Anheuser-Busch InBev looked pretty solid in 2019. The largest global brewer reported revenue grew 4.3% as healthy volume growth was enhanced by global premiumization and revenue management initiatives, although growth of revenue per hl decelerated. Profit soared 29% to $8.086 million.
And then came the coronavirus. So, A-B InBev halved its final dividend to € 0.50yesterday from €1. The cut reduces ABI’s final dividend yield to 3% from 4.1%, Barenberg Beverages said. The analysis called the decision “a sensible move,” saying it “reduces the financial distress discount the share price its suffering from.”
While ABI is “high risk,” Barenberg said, it is also “high reward,” and its liquidity and refinancing risks are “manageable.”
In 2019 the company grew volumes 1.1%. It was the third consecutive year of volume growth. And the rate of growth had been accelerating each year.
The company’s global brands had a very strong year, it said. Budweiser grew 3.3% outside of the US, led by strong performances from Brazil, Europe and India, but was negatively impacted by the softness in the nightlife channel in China, where it has a leading position.
Stella Artois delivered growth of 6.5% outside of Belgium, with meaningful growth in the US and Brazil. Corona continued to lead the way with growth of 21% outside of Mexico, with major contributions from markets such as China and South Africa. The strong equity of our global brands was also recognized by Interbrand, which ranked Budweiser and Corona in its list of the top 100 global brands. They were the two highest ranked beer brands, improving their rankings from last year and increasing their brand value on a dollar basis.
The company noted that Covid-19 had led to a significant decline in demand in China in both on-premise and in-home channels. Additionally, demand during the Chinese New Year was lower than in previous years as it coincided with the beginning of this outbreak. For the first two months of 2020, we estimate that the outbreak has resulted in lost revenue of approximately $285 million and lost EBITDA of approximately $170 million in China. And that’s just China. As Covid-19 rampages across the globe, so will the pain of global brewers such as ABI.
In the U.S., total revenue rose 2.8% and revenue per hl was up 2.8%. But in the fourth fiscal quarter revenue declined 1.8%. QBI’s sales-to-retailers were down 2.3%.
The above core portfolio gained 90 bps of total share in both FY19 and 4Q19, due to strong performances from Michelob Ultra, Michelob Ultra Pure Gold, ABI’s craft portfolio and innovation pipeline, the company estimated.. Michelob Ultra continues to grow by double-digits and is now the second largest brand in the country by retail sales, according to IRI. Michelob Ultra Pure Gold grew by triple-digits in FY19, while our craft portfolio grew by more than 20%, gaining share within the craft segment according to IRI.
ABI estimated its innovations contributed about half the total innovation volume in the industry once again this year, led by Naturdays, Michelob Ultra Infusions and Natural Light Seltzer.
Mainstream brands lost an estimated 140 bps of market share in FY19 and 120 bps in 4Q19 as consumers continued to trade up to higher price tiers, the company said.
With the hard seltzer segment is drawing new consumers to the malt beverage category and ABI said it is increasing investment behind its brands to accelerate growth in the segment. Bon Viv and Natural Light Seltzer are growing at a strong rate. In January 2020, it added Bud Light Seltzer to its portfolio, with a very successful nationwide launch that is already yielding positive results from both customers and consumers. We are confident that we can leverage our strong portfolio, coupled with our best-in-class brewing capabilities and distribution network, to accelerate our momentum in this fast-growing segment.