Growth Bypasses Anheuser-Busch InBev in the U.S. Despite a Global Sales Jump

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Anheuser-Busch InBev (NYSE: BUD)&nbsp;has proved it still has growth potential&nbsp;and is a hit just about everywhere in the world — except the U.S. A good portion of its woes domestically is a result of its acquisition of SABMiller. The deal not only saddled the brewer with a massive amount of debt, but also required AB InBev to give up control over U.S. distribution of the Corona brand of Mexican beer.” data-reactid=”11″>Anheuser-Busch InBev (NYSE: BUD) has proved it still has growth potential and is a hit just about everywhere in the world — except the U.S. A good portion of its woes domestically is a result of its acquisition of SABMiller. The deal not only saddled the brewer with a massive amount of debt, but also required AB InBev to give up control over U.S. distribution of the Corona brand of Mexican beer.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Corona is experiencing huge growth, as A-B InBev's results attest, and is wildly popular here in the U.S. But&nbsp;Constellation Brands (NYSE: STZ)&nbsp;is enjoying the benefits because it bought the U.S. distribution rights to Corona in 2013 to help Anheuser-Busch get its Miller acquisition past regulators.” data-reactid=”12″>Corona is experiencing huge growth, as A-B InBev’s results attest, and is wildly popular here in the U.S. But Constellation Brands (NYSE: STZ) is enjoying the benefits because it bought the U.S. distribution rights to Corona in 2013 to help Anheuser-Busch get its Miller acquisition past regulators.

Because Corona is AB’s most premium global brand, and premium labels are driving growth in beer sales worldwide, AB is missing out on a good chunk of the potential the brand offers.

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Image source: Getty Images.

Global brands growing globally

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Anheuser-Busch's second-quarter sales volume was the best it’s seen in five years. Revenue grew 6.2% for the period, and EBITDA was up by more than 9% as margins expanded 123 basis points to 42% due to the strength of Budweiser, Stella Artois, and Corona. Combined global revenue of the three brands grew 8%, and was up 11.3% outside of their respective home markets.&nbsp;” data-reactid=”27″>Anheuser-Busch’s second-quarter sales volume was the best it’s seen in five years. Revenue grew 6.2% for the period, and EBITDA was up by more than 9% as margins expanded 123 basis points to 42% due to the strength of Budweiser, Stella Artois, and Corona. Combined global revenue of the three brands grew 8%, and was up 11.3% outside of their respective home markets. 

Corona revenue, however, grew 24% outside of Mexico, while Budweiser was up by only high single digits across Europe, helped by a successful launch in France. According to CEO Carlos Brito, A-B InBev’s global brands have increased their so-called premium segment market share from less than 25% in October 2016 to more than 75% today, and “Corona and Budweiser have led this growth, and they’re now the No. 1 and No. 2 international premium brands, respectively.”

That’s not unlike the results Constellation is seeing in the U.S. with Corona, as it has largely shouldered the burden of carrying the domestic craft beer market higher.

What could have been

Imported beer accounted for 20% of craft production in 2018, and Mexican beer represented over 72% of all imports. Constellation told investors in the first quarter that its beer portfolio was the primary growth contributor to the U.S. beer market last year, and all of its imported brands achieved record sales volumes. Data from the market researchers at IRI gives Constellation’s combined Corona and Modelo brands a 61% share of import dollar sales and 60% of case sales.

The two Mexican beers aren’t letting up, either. IRI’s latest data shows Modelo Especial sales are up nearly 20% year to date; Corona Premier is up 48.8%; Corona Familiar, 12.5%; and Corona Extra, which has been struggling, is up 1.1%. At the same time, A-B’s Budweiser has fallen out of the top five most-popular beers, and U.S. sales are down 4.5% year to date.

Anheuser-Busch is falling out of favor

That’s the kind of growth Anheuser-Busch is missing in the U.S. While all of its other markets were showing volume growth, some phenomenally, North America was the one region that continued to report declines, with volumes falling 1.8% for the period and sales-to-retailers (STR) down 2.2%. The brewer estimates U.S. volumes and STRs were down 1.7% and 3%, respectively.

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