USA: AB InBev struggling to keep Americans drinking its beers

Anheuser-Busch InBev NV is struggling to keep Americans drinking its brews, the Fortune reported on July 26.

Sales of the domestic lagers have receded as American consumers turn to craft beers, Mexican imports, wine, and spirits to get their buzz.

On July 26, the Budweiser and Bud Light manufacturer said U.S. revenues fell 3.1% in its second quarter despite lower volumes. The underperformance resulted in the company missing overall sales growth forecasts, triggering shares to drop more than 5%.

AB InBev hopes to increase brand consumption by offering more expensive beers like Michelob Ultra Pure Gold, made with organic grains, and Bud Light Orange, brewed with real citrus peels. A plan to launch a fancier Budweiser variant aged on bourbon barrel staves is also in the works to hit the shelves next month.

While Chief Financial Officer Felipe Dutra told the Wall Street Journal there is “no silver bullet, no short term answer to some of the problems we face,” he added that the company’s efforts to innovate and go upmarket looked promising.

Innovation and growth continue to be a priority to AB InBev as the company announced its plans to combine ZX Ventures—a unit founded in 2015 to develop new products for developing consumer needs—with its marketing department.

AB InBev also created a new position in the company—a head of nonalcoholic beverages. Younger generations are drinking far less than their predecessors, urging booze manufacturers to launch more low-alcohol and nonalcoholic products.

After a helping hand from beer drinkers around the world during the World Cup, AB InBev reported a jump in net profit to $1.94 billion for the three months to June 30, up from $1.5 billion a year earlier. However, at 4.7% growth, sales fell short of the 5.4% growth estimate.

Dutra said the company is preparing to be hit hard as costs are only expected to rise due to tariffs on steel and aluminum imports.

26 July, 2018