World: AB InBev’s Q3 sales surge past pre-pandemic levels

Sales at the world’s largest brewer Anheuser-Busch InBev surged past pre-pandemic levels in the third quarter as drinkers switched to more expensive brands and bought beer online.

The maker of Budweiser said on October 28 the volume of drinks it sold in the three months to September was up 3.4 per cent, while analysts had expected a decline. That and drinkers moving to premium brands helped to bring revenues up 7.9 per cent at the group, which also brews Stella Artois and Corona.

Revenues also surged in Brazil, a key market for the group, which owns the Brahma brand. The rise was partly because of the rapid expansion of its Zé Delivery direct-to consumer service, which accounts for 10 per cent of Brazilian sales and which AB InBev is now using as a model for other countries.

“Knowing how to deliver in 30 minutes, cold beer when the consumers need it — this is expanding the industry,” said Michel Doukeris, chief executive.

The company raised its earnings guidance for the year and reported a 6.1 per cent rise in underlying profits to $1.7bn for the quarter. But it will pay out no interim dividend and focus instead on reducing its debt and weathering the impact of the pandemic.

Doukeris, who took over in July from Carlos Brito, said the recovery in demand for beer was uneven across countries.

“In the majority of our markets in North America, South America and Europe, the on-trade [bars and restaurants] recovery is now at 80 per cent [of pre-pandemic levels],” he said. “But there was big damage to this sector and it has not fully recovered yet. It will take a lot of patience, investment and government support.”

AB InBev’s surge in sales contrasted with a drop reported on October 27 by rival Heineken, which suffered from returning lockdowns in several Asian countries.

For AB InBev, a 5.9 per cent decline in Asian sales in the quarter was outweighed by rises in Central and South America, Europe, the Middle East and Africa, though North American sales were also down, partly because of supply chain disruptions.

The brewer has been pushing into what it calls the “beyond beer” segment to cater for rising demand for “hard seltzer” — flavoured alcoholic fizzy water — and canned cocktails. These drinks contributed $1.2bn of its $34.1bn of revenue in the first nine months of the year.

Ahead of the results, AB InBev’s share price had shed more than 20 per cent of its value since a peak in July, partly on concerns about input costs as companies globally battle commodity price inflation. But the share price rose more than 10 per cent on Thursday to €54.33.

Doukeris said: “Out of input costs, you see aluminium, barley, several different raw materials, going up, freight costs are going up, labour costs are going up. We see this coming across all the markets.”

He said the company had increased prices for its drinks in markets including Brazil, Colombia and China, but was also making efficiency savings to help deal with cost rises. Earnings before interest, tax, depreciation and amortisation were 3 per cent up on the previous year.

The company received a further boost on Thursday when US tobacco group Altria said it would not for now sell its €10bn stake in AB InBev despite the expiry of a “lock-up” that had barred it from selling the shares for five years after Altria acquired them as part of AB InBev’s 2016 purchase of SABMiller.

S&P Global Ratings on Thursday upgraded its outlook for AB InBev to stable from negative, saying it was on track to reduce its debt — much of which stems from the SABMiller acquisition — to 4.5x earnings by the end of the year.

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