Anheuser-Busch InBev, the world’s largest brewer, reported higher-than-expected first-quarter earnings as the sharp price increase did not deter buyers.
The Belgian company, which produces about a quarter of the world’s beer, said its results confirmed the resilience of the beer market in the face of economic challenges, in particular high inflation.
The maker of Budweiser, Stella Artois and Corona reiterated its 2023 guidance that core earnings (EBITDA) will rise in line with the medium-term forecast at 4% to 8%, with revenue growing faster than EBITDA.
In April, AB InBev faced online backlash against its Bud Light brand after a brief social media partnership with a transgender man. Dylan Mulvaney. Internet figures called for a boycott of beer, while others said AB InBev did not provide enough follow-up support for the TikTok star.
Later that month, the company said it had worked with “hundreds of influencers” and that it was one of many ways to “reach out to audiences from different demographics.”
CEO of AB InBev Michelle Duqueris said it was too early to estimate the full business impact of the case, but added that the drop in Bud Light sales in the first three weeks of April was equivalent to about 1% of global volumes over that period.
He stressed that the backlash was directed at one brand and one social media post, not the campaign as a whole. He said that AB InBev will invest more in promoting Bud Light this summer.
Beverage Analyst at Bernstein Autonomous Trevor Stirling said the impact on sales has been significant and appears to be spilling over to other AB InBev brands. According to him, the market has already assessed the worst-case scenario of the April trend, which persists throughout the year.
Senior equity analyst at CFRA Research Garrett Nelson said AB InBev’s reiteration of its full-year earnings growth forecast should “convince investors that financial worries about the recent consumer backlash against the Bud Light brand are exaggerated, given the company’s global portfolio of more than 500 beers.”
Shares of AB InBev have fallen about 4.5% since the beginning of April, while shares of its US rival Molson Coors are up about 25%.
AB InBev beer sales overall in the first quarter were 0.4% higher than a year ago, but only because of the surge in Asia-Pacific as China steadily lifted its COVID-19 restrictions. Sales volumes in all other regions decreased.
Revenue, however, rose sharply as the company increased prices and some consumers switched to more expensive beers.
First-quarter results from competitors AB InBev Heineken and Carlsberg also showed consumer willingness to accept higher prices.
AB InBev’s underlying profit rose 13.6% on a like-for-like basis to $4.76 billion, compared with a 5.6% average increase expected in the company’s survey.
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