Beer; Asahi CUB deal

AB InBev volumes take major virus hit

May 12, 2020
By Alana House

AB InBev volumes declined 32% globally in April as the brewer battled on-premise shutdowns and production issues.

The year started with good momentum and delivered volume growth of 1.9% in the first two months excluding China, which experienced the COVID-19 outbreak beginning in late January.

The impact of COVID-19 on AB InBev’s results increased significantly toward the end of the quarter. Social distancing and lockdown measures were put in place in most of its markets starting in mid-March 2020.

This had a disproportionately negative effect on the on-premise channel, which represented approximately one-third of its global volume last year.

The e-commerce channel has accelerated its growth meaningfully, although it still only represents a small portion of total volume.

Consequently, total AB InBev volumes declined by 9.3% in 1Q20 and by 3.6% excluding China.

The loss in volume contributed to a revenue decline of 5.8%, which was partially offset by revenue per hl growth of 3.9%.

Corona sales surge

Combined revenues of its three global brands, Budweiser, Stella Artois and Corona, declined by 11% globally and by 17.5% outside of their respective home markets. Growth across the majority of markets was more than offset by AB InBev volumes declining in China, which is the largest market for both Budweiser and Corona outside of their respective home markets.

AB InBev said the full impact of the COVID-19 pandemic on its future results “remains uncertain”.

“We expect that the impact on our 2Q20 results will be materially worse than in 1Q20 given the widespread social distancing measures and government restrictions currently in place,” the company said.

“This has already become evident in our April 2020 global volumes, which declined by approximately 32%, primarily driven by the closure of the on-premise channel in most markets and government restrictions imposed on certain operations in connection with the COVID-19 pandemic.”

The brewer has faced government-mandated production shutdowns in Mexico, South Africa and Peru. 

Brewer cuts marketing spend

AB InBev said that it is re-examining its discretionary spending, halting new product launches and promotions and upping its investment in e-commerce.

“We’re taking a hard look at sales and marketing and trying to put the money in channels and products that consumers are demanding more,” Brito said.

“So trying to put more money behind e-commerce initiatives, direct-to-consumer initiatives. More money for ensuring the off-trade, more money behind bigger packs; trying to promote less because today, there’s no need for that; trying to phase out some product new introductions, innovations because at this point, it doesn’t make sense to do introductions; trying also to curb some media spend and put more online; so trying to be more in tune with consumers and trends so we allocate resources in a more effective way.”

The brewer is also revising its sport sponsorships.

“If the season is delayed it doesn’t make sense to spend money now, and if there will be no season we are not going to spend any money,” Brito said. “We will have to see how we do with the contract terms — what we are trying to do is find solutions that are win-win for the leagues.”

Bud Light Seltzer drives sales

Bud Light Seltzer launched in January with a 12-pack variety pack and 6-packs of its four flavours. The launch boosted AB InBev’s hard seltzer portfolio by 600%. Prior to Bud Light Seltzer, the company’s hard seltzer offerings included Bon & Viv Spiked Seltzer and Natural Light Hard Seltzer, as well as a few hard seltzers produced by its craft arm, the Brewers Collective.

Bud Light Seltzer

Since its launch, Bud Light Seltzer has earned $66.1 million, according to market research firm IRI, which tracks off-premise sales in grocery and convenience stores. By comparison, category leader White Claw earned $41.2 million in the week that ended April 26, according to IRI.

Actual Vodka Seltzer

AB InBev recently launched CUB’s first white spirit RTD in 25 years, Actual seltzer, in Australia.

Actual Vodka Seltzer is made with 100% natural ingredients to a vegan recipe. There are two varieties, pure and lime. Pure has no sugar and 65 calories, while lime is low in sugar and contains 69 calories.

Australia’s Foreign Investment Review Board approved Asahi’s acquisition of CUB earlier this month from AB InBev. The deal is expected to complete on June 1.

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