home markets.

Anheuser-Busch InBev's Full-Year Volumes 2013-2017

2013201420152016 (Ref Base)2017
Volumes425939458801457317615880612572

Source: Company results

Global brands

The holy trinity of Budweiser, Stella Artois and Corona have been consistently-strong performers over the five-year period. The only regular blot on Budweiser's copy-book among the major territories has been it home US market [see North America below], but successive years have seen global brand sales growth of 6.4% in -2013, 5.9% in 2014, 7.6% in 2015, 2.8% in 2016 and 4.1% last year. Football and music sponsorships have energised the brand and China, Russia, Brazil and the UK have regularly featured as stand-out markets.

Stella Artois wasn't singled out in dispatches in 2013 and 2014, but revenue growth for the brand of 12.5% was reported in 2015, followed by 6.3% in 2016, with particularly good performances in the US and South Korea. 

The US was the main driver of Stella Artois growth in 2017, when global brand sales climbed 12.8%, a figure helped by A-B InBev taking back distribution rights in Australia and the brand entering South Africa for the first time.

Corona has put-in the most effervescent performance of the three. The Mexican brand enjoyed a 3.9% increase in sales in 2013, the year it was fully absorbed into the A-B InBev business, and kicked on with growth of 5.8% in 2014, 23% in 2015 and 14.3% in 2016 when it achieved double-digit growth in 23 countries.

Corona boosted its global sales by 19.9% in 2017, with positive trends for the brand in Mexico, China, Australia and Argentina.

Anheuser-Busch InBev's Full-Year Sales by Region 2013-2017

North AmericaMexico/LatAm WestLatin America NorthLatin America SouthEurope/EMEAAsia-PacificTotal
20131602327691087732695021335443195
20141609346191126929614865504047063
2015156033951909634584012555543604
2016 (Ref Base)156988595863028509700725053942
20171558892389775336310344780456444

Source: Company results

Note - From 2016, A-B InBev redrew its reporting regions. Mexico was replaced by Latin America West, while Europe became Europe, Middle East & Africa

  • North America

Of all the major regional operations, North America has been the most sluggish for volume growth, with the performances of both Budweiser and Bud Light regularly being eclipsed by the lower volume, but higher-end, likes of Michelob Ultra, Budweiser Crown and Stella Artois, which operate in what A-B InBev calls the 'Above Premium' segment. The national roll-out of Goose Island, the launch of the Montejo Mexican brand and the introduction of Shock Top into the craft beer all threw further focus on to more expensive beer trends.

In 2013, total North American own-beer volumes decreased by 2.7% and US sales-to-retailers fell 2.9%, though beer revenue-per-hl grew by 3.1%. The Ritas flavoured malt beverage line was considered a "hit with consumers", part of a group strategy to bring non-beer drinkers into the category from competitors such as spirits, ready-to-drink and wine.

Volumes dropped 1.4% in the US in 2014 with sales ahead by just 0.3%. This was followed by a further volumes fall of 2.2% in 2015, and a sales dip of 0.7%. Bud Light sales-to-retailers were down by low-single-digits and the brand lost market share, though its performance in Canada was something of a mirror image, and strong showings for Corona and Stella Artois contributed to rising sales and share in that market.

In 2016, North America saw organic own-beer volumes decline 1.6% and US sales-to-retailers decreased 2%. Sales were flat, however, as margin improved. Bud Light was down again, by mid-single digits, with disappointing sales in some larger states.

Last year brought organic own-beer volumes down 3.4%, the only reporting region globally to see a fall. Michelob Ultra's continued star billing - the brand was now the "biggest share gainer" for 11 successive quarters and was enjoying further double-digit growth - led to the launch of the Pure Gold organic line extension.

Despite the good news from premium trends' effects on the top-end of the portfolio, A-B InBev declared bluntly of its efforts overall: "We are not satisfied". Positive aspirations for Budweiser and Bud Light had been expressed at the time of the 2016 full-year report, but both underperformed against the total beer market.

Canad, in contrast, gave Bud Light its 22nd consecutive year of growth and contributed to an overall volumes increase, in a market described as challenging.

  • Mexico 

Consistently good showings for the home-grown brands Corona and Victoria helped Mexico become one of A-B InBev's best growth generators over the five-year period. That said, in 2013, total own beer volumes declined by 2.9%, impacted by a soft economy and severe weather in September. Tax increases for early-2014, announced towards the end of the year, also impacted consumer confidence and affected beer sales.

But, 2014 brought a resurgence, with sales up 5.7% on volume growth of 1.6%, with advances strongest in regions where A-B InBev was historically less well-represented. The Corona portfolio grew by 6.5% across the year, with market visibility helped by a refurbishment programme for the Modelorama retail chain. Volumes for Bud Light, meanwhile, doubled on the previous year, and a marketing campaign behind Victoria saw that brand's volumes rise 10%.

Mexico's volumes were up 7.3% in 2015 and revenue rose by 11.1%, with further good performances from Corona, Bud Light and Victoria, taking A-B InBev's overall market share to 58%. Growth hit double digits in 2016, before slowing to mid-single digits for volume and high-single digits for sales last year. A new-look pack boosted Bud Light in the country, while there was success in premium beers with Stella Artois and Michelob Ultra.

  • Brazil

Volatile political and economic times have made Brazil the most tricky of A-B InBev's major markets, with regular spikes and troughs on the sales charts. Poor weather and high inflation impacting consumer confidence contributed to a drop in beer volumes of 4.3% in 2013, but the Brazilian World Cup in 2014 helped A-B InBev bounce back, with full-year volumes up 4.7% and revenue ahead by 10.6%.

Beer volumes in the country dropped again, however, in 2015, by 1.8%, inhibited by a challenging economy and poor weather. Despite this, premium brand growth, led by Budweiser, Stella Artois, Corona and local brand Skol, raised sales for the year by 8%.

Rising unemployment and devaluation of the Real hit consumer spending in 2016 and A-B InBev's Brazilian woes were reflected in a 6% decline in beer volumes across the Latin America North reporting region.

Last year brought organic own-beer volumes growth of 1.6% as business rebounded in Brazil, where volumes were up 0.7%. The premium portfolio was up by double digits in Brazil in 2017, fuelled by growth for Budweiser.

  • Latin America South

The main contributor to this reporting region is Argentina, with the remainder of sales made up by Uruguay, Chile, Bolivia and Paraguay.

Beer volumes from the region for 2013 dropped 2.8%, with Argentina down 1.9%. Sales were hit further in 2014 by weak economies in several markets and poor weather, resulting in a further fall of 1.7%.

Regional beer volumes in 2015 increased by 1.5%, and Argentina's volumes were up by low single-digits, helped by positive trends for Stella Artois, Corona and by Mixx Tail, a malt beverage cocktail launched in 2014.

Latin America South volumes declined 2.1% in 2016, impacted by high inflation in Argentina, but there was some correction in 2017 when a repositioning of Brahma, the launch of Quilmes Clásica and growth of the Patagonia craft beer brand helped deliver volume growth of 7.5% in Argentina, with sales soaring by 41%.

  • Latin America West 

A-B InBev began reporting Latin America West - comprised of Colombia, Peru and Ecuador - separately in 2016, when it showed organic own-beer volumes growth of 5.9%. This was followed by a further rise of 1.7% in 2017.

Beer volumes in Colombia were down 3.2% in 2016 with margins impacted by unfavourable exchange rates and rising imported ingredient prices. Sales grew 4.5% in 2017, but the main driver in the country was non-beer volumes. Beer sales were down a further 4.2% in a challenging economy, though Corona led growth for all three global brands.

Ecuador declined by double-digits in 2016 with a recessionary economy made worse by an earthquake in the April, which led to tax increases to aid recovery. Last year, sales grew 6.7%, with volumes up 0.8%, as the group's global brands were launched in the country.

Peru volumes were flat in 2016 and dipped by 0.4% in 2017.

  • Europe

Calendar-2013 brought a 4.3% decrease in beer volumes in Western Europe, with Germany down 7.1% and Belgium and the UK both 3% off the pace, though the latter saw Budweiser sales rise by a similar amount. A-B InBev said at the time that it had "strong brand health" for the Belgian brands Jupiler and Leffe in the region.

Beer volumes in Central & Eastern Europe fell 15.8% over the year, despite Budweiser establishing a "strong foothold" in the premium beer segment in Russia and Ukraine. Overall beer sales in Russia were down 13.6% in the year, due to the impact of regulatory changes, while political instability hammered Ukraine beer sales in the last quarter, when they dropped 41.3% on the previous year.

In 2014, Belgium was "essentially flat" - with no pun intended, presumably - while sales in Germany dropped a further 3.4%. The UK, meanwhile, started to deliver a period of strong growth in a difficult market, with volumes up 1.5% and market share gain in the off-premise channel.

Western Europe as a whole was ahead by 3% in 2015, with further falls in Belgium and Germany but good growth for focus brands in France, Italy and the Netherlands. UK volumes were up by mid-single digits, driven by marketing activations for Stella Artois and Corona.

The region was reported under the broader EMEA umbrella from 2016, when the region's overall organic own-beer volumes declined 1.4%. Sales in Europe were up 4.5%, driven by premium brands with market share gains in most of Western Europe. Eastern Europe, however, was down by high single-digits following price increases on 'Value' segment brands in Russia.

Last year brought organic own-beer volume growth of 2.3% for EMEA. Western Europe was up by high single-digits and market share again improved in most markets. The UK boasted double-digit growth in the 12-month period.

Sales in Eastern Europe declined slightly as the PET ban in Russia hit, but A-B InBev said its premium brands did well.

  • Africa

The SABMiller acquisition prompted figures for Africa to be reported in detail for the first time in 2016, as part of the EMEA region. In the year, volumes in South Africa fell by 5% in the fourth quarter on economic weakness and and headwinds caused by currency movements and higher commodity prices. Nigeria saw a double-digit increase on the back of increased market penetration and brewing capacity, while Tanzania and Mozambique had single-digit growth. An economic slowdown in Zambia, however, brought a double-digit volume slide.

Last year saw beer sales in South Africa grow by 6% with volumes in the country up 0.9%. Outside of South Africa, growth was in the mid-teens with volumes up by double digits in Nigeria, Tanzania, Uganda and Zambia.

  • Asia Pacific

A-B InBev's focus on premium and super-premium brands targeting China's affluent middle classes helped it outperform a stuttering beer market over the five-year period. The brewer described its performance in China in 2013 as "extremely robust", as sales increased by almost 9% in the country, led by the increasing popularity of Budweiser and the domestic brand Harbin. A brewery expansion programme and "selective" brewery acquisitions help to extend A-B InBev's reach into new regions of the country.

A year later, in 2014, sales in China rose 11.6% on volume increases, against the backdrop of a 4% fall in the total beer market. The year saw the Chinese launch of Budweiser Brewmaster Reserve, a limited edition brew topped with a Champagne-style cork. The main Budweiser brand, meanwhile, was in double-digit growth in the year.

South Korea was less buoyant in 2014, with beer volumes down 6.4% in a depressed market. A year later, and new marketing campaigns were implemented to attempt to generate growth for the Cass and OB brands in the country. Beer volumes, however, fell in 2015 by mid single-digits, with market share loss in a competitive environment. Sales trends improved in the second half, with some share gain for Cass on the back of its beer freshness campaign.

A-B InBev volumes in Asia Pacific were flat in 2015. The premium trends in China continued, however, with sales up 9.8% on a volumes increase of just 0.4%. The country's total beer market volumes, meanwhile, were down 6% in blustery economic headwinds.

A decline in own-beer volumes of 1.1% was recorded for the region in 2016. China was down 1.2%, but A-B InBev still fared better than an industry decrease of 3.8%. The group's targeting of higher-spending consumers helped sales in value terms increase in the country by 2.5%.

Last year saw organic own-beer volumes flatline in the region, inching up 0.3%. Sales in China were up 7.3% on volume growth of 1.1%, as Harbin Ice did well in the premium segment, aided by the addition of a Baipi wheat beer line extension. Combined sales from the super-premium portfolio of Corona, Hoegaarden and Franziskaner almost doubled.

The SAB acquisition gave A-B InBev control of the Australian distribution rights for its own global brands Budweiser, Stella Artois and Corona brands, securing instant market leadership in the country for A-B InBev.

The Australian market appeared in the financial statements from 2017, when it enjoyed double-digit growth with Great Northern, which became A-B InBev's biggest brand in the country in volume terms.

What can the brewing industry learn from Anheuser-Busch InBev? - Comment

If there is a single overriding lesson to be learned from just-drinks' analysis of Anheuser-Busch InBev's performance over the last five years, it is one more obvious than a pint of IPA at a Champagne tasting. Put bluntly, that lesson is: Global expansion + cost reduction = increased profitability.

Of course, A-B InBev is the master of takeovers, having effected dozens of them, large and small, over the last two decades. So many businesses have been absorbed by the company, in fact, that it warrants breaking them into categories of large and small, or perhaps more precisely, international and national.

In the international group, the largest deal has obviously been SABMiller, the integration of which is still in motion after a year and a half. As per the just-drinks analysis, the takeover provided A-B InBev with a portfolio of over 500 brands, including "seven of the world's top ten and 18 that generate more than US$1bn a year each in retail sales".

In an increasingly-internationalised beer world, that's no small achievement. 

That said, not all of those brands are in the greatest of health in all markets, so it's worth examining the company's actions during its post-acquisition periods. In the same fashion as Interbrew did following its merger with AmBev, and the resulting company InBev did following its takeovers of both Anheuser-Busch and Modelo, the focus of the post-SAB A-B InBev has been on cost-cutting, the now quite extended series of which, with one year's exception, has allowed the company to grow revenue disproportionately to volume.

In 2014, for example, volumes in the post-Modelo takeover period rose only 0.6%, whereas gross profits were up 7.9%, thanks in no small part to $730m in cost savings since the completion of the Modelo purchase a year earlier. It being a much larger company, the SAB takeover two years later provided A-B InBev with even more opportunities, with $262m in cost-cutting reported in the last three-quarters of 2016, despite the deal's completion in October of the same year. By the time all is said and done. the anticipated eventual total of synergies and cost savings has been set at $2.8bn.

On the smaller, more nationally-oriented side, A-B InBev has been equally active, with multiple acquisitions of craft breweries in the US, Canada, Mexico, the UK, Italy, Brazil, China and beyond.

The key to their handling of these purchases would appear to deliver a lesson in brewery management: Step one is to establish a unique division - The High End, in A-B InBev's case - to oversee smaller and more niche breweries separately. This recognition that breweries like Golden Road in the US, Camden Town in the UK and Birra Del Borgo in Italy require different handling than, say, Budweiser and Stella Artois, allowed The High End to contribute sales of $4.6bn in 2017.

On a more macro level, it makes sense for A-B InBev to be active pretty much everywhere where beer may be legally sold. This being the case, the markets the group has so far not particularly focused on is telling.

As noted in our look at the past five years for Carlsberg, Russia has been a particularly volatile market of late. It is interesting to note that A-B InBev has not been in any great rush to either strengthen or expand its position in the country. Indeed, as observed in the performance trends analysis for A-B InBev, the brewer has been helped significantly by operating principally in fairly steady and established regions, proving that stable markets can and do offer, well, stability.

Further, in markets that have wavered from time to time, A-B InBev has proved itself able to adjust in order to maintain revenue streams, even if sometimes that comes at the cost of volumes.

In China, where overall beer sales have been in decline for some time, the company has adjusted by appealing almost exclusively to consumers of premium and super-premium beers, thereby mining segments of the Chinese beer market that are still growing. In 2016 and 2017, this resulted in sales increases in the country of 2.5% and 7.3%, respectively, despite low or negative volume growth.

On the potentially negative side of things, the year 2016 - the lone exception to the cost-cutting success stories noted above - bears examination. In that year, which the company itself deemed disappointing, group sales were up by 2.4% while global volumes dropped 1.4%. (This is leaving aside the effects of the integration of SAB.) Even though A-B InBev's 'Big Three' brands - Budweiser, Stella Artois and Corona - appeared to buck the trend, posting combined growth of 6.5%, one has to wonder whether the year was an aberration or an omen.

Further to the Big Three scenario, in markets such as North America, Brazil and parts of Latin America and Europe, the company has compensated for declining volumes by increasing prices, a strategy that has so far managed to keep revenues up in most such regions. That said, when price points in markets such as Canada and the US begin to equal or even surpass those demanded by heavily-hyped and desired craft beer brands, one has to wonder if there is an end point approaching for this strategy.

Indeed, if that point is approaching, A-B InBev will need to demonstrate that even the world's largest brewer can be nimble enough to adjust on the fly to market situations.

For Anheuser-Busch InBev's company page on just-drinks, click here


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