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AB Inbev sales lose fizz as drinkers pick craft beers and cocktails

AB Inbev, which is buying SABMiller, posted worse-than-expected fourth-quarter earnings

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AB Inbev US lager sales declined and brands like Budweiser lost share

US drinkers are losing their taste for lager, hitting sales and profits at Stella Artois brewer Anheuser-Busch InBev (AB Inbev).

AB Inbev, which is buying SABMiller (LON:SAB), posted worse-than-expected fourth-quarter earnings on Thursday as it faced declining US market share and margins.

The company's lager volumes declined in the US and brands such as Budweiser lost market share as drinkers went for craft beers and cocktails instead.

It also took a hit in Brazil, which is heading for its worst recession since records began in 1901, and China, where the economy expanded at its slowest rate in a quarter of a century last year.

However, Chinese and Brazilian revenues and margins increased on the back of price rises and a growing appetite among consumers for higher-priced beers. 

AB Inbev is buying SAB Miller, which brews Peroni and Grolsch, to offset weakness in its own markets by exploiting regions where SAB is strong, such as Africa and Latin America.

The Belgian-based brewer, whose brands also include Mexico's Corona, Hoegaarden and Leffe in Europe and Brahma in Brazil, sounded an upbeat note on the outlook.

It predicted improved volumes and a better brand mix in the US, another strong year in Mexico, but more woe in Brazil and China.

AB InBev stayed silent on the US$100bn takeover of SAB, but said it still expected the deal to complete later this year.

The group is selling parts of the combined business to North American rival Molson Coors and Japan's Asahi to allay regulators' competition concerns.

AB InBev's fourth quarter underlying pre-tax earnings before interest and other items rose 6.6% on a like-for-like basis to US$4.31bn, against a consensus of about US$4.7bn.

It increased its dividend to a total of €3.60 from €3, against market expectations of about €3.3.

The company forecast better times in Brazil, where it expects revenue to increase in mid to high single-digit percentages this year after a tough first quarter. It expected its Chinese business to do better on average than rivals.

Quick facts: Anheuser-Busch InBev

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