Anheuser-Busch InBev SA is set to post it’s weaker full-year results as an aftermath of the expected decline in sales growth in the United States.
Their shares went 10% down in early trading proving what challenges the company is still facing despite their strategies to woo overseas drinkers and lessen its hulking debts.
Numbers reveal that for quite a while, the world’s biggest brewer has continued to suffer in terms of sales. Americans may have changed preference from their Bud and Bud Light to a variety of craft beers, spirits and non-alcoholic drinks.
AB InBev has also ventured into selling beers of higher price in a more developed market only to be pushed further in the emerging markets with cheaper drinks.
Its recent venture in Brazilian and Columbian markets have also registered limited sales this quarter and is expected to have a strong effect on the year-end figures.
AB InBev subtly informs that they are reporting a rather moderate growth in earnings before interest, taxes, depreciation and amortization. Moreover it has revealed that growth will be slightly below inflation, which was totally in contrast to what they expected to earn in such circumstances.
A profit of $3 billion was reported by the Belgian company, profit was revealed to have dropped $2.19 billion.
Revenue rose to $13.17 billion from $12.92 billion. Overall volumes of nonalcoholic and alcoholic drinks edged down 0.5% globally, falling short of statistics laid out by analysts.
AB InBev sees that China and South Korea’s declining sales have been the primary reason for the downfall, as higher commodity costs and foreign-exchange headwinds for the weaker earnings. Moreover, price increases in Brazil also resulted in lower demand.
AB InBev has undeniably put in a lot of effort to reduce its massive debt by acquiring SABMiller. It is said to be a focal point in the company’s endeavor to expand business in emerging markets as volume declines in the West. It recently agreed to sell its Australia business and listed its Asia arm.
It has recently been analyzed to have clung unto its affordability strategy for emerging markets. In Colombia, the company has been selling more one-liter beer bottles. Meanwhile, It is selling brands in Brazil made with ingredients grown by local farmers, and it launched a new one-liter returnable glass bottle to keep prices down in Ecuador.
It has also bought craft brewers, and pushed pricier brands and nonalcoholic drinks.
Volumes again dropped in the U.S.because of the rising popularity of hard seltzer currently developing its portfolio of low or no-sugar hard seltzer brands. As a result, AB InBev reveals plans to launch a new hard seltzer brand, Bud Light seltzer.