Financial news

Budweiser owner Anheuser-Busch sets its sights beyond beer

By  | 


Anheuser-Busch, brewer of Budweiser, has set its sights on new products from DIY cocktails to craft beer for women as new industry figures recorded the steepest drop in US beer volumes in seven years.

Michel Doukeris, who runs the North America arm of the world’s largest brewer AB InBev, outlined how he planned to win back drinkers as the latest data underlined how Americans are switching to spirits and wine.

Anheuser-Busch produces some of the country’s biggest beer brands including Bud Light and Goose Island.

Explanations for the decline in beer’s popularity range from increasingly health-conscious consumers eager to avoid beer bellies to the rise of social media, which has discouraged young adults from getting drunk.

Anheuser-Busch’s efforts to deal with the shifts in consumer tastes include Drinkworks, a venture with Keurig Dr Pepper that Mr Doukeris described as “perhaps the single biggest opportunity” for the company outside beer. The coffee machine-like product, available in Missouri and being rolled out in Florida, allows consumers to make cocktails from mojitos to margaritas at home.

Mr Doukeris said: “The mega trend that Drinkworks addresses is convenience. You only need to press one button and you have this unbelievable high-quality cocktail.”

He defended the price of the equipment, which sells for $399 on top of $4-each capsules. “In Manhattan, for example, a decent cocktail will cost you between $12 and $24.”

In beer, Mr Doukeris said Anheuser-Busch could still improve revenues despite the industry’s volume decline, in part because it was pushing more expensive offerings such as Michelob Ultra, marketed as a low-carb beer.

READ ALSO  Aramco Stock Soars Limit Up In Debut After Saudis Force Locals To Buy

“We are going to capture consumers back, and perhaps turn the volume trends around.”

Mr Doukeris said the St Louis-based business had an opportunity to sell more craft beer to women and Hispanic drinkers through new flavours. Female-friendly offerings include a passion fruit lychee beverage produced by the group’s Wicked Weed craft brewer.

AB InBev, which had a $102.5bn debt pile at the turn of the year stemming from its 2016 takeover of SABMiller for £79bn, has grappled with a multiyear slide in revenues from the US, its biggest market. US revenues rose 1.6 per cent in the first quarter of this year after a 0.7 per cent fall last year.

Across the industry, beer volumes dropped 1.6 per cent year-on-year in 2018, according to the IWSR drinks market analysis. The decline, which accelerated from a 1 per cent fall in 2017 and a 0.2 per cent dip the year before, contributed to a 1.6 per cent drop in global alcohol consumption.

Global beer volumes fell 2.2 per cent, led by a 13 per cent drop in China. Mexico and Germany held up better, the IWSR data showed, up 6.6 per cent and 1 per cent, respectively.

In contrast, global gin volumes rose 8.3 per cent globally — including a jump of one-third in the UK. Other spirits also performed strongly, including whisky up 7 per cent, and mixed drinks, including pre-mixed cocktails, climbing 5 per cent.

At a recent investor day in New York, AB InBev set a target to increase its non-beer revenues in the US to $1bn. AB InBev, which produced revenues across the group of $54.6bn last year, did not provide a timeframe.

READ ALSO  Subaru CEO expects record U.S. sales in 2020 despite market slowdown

Simon Hales, analyst at Citigroup, noted a “lack of hard financial data and guidance” but was encouraged that the group was “better prepared to win where the growth is”.

Other products being pushed by Anheuser-Busch include Naturdays, a mix of beer and pink lemonade, and ready-to-drink canned cocktails produced by San Diego-based Cutwater, which it acquired this year.

Anheuser-Busch was bought by Belgium’s InBev for $52bn in 2008 and is backed by the Brazilian billionaires behind 3G Capital, the investment group. Its interests include Burger King and Kraft Heinz.



Via Financial Times

Print Friendly, PDF & Email

Hold dit netværk orienteret