- We maintain AB InBev at a negative outlook ahead of earnings.
- Volumes improved across FQ4-23 but organic revenue estimates fell short of consensus.
- Stella Artois remained a strong performer in the portfolio but faced rising competition from Mediterranean brands such as Peroni, Moretti and Estrella with some potential market share slippage.
- Corona and Latin American beers retain popularity but AB InBev’s presence in Latin American countries waned with Heineken making strides.
- Competitive pressures led to pricing increases below consensus as promotional activity started to rise with AB InBev fending off peers.
- Inventory levels were widely healthy with some supply issues persisting in certain regions, namely Colombia and certain parts of North America.
Volumes Increase But Revenues Fall Short
Across our channel checks in FQ4-23, most AB InBev procurement managers reported slight volume increases YoY averaging 3.7%. 67% of respondents said that AB InBev volumes increased in FQ4-23, with the remaining 33% reporting flat volumes compared to last year. European volumes trended better than those reported among US and Latin American respondents, with more competition noted in these regions. Respondents highlighted an increase in average order values and revenues of c.6% YoY with pricing increases and volume trends playing a part in the YoY uptick. Notably, customer downtrading within the brewer segment had a marginal negative impact on these figures causing revenue estimates to slightly trail consensus.
AB InBev Brand Performance
Several respondents interviewed for our Brewer sector checks in fiscal Q4-23 pointed to the strong performance of Mediterranean beer brands, a trend that did not benefit AB InBev. Stella Artois and Corona were widely referenced as the leading brands under the AB InBev portfolio, although both faced rising competition from Peroni and Moretti. Our sources suggested that Budweiser witnessed mixed results for the quarter and Hoegaarden underperformed in Q4-23 and saw some sequential softening from the prior quarter.
Pricing Impact Below Consensus as Promotions Increase
Pricing trends were fairly stable across European respondents, with higher increases seen in Latin America and for specific brands, with Corona called out as one that had seen a rise in pricing. Across our respondents, pricing increased by an average of 4% compared YoY, below consensus estimates of 6% for FQ4-23. Alongside minor to moderate pricing increases, 57% of respondents saw increased promotional activity from AB InBev in FQ4-23, both in the form of marketing campaigns and some discounting activity. One respondent said that AB InBev’s “Easy to Drink, Easy to Enjoy” marketing campaign had boosted sales volumes.
Competitive Pressures Rise
AB InBev faced increasing competition from Heineken this quarter. This included threats to Stella Artois from competitors’ Mediterranean brands and Heineken’s rising presence in Latin American markets, which historically represented a stronghold market for AB InBev, resulting in some potential share losses to Heineken. Respondents in Europe appeared more confident in AB InBev’s market position, with expectations that they maintained or even gained some market share with a shift towards known beer brands reported.
Inventory Levels Widely Healthy
Although 78% of respondents reported no issues with inventory levels in FQ4-23 and healthy levels of stock, it is worth noting that the remaining 22% of respondents were experiencing inventory issues with not enough stock reported and supply chain struggles with AB InBev. These were apparent among respondents from Colombia and a distributor referencing North America.