AB InBev has reported that its global volume sales declined 9.3% in its first-quarter results, however April figures suggest that Covid-19 impact will be greater in its second quarter.
Growth of AB InBev’s three global brands – Budweiser, Stella Artois and Corona – across the majority of its markets was more than offset by declines in China, which is the largest market for both Budweiser and Corona outside of their home markets.
Excluding China, volumes declined by 3.6%, despite initial growth of 1.9% in January and February. The firm said that the impact of Covid-19 on its results increased significantly towards the end of the quarter due to shortfall from lost sales from bars and restaurants.
However, the Belgium-based company expects a “materially worse” second quarter, as its April global volumes already witnessed a decline of approximately 32% due to the closure of the on-premise channel in most markets.
The world’s largest brewer recorded a 5.8% drop in revenue to $11 billion compared to last year’s $12.2 billion. Meanwhile, gross operating profit (EBITDA) was worse than the company predicted in its last quarter and fell 13.7% to $3.95 billion.
In the US, the firm’s largest market, revenue grew by 1.9% driven by its top 10 brands and above core portfolio. However, overall market share was lost as the trend for hard seltzer’s accelerated but the company is pushing more into this category with the entry of Bud Light Seltzer.
In the US, Canada and Western Europe, AB InBev has benefitted from an increase in retail sales as the off-premise channel represents the majority of the firm’s sales. Meanwhile, in Brazil and Colombia, the brewer witnessed significant impact to its volumes due to the relevance of the on-premise channel which is predominantly closed.
In markets such as Mexico, South Africa and Peru, brewery operations have been severely restricted however the company’s Corona brand led the way with growth.
AB InBev’s China market has been showing improvements with volumes declining approximately 17% in April compared to a decline of 46.5% in its first quarter.
The firm said they will best practices from its experiences in China and South Korea – which are showing early signs of recovery – to the rest of its markets, as restaurants and bars began re-opening from mid-March.
The company’s first-quarter results coincide with the Foreign Investment Review Board’s approval of Asahi’s acquisition of AB InBev’s Australian subsidiary Carlton and United Breweries (CUB). This marks the closing of the regulatory review process and enables the completion of the transaction to go forward on 1 June.
By: Emma Upshell
Source: Food Ingredients First
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