Dive Brief:
Anheuser-Busch InBev reported2017 fourth-quarter earnings of $14.6 billion, an 8.2% increase in organic growth from the same period in 2016. North America sales dropped 0.6%, while total volume fell 1.4% to 26.2 million hectoliters. The company estimated an overall decline in total market share of approximately 75 basis points in fiscal 2017 and 55 basis points for the fourth quarter.
The Belgium-based company continued to see losses in its Premium and Premium Light segments, with Budweiser losing 40 basis points for the full year and 35 basis points in the fourth quarter. Bud Light lost 85 basis points of share in both the full year and the fourth quarter. Sales of Stella Artois were up 12.8% in North America, AB InBev said, while Michelob Ultra was the biggest share gainer in this country for the 11th straight quarter.
The world's largest beer maker projected its revenue and profits would show strong growth in 2018. "We are not satisfied with our market share performance and are working hard to balance the share and profitability equation," the company said in a release. "We will continue to focus on expanding and reshaping our portfolio of brands to meet consumer needs across a wide spectrum of occasions."
Dive Insight:
AB InBev's latest earnings benefited from increased beer sales in Brazil, where the economy has been rebounding, and from $381 million in savings fromits 2016 merger with SABMiller— a deal valued at more than $100 billion.
Still, North America remains a problem with AB InBev's beer sales dropping by 15% since 2008,据路透社报道. U.S. consumers have been moving more to wine and spirits, and they are drinking less beer than in previous years.Overall, U.S. beer sales fell 1.8% in 2016, compared with a five-year decline rate of 0.6%,according to IWSR, which tracks the alcohol industry. To stem the loss,the Wall Street Journal saidAB InBev haspurchased a number of craft brewsand focused on brands such asStella Artois and its higher-end light lagerMichelob Ultra.
AB InBev replaced the CEO of its North America unit this past November in order to try and turn around its sluggish sales results. This latest earnings report indicates that more time will be needed to get the job done. Bud Light continues to see sales declines — its volumes fell 5.7% last year — andlocal distributors have been responding by limiting promotions.
Other large U.S. brewing companies are in similar situations, withMolson Coors recently posting a 3% decline in domestic retail salesandBoston Beer reporting a 5.9% drop in net revenueand a 7.7% decline in shipments for the fourth quarter.Molson Coors and AB InBev nowcontrol roughly 90% of the U.S. beerindustryfollowing major acquisitions in the past couple of years, so they need to keep innovating and plowing more marketing dollars into existing brands to keep sales up.
AB InBev has been busy promoting Bud Lightthrough its "Dilly, Dilly" ad campaign and is looking to attract younger drinkers through ads on TV and on social media. The company also brought back Andy Goeler as vice president of the brand in order to bolster relationships with wholesalers. Will these initiatives be enough to reverse the struggles of its North America unit? It seems unlikely at this point, but it will be interesting to see what steps the beer giant takes next to resume growth in this region.
