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CASTLE MALTING NEWS in partnership with www.e-malt.com
07 December, 2021



Brewing news World: AB InBev CEO dismisses suggestion beer is losing ground to spirits

The chief executive of the world’s largest brewer Anheuser-Busch InBev has dismissed the suggestion beer is losing ground to spirits, saying “it’s about time for people to get the right story” about its popularity, The Financial Times reported on December 8.

“Beer is big, beer is profitable and beer is growing,” said Michel Doukeris, who this year took charge of the group behind Budweiser, Stella Artois and Corona. “For too long there [have been] people saying the opposite without showing the data.”

His comments to the Financial Times came as AB InBev, formed through a series of takeovers that culminated in the £79 bln purchase of SABMiller in 2016, this week issued targets for organic growth.

The Belgium-based company is seeking to show it can move beyond the strategy of acquisitions and cost-cutting pursued by former chief Carlos Brito and pay down debt by speeding up growth.

Doukeris, who took over from Brito in July, said drinkers switching to more expensive beer brands, higher sales of other products including ready-to-drink cocktails and exposure to emerging markets would help drive growth at AB InBev.

The company this week said it aimed to deliver an improvement in organic earnings before interest, taxes, depreciation and amortisation of between 4 and 8 per cent over the “medium term”.

The chief executive is seeking to counter a perception among investors that drinkers are increasingly favouring spirits over beer, especially since home cocktail-making took hold in the pandemic.

Shares in AB InBev have lost almost 30 per cent of their value since the start of 2020. In contrast, those in Diageo, one of the world’s largest distillers, have rallied more than 25 per cent.

According to Euromonitor, spirits accounted for 35 per cent of global alcoholic drinking by value in 2020, up from 32 per cent in 2007. Beer declined slightly over the same period from 43 to 42 per cent. The data company forecasts faster growth for beer than for spirits between now and 2025, however.

Ed Mundy, analyst at Jefferies, said that spirits had been gaining “share of throat” largely from wine, but that the dynamic varied widely by country.

Beer consumption has been falling in the likes of the US and Japan, although in others, including Colombia, Chile and Bangladesh, it has shown strong growth since 2010.

In these territories beer is gaining market share, particularly from locally made spirits, rather than from those distilled by international groups such as Diageo and Pernod Ricard, said Mundy. “Beer is winning in emerging markets,” he said.

Doukeris mounted the defence of AB InBev’s core drink as the company has also moved into what it calls the “beyond beer” category, including hard seltzer and ready-to-drink cocktails, which are forecast to grow rapidly in popularity.

Yet Doukeris added: “The first and most important part of our growth story will be the category that we lead today — that’s beer.”

He said there was a significant opportunity in consumers trading up to higher-end beer. “Out of the CPGs [consumer packaged groups] it’s one where you have the lowest level of premiumisation,” he said.

Doukeris said AB InBev, which has its roots in regional Latin American brewing, was “well positioned” overall, not least given its position in emerging markets.

Its shares have gained 4.6 per cent since the start of the week to €52.31 following an investor day.





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