Online Beer Sales, Drinking at Home, Boosts Budweiser Brewer
October 29 2020 - 7:22AM
Dow Jones News
By Saabira Chaudhuri
Homebound drinkers bought more beer online and at supermarkets,
boosting organic sales at Anheuser-Busch InBev NV and cushioning
the revenue lost at restaurants and bars amid Covid-19
restrictions.
The world's largest brewer comfortably topped analysts'
expectations for the third quarter, saying consumers had "quickly
adjusted to the new reality" of the pandemic era. Amid those
shifts, AB InBev said it boosted market share in most regions.
Investors sent shares up more than 2% in early European
trading.
Still, higher costs weighed on profits, and the company said as
a defensive move, it wouldn't pay an interim dividend.
Amid lockdowns and social distancing, rules limiting online
alcohol sales have eased in many places. New York in March began
temporarily allowing restaurants and bars that serve food to offer
delivery or takeout of alcohol, too. Iowa and Ohio recently made
their temporary alcohol-to-go measures permanent.
Online U.S. booze retailer Drizly in August said its sales had
grown over 350% from a year earlier. It estimates just 2% of U.S.
alcohol purchases from supermarkets and liquor stores are currently
made online, but expects that to rise to 20% in five years.
AB InBev, which brews one of every four beers sold, including
the Budweiser and Bud Light brands, didn't detail U.S. online
sales, but said North American revenue overall grew 4.7% in the
quarter on an organic basis -- which strips out currency moves and
acquisition impacts -- compared with a year earlier.
In other parts of the world, the company said it bolstered its
online sales. Its online app in Brazil -- the company's second
biggest market behind the U.S. -- Zé Delivery, is now available in
all of the country's 27 states. AB InBev said it had seen a
significant acceleration in the number of orders in the quarter. In
Belgium, it is piloting a webshop to sell beer directly to
consumers. In the U.K., it ships beer to people's homes through a
subscription service called BeerBods.
Pandemic-inspired changes in consumer habits hurt results, too.
AB InBev's input costs jumped 9.6%. It blamed supply-chain
adjustments, including a lower volume of returnable glass and kegs
during the pandemic. A spike in demand for beer in cans increased
currency and aluminum expenses.
AB InBev's net profit for the three months to Sept. 30 fell to
$1.04 billion from $3 billion a year earlier, when results were
boosted by a hedging-related gain. Underlying profit, which strips
out gains tied to hedging and the impact of inflation, dropped to
$1.6 billion from $1.87 billion.
Revenue fell to $12.82 billion from $13.17 billion for the same
period a year ago. But, on an organic basis, revenue rose 4%,
beating analysts' forecasts for a 4.2% decline.
Overall beer volumes grew 2.6%, driven largely by South America.
AB InBev reported a 20% jump in beer volumes in the region for the
quarter. The company performed especially well in Brazil. A new
malt beer -- Brahma Duplo Malt -- and government subsidies propped
up spending there.
In North America, volumes rose 1.5%. AB InBev said Michelob
Ultra and Bud Light Seltzer both did well, while Budweiser and Bud
Light continued their now long-running trend of market-share
decline.
In Europe, the company said volume grew by low single digits.
Volume grew 3.1% in China where most bars and restaurants are open,
but increased just 0.5% for the Asia Pacific region as a whole,
weighed down by other countries grappling with the virus.
Thursday's results mark a sharp improvement from the second
quarter, when many countries instituted sharp lockdowns that
propelled consumers to stay home.
Rivals Heineken NV and Carlsberg A/S this week also reported a
stronger performance than in the prior quarter. But while Carlsberg
raised its estimates for the full year, citing strong volumes in
Russia and China, Heineken offered a more cautious view saying it
expects the final quarter to be choppy as the pandemic spikes and
bars close across a raft of countries.
AB InBev said it expects the second half of the year to deliver
better results than the first but continues "to face uncertainty
and volatility" due to the pandemic.
AB InBev's debt has ballooned, following its 2016,
$100-billion-plus deal to buy SABMiller, the world's second-largest
brewer at the time. On Thursday, the company said its debt
reduction plans have been affected by Covid-19. It blamed the
uncertainty wrought by the pandemic for its decision to not pay an
interim dividend and said it would announce in February whether it
will pay a final dividend.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
October 29, 2020 07:07 ET (11:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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