AB InBev’s local arm SAB maintained its growth streak in the third quarter thanks to a combination of price hikes and the ability to offer more expensive items like premium beer, despite its parent reporting lower beer sales in major regions like the US, Mexico and China.
SAB CEO Richard “Boris” Rivett-Carnac said the group was targeting growth in the premium beer segment and in the beyond beer portfolio, where it typically earns higher margins.
SAB reported a revenue increase in the low teens, with low single-digit volume growth for the three months to end-September. Earnings before interest, tax, depreciation and amortisation (ebitda) increased more than 20% with SAB attributing its performance to its core beer brands, whose growth was driven by Corona & Stella Artois. In Beyond Beer, its portfolio grew volumes by high-single digits driven by Flying Fish.
It said according to its estimates, it had outperformed the industry in both beer and Beyond Beer.
Speaking to Business Day on Thursday, Rivett-Carnac said while there was an overall decline in the alcohol markets in SA last year across most categories, 2024 had seen renewed vigour. He said the third quarter, which saw its premium beer and beyond beer portfolios both gaining market share was made possible through price increases.
The CEO said the group, which owns the brands Carling Black Label and Castle Lager, had grappled with input cost increases like above-inflation rises in excise duty and high input costs, especially with dollar-priced imports like aluminium and barley.
“We are still in a relatively high inflation environment with input costs,” he said, adding that it helped that SAB was able to increase prices, while also adding volume.
Meanwhile, the world’s largest beer maker’s third-quarter profit, revenue and volumes were all well behind forecasts as it sold less beer in the US, its largest market, with sales to wholesalers down 0.2% and those to retailers falling 3%. Its revenue and volumes, meanwhile, rose 2.1% and fell 2.4%, compared to analyst forecasts for a 3.4% increase and 0.4% drop.
It reported a low single-digit fall in Mexico, another critical market for its beers, amid adverse weather and softer consumer demand. Revenue and volumes were down 16.1% and 14.2% respectively in China, with AB InBev flagging particular weakness in sales in venues such as bars and restaurants.
SAB attributed its positive performance to revenue management initiatives and continued premiumisation.
The expected result was that the percentage of premium beer overall would increase over time relative to the rest of the beer portfolio, a trend seen as economies and as beer portfolios mature, the CEO said.
“For growth, we really need to win in the premium beer segment as well as in the Beyond Beer because, typically, that’s where you have higher growth than in the core or mainstream part of the portfolio,” Rivett-Carnac said. “We will continue to invest in innovation, especially in Beyond Beer; we see that as a segment of the market that is that is very competitive, and where consumers really look for new, and exciting products.”
The group is counting on the upward trajectory to continue into the peak festive season where it typically records higher sales and volumes, with consumers having slightly more disposable income and gravitating back towards the more expensive items in its repertoire.
AB-inBev raised its full-year guidance and announced a $2bn share buyback over the next 12 months. /With Reuters
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