AB InBev Displays Solid 6-Month Run-Up, Adds More Than 25%

Endeavors to Drive Momentum

The company’s ongoing premiumization efforts have been the keys to strength in its global brands — namely Budweiser, Corona and Stella Artois — in the past few quarters. Notably, consolidated revenues for the global brands improved 8% globally and 11.3% outside their respective home markets in second-quarter 2019. In revitalizing growth in these brands, the company has been focused on initiatives, including sponsorship deals and expansion across global markets.

Budweiser witnessed robust revenue growth outside the United States in the second quarter, driven by strength in China, Europe and France markets. Further, the brand also reinforced its connection to football, with its multi-year sponsorship of the Premier and La Liga football leagues. Corona, the most premium global brand, sustained its growth momentum, with 24% rise in revenues outside Mexico. Most of this uptick was driven by strength across many countries, especially the U.K. and Germany.

Stella Artois revenues were backed by higher volume in the U.K., Italy and Belgium. Furthermore, the High End Company delivered revenue growth of nearly 20%, fueled by the successful execution of the premiumization strategy. Notably, AB InBev’s strength in global brands reflects its potential to grow on improving trends in key markets and continued premiumization in the majority of its markets.

Robust Brand Portfolio

The company boasts a robust brand portfolio and solid geographic reach. AB InBev’s combined brand portfolio with SABMiller (LON:SAB) includes more than 500 beer brands, including some of the most renowned beer brands worldwide like Budweiser, Corona and Stella Artois. Further, the robust kitty includes seven of the top 10 global beer brands, with 18 brands generating over $1 billion in retail sales. AB InBev remains focused on further solidifying strong images and market positions of these brands to enhance relations with consumers.

In fact, management expects the low and no-alcohol beer categories to account for about 20% of its global beer volume by 2025.

That said, the company’s strong brand portfolio surely places it in the wake of competition from the likes of Carlsberg (CSE:CARLa) AS (OTC:CABGY) , The Boston Beer Company, Inc. (NYSE:SAM) and Diageo (LON:DGE) plc (NYSE:DEO) . We believe AB InBev’s global brands along with vast operations spread in North America, Latin America (North, South & West), Europe, the Middle East and Africa (EMEA), and the Asia Pacific will continue to drive volume and sales growth.

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Other than this, AB InBev’s foray into the craft beer space and its planned buyout of organic energy drinks, and sparkling water and juice maker — Hiball — underscores its focus on using all opportunities to drive top-line growth. All these factors helped the company to carve an impressive niche, thus emerging as the strongest player in the beer space.

Wrapping Up

As already detailed, we expect AB InBev’s top-line momentum to continue in the quarters ahead. Sales are likely to gain from continued premiumization efforts as well as ongoing revenue management initiatives and strength in global brands.

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