Anheuser-Busch InBev is stepping up its efforts in the off-trade channel in China in a bid to improve its performance in the market.
Speaking to analysts following the release of the group’s first-quarter results, AB InBev CEO Michel Doukeris said there was “more to do” in China, where the group’s revenues fell more than 12% in the opening three months of the year.
“We are accelerating the expansion in the off-trade,” he said. “Massive opportunity there. As we focus more on our execution on the off-premise, we’re going to get better results.”
Doukeris said AB InBev was seeing a “weaker on-trade” and “good off-trade” in China, adding “the more you cycle the on-trade, the more [it] is going to be a less negative impact”.
In its first quarter, AB InBev’s revenue in China declined 12.7% on the back of a 9.2% decline in volumes. EBITDA dropped 15.2%.
As part of its strategy, Doukeris said AB InBev would be looking to make “some tweaks” around “the sales force, our route to market” for its brands in China, which include Budweiser, Corona and Harbin Ice.
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By GlobalDataDoukeris noted the growth of the off-trade channel was something the company had witnessed in “all markets”, with consumers leaning more towards at-home consumption “as the markets mature”.
He stressed AB InBev “will continue to have a very good business in the on-trade” in China, adding “we will rebound over time”.
In February, the chief executive said AB InBev was injecting cash into “portfolio innovation and geographic expansion” in China, with spending focused on the business’s “mega brands”.
Commenting on China’s beer industry yesterday (8 May), the AB InBev CEO told analysts it “has been improving sequentially”, adding the company expected to see a “normalising of the industry” by the “summer, back end of the year”.
AB InBev’s total first-quarter revenue grew 1.5% to $13.6bn. Gross profit was also up 5.2% to$7.6bn. Total volumes declined 2.2% to 136 million hectolitres.
The brewing heavyweight reported sales declines in North America in the quarter. Volumes dropped organically to 6.4% to 19.8 million hectolitres, while revenue was down 4.7% to $3.4bn.
Within the region, the Stella Artois owner saw revenue decrease 5.1% in the US. EBITDA dropped 1.7%.
Sales to retailers in the US were also down 5.4% in the period, as the industry was hit “by adverse weather and Easter shipment phasing”, AB InBev said. Sales to wholesalers dropped 6.7%.
