Budweiser loses more drinkers in the U.S.
Anheuser-Busch InBev NV’s quest to woo increasingly fickle American drinkers is a headache it’s struggling to shake.
The brewer behind Budweiser and Bud Light on Thursday said U.S. revenues fell 3.1% in the second quarter on the back of lower volumes, as both brands continued to lose market share. The weak performance was a factor in the company missing overall sales growth forecasts, prompting shares to drop more than 5%.
Sales of the two brands have fallen as once-loyal American consumers shift away from domestic lagers toward craft beers, Mexican imports, wine and spirits.
In response, the company is trying to persuading consumers to buy more expensive beers, rolling out Michelob Ultra Pure Gold, made with organic grains, and Bud Light Orange, brewed with real citrus peels. It also plans to launch pricey variants of Budweiser, including a beer aged on bourbon barrel staves, due to begin selling next month.
On Thursday, Chief Financial Officer Felipe Dutra said there was "no silver bullet, no short term answer to some of the problems we face," in the U.S., although he added the company’s efforts to innovate and go upmarket was bearing fruit.
AB InBev pointed to some signs of improvement, noting quarterly share losses in the U.S. had slowed, with a 0.35 percentage point drop in the last quarter its best quarterly performance in almost four years. It said Michelob Ultra — marketed as a beer for people with an active lifestyle — continued to perform well.
Overall, AB InBev reported a jump in net profit to $1.94 billion for the three months to June 30, from $1.5 billion a year earlier, as lower costs helped offset a 1.2% fall in revenue to $14.01 billion.
Stripping out currency changes and acquisitions, sales grew 4.7%, missing analyst estimates for growth of 5.4%
Mr. Dutra said costs are yet to rise because of tariffs on steel and aluminum imports but that the company would begin to feel the impact next year.
Outside of the U.S., results were buoyed by Brazil, Mexico, China and Western Europe, helped by the soccer World Cup in Russia, and AB InBev’s efforts to sell pricier drinks.
The company also announced some organizational changes to spur growth.
It will combine ZX Ventures, a unit founded in 2015 to develop new products for emerging consumer needs, with its marketing arm. The innovation unit in April bought a U.K.-based spirits, e-commerce and import business.
AB InBev is also creating a new position: a head of nonalcoholic beverages. Millennials and so-called "Generation Z" are drinking less than older generations, spurring booze makers to launch more low-alcohol and nonalcoholic products. Nonalcoholic drinks make up more than 10% of AB InBev’s volumes but they plunged 43% in the second quarter.
The company is also restructuring its management, collapsing nine geographical divisions into six in a move it said would help it become more agile following its integration of SABMiller, the London-based brewing giant it acquired in 2016.
Write to Saabira Chaudhuri at [email protected]
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