AB InBev sticks to forecast as China offsets Bud Light backlash

By Philip Blenkinsop

BRUSSELS (Reuters) -Anheuser-Busch InBev beat quarterly earnings forecasts and held its 2023 guidance on Thursday as a post-COVID recovery in China helped offset the impact of a U.S. conservative backlash against Bud Light over a transgender promotion.

Shares in the world’s largest brewer were up 2% at 52.10 euros in afternoon trading, ranking them among the best performers on the STOXX 600 index of European equities.

AB InBev, which makes around a quarter of all beer drunk globally, said second-quarter volumes fell 1.4% despite growth in most markets. Average prices were up 9% year-on-year due to price hikes and as consumers shifted to more expensive drinks.

The maker of Budweiser, Stella Artois and Corona said core profit (EBITDA) for the April-June period rose 5.0% year-on-year on a like-for-like basis to $4.91 billion, against expectations of a 0.4% increase in a company-compiled poll.

This contrasted with Heineken, the world’s second-largest brewer, which reported worse than expected results on Monday and cut its 2023 forecast after a slowdown in Vietnam and price hikes that squeezed volumes.

In China, AB InBev sold 11% more beer by volume and over 20% more higher-priced “premium” beers, pushing revenue and profit there above pre-pandemic levels.

The Belgium-based company said revenue and profits were also higher in major markets Brazil and Mexico, where profit margins rose sharply, as well as Colombia and Europe.

The opposite was the case in the United States, normally the company’s biggest market, where Bud Light lost its top spot to Constellation Brands’ Modelo Especial after a conservative backlash over a social media promotion with transgender influencer Dylan Mulvaney.

Bud Light U.S. sales through retail stores have fallen by 25% or more since April, but the company said they had now stabilised, with a survey showing about 80% of consumers favourable or neutral towards the brand.

In an investors’ call on Thursday, CEO Michel Doukeris said that AB InBev’s U.S. team is working hard to win back consumers, adding that the stabilisation comes with signs of improvement.

Bud Light’s loss has spelled gains for Coors Light and Miller Lite, brands of main U.S. rival Molson Coors. It raised its outlook on Tuesday after its strongest quarter of sales since Molson and Coors merged in 2005.

AB InBev maintained its own 2023 forecast that EBITDA would grow in line with its medium-term outlook of between 4% and 8%, with revenue growing ahead of EBITDA.

“We are making no changes to our outlooks and we continue to expect to have a strong year”, CFO Fernando Tennenbaum told investors.

(Reporting by Philip Blenkinsop, Charlotte Van Campenhout; Editing by Edmund Klamann, Mark Potter and Alexander Smith)