How Did Anheuser-Busch Perform In FY 2017?

2017 brought much success to Anheuser-Busch InBev (NYSE:BUD), including a successful integration of SABMiller. Strong performances were registered across the globe, with nine of BUD’s top ten markets delivering revenue growth. The company was also able to expand its margins, particularly in China. These factors helped the company beat consensus estimates on both revenue and EPS. If we look at the past, the revenue per hectoliter growth posted by the company in the last five years, at 4.6%, has exceeded that of all its global FMCG (Fast Moving Consumer Goods) peers. Moreover, with the integration of SABMiller, the company has placed itself in a strong place to continue its growth momentum, by positioning it toward emerging markets that are poised for higher growth. These emerging markets now contribute to over 70% of the company’s total volumes, and roughly 60% of its revenues.

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Tremendous Potential In Africa

Since in many emerging markets, there is a high level of consumption of illegal and illicit alcohol, due to a lack of affordable options, it represents a big opportunity for Anheuser-Busch to provide consumers with affordable, high quality, branded alternatives. BUD has been able to achieve this in Africa by using local crops to create beer brands at not just appealing price points, but also at healthy margins. Moreover, the long-term outlook for Africa is hugely attractive: markets with increasing gross domestic products, a growing middle class, and expanding economic opportunities. Africa had been a strong market for SABMiller before its amalgamation into AB InBev, and accounted for a considerable level of beer sales volumes. South Africa, a mature beer market, makes a big contribution to this.

Scope For Premiumization

BUD has a considerable opportunity to encourage consumers to trade-up to more high-end products, in both developed and in emerging markets. The company has various beer brands at different price points, which should stand it in good stead. BUD has also launched a high-end company, made up of its global specialty and craft brands. This is now established in 22 markets, accounting for roughly 70% of the high-end opportunity worldwide. BUD was able to deliver a growth of 26% in this segment in FY 2017, recording a revenue of $4.6 billion.

Diversifying Beer Portfolio

Flavored beer is another area that can provide growth for the company going forward. BUD has witnessed considerable success in this category in emerging and developed markets. For example, in South Africa, Flying Fish grew volumes by more than 60% by recruiting females and younger LDA (legal drinking age) consumers into the beer category and grabbing share from cider. In Western Europe, Cubanisto, a rum flavored premium beer, grew its top-line by more than 40% in FY 2017 by successfully competing against spirits in the nightlife occasion.

The company is also trying to make in-roads in the craft beer industry, with partnerships with almost a dozen craft breweries. The company’s craft portfolio is growing ahead of the industry, driven by organic growth, as well as expanded distribution. Even in France, their Leffe brand has grown to become the number one beer brand by penetration.

See Our Complete Analysis For Anheuser-Busch InBev

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