World: AB InBev’s partnership with 2018 World Cup should bode well for the brewer

The 2018 World Cup in Russia is upon us. Budweiser, one of the key brands of Anheuser-Busch InBev, is the global beer sponsor of the sporting event. Partnering with such a massive tournament, which boasts an audience of over 3.2 billion, should bode well for the company. In this regard, AB InBev launched its biggest commercial campaign called “Light Up the FIFA World Cup.” This campaign has been activated in more than 50 countries, which includes not only those where the brand already has a significant presence such as China, Brazil, the U.K., and Russia, but also new markets which include Colombia, Peru, Ecuador, Australia, and Africa. The company expects growth to accelerate in the remainder of the year, particularly in the second half, with the World Cup being one of the driving factors, Forbes reported on June 14.

The Russian beer market has been shrinking in recent years. An anti-alcohol campaign was launched in the country in 2010 in a bid to lower liquor consumption by half by 2020. Subsequently, taxes have been raised and advertising has been banned, which has resulted in a considerable reduction in volumes. To make matters worse, the size of plastic beer bottles was reduced to a maximum of 1.5 litres, from 2.5 litres earlier, in 2016, hurting a segment that formed over 20% of the beer sales previously. The latter was one of the factors that resulted in disappointing beer sales during the Confederations Cup (another footballing event, albeit on a much smaller scale) held in Russia in 2017. According to Brewer’s Union in Russia, beer sales volume fell 5% in 2017, versus an expected growth of 3% to 5%. This year, all growth hopes are pinned on the performance of the Russian football team, who would need to do much better than their last campaign when they didn’t win any of their matches, and failed to progress from their group. Bernstein analysts have forecast the World Cup to boost the beer sales in the country by 2.5% to 3%, contingent on the team’s performance. Meanwhile, Morgan Stanley analysts have predicted a 2% to 3% growth, based on past data.

What can benefit Anheuser-Busch is that, given its sponsorship of the sporting event, it has exclusive rights to advertise and sell its beverages at the stadiums and in the Fan Zones, with alcohol sale restricted in other areas. The official beers of the World Cup are Budweiser and local brew Klinskoye, both brands of Anheuser-Busch.

Russia will not be the only market experiencing growth in beer volumes. CFO Felipe Dutra has stated that the event could result in a volume spike in Brazil and Argentina, despite cold weather conditions, by 0.5 to 1 percentage points. Furthermore, Budweiser was launched nationally in South Africa in March, in preparation for the World Cup. Consequently, the company’s global brand portfolio, including Stella Artois and Corona, grew by more than 200% in the first quarter, and gained over 600 bps of share in the growing premium segment. Volume growth can be expected to come from traditional beer drinking nations, such as England and Germany, as well.

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