Beer giant AB InBev beats profit estimates, with Bud Light boycott set to ease one year on

Shares of Belgium’s AB InBev rose 4% on Wednesday after the company posted higher revenue and profit in the first quarter, as analysts said it had escaped the drag from a year-long boycott of its Bud Light brand relatively unscathed.

The world’s biggest brewer, whose brands include Corona and Stella Artois, notched a 2.6% revenue increase year-on-year to $14.55 billion in the first quarter, narrowly ahead of analyst estimates. That was despite a 0.6% drop in volumes that the brewer sold.

Underlying profit attributable to shareholders was higher at $1.5 billion, also above an LSEG-compiled consensus.

A social media-led campaign against Bud Light in response to a sponsorship partnership with transgender influencer Dylan Mulvaney started in April 2023, making this the last quarter likely to be negatively impacted by a year-on-year comparison.

Former U.S. President Donald Trump in February urged his followers on social media to give the company a “second chance.”

The furore toppled the brand’s status as the best-selling U.S. beer, but also generated criticism of the company for failing to support Mulvaney. It has prompted wider discussion in the advertising industry about corporations fearing backlash for promoting diversity or inclusivity.

AB InBev’s Europe CEO Jason Warner told the U.K.’s Telegraph newspaper earlier this week that the drinks firm will “stay in our lane” following the reaction to the campaign, which had sought to reach a wider range of consumers.

The company nonetheless managed to increase revenue by 7.8% last year, driven by higher sales in the Asia-Pacific and Central America regions.

The first-quarter results showed a 11.1% drop in sales of AB InBev’s own beer brands in North America, which it said was primarily due to Bud Light. Revenue meanwhile declined 2.7% in China as sales dropped 6.2%. The drop was in-line with a wider industry retreat related to China’s reopening last year and poor weather in March, the company said.

However, sales were at record highs in Brazil and Colombia, and grew firmly in Europe, Mexico and South Africa. The results also flagged growth in its Corona brand, particularly for its non-alcoholic beer brand Corona Cero.

AB InBev reiterated a medium-term outlook for earnings before interest, taxes, depreciation, and amortization (EBITDA) of 4% to 8%.

“The strength of the beer category, our diversified global footprint and the continued momentum of our megabrands delivered another quarter of broad-based top- and bottom-line growth,” CEO Michel Doukeris said in a statement.

The results were a “solid print at the start of the year,” analysts at Barclays said in a note.

“Bud Light continues to weigh on results, but this is the last quarter to face a significant impact – it’s all easy [comparisons] from here,” they said, adding that the company had got its hardest quarter out of the way “with little to no bruises.”

“We remain optimistic for improvements throughout the year at both revenues and costs leading to a substantially improved balance sheet at year end, and a likely increased buy​-​back.”

RBC Europe analysts meanwhile upgraded their price target on the stock to 75 euros ($80.59) from 73 euros. They said the earnings were “gratifyingly dull” with the potential to restore AB InBev’s status as a “consistent compounder.”

“We are past the anniversary of the Bud Light debacle, and while we don’t expect a substantial bounce back, we think the lack of a drag – equivalent to some 10% of US volumes – to provide a further fillip to investors’ perceptions,” analyst James Edwardes Jones said in a note.