For so long, it seemed as though no one could get away from the ubiquitous Budweiser commercials and ads that permeated modern culture. But over time, Anheuser-Busch InBev has failed to stay as relevant or as popular to beer drinkers today — especially in America.
Budweiser is no longer on the lips of every red-blooded American male, and it’s really starting to show in their numbers. Third quarter reports show that overall revenues are down by 2.5% from the beginning of the year, with a staggering 5% drop in revenue in just the third quarter alone. However, that may not be the full picture.
See how the company is doing in the global market, and how they’re responding to new American demands below.
First, A Little History
Anheuser-Busch used to operate on its own before it was purchased by the Belgian company InBev. The takeover was highly anticipated and publicized, especially considering there was a time when it was unimaginable that the King of Beers could be dethroned.
The company officially goes by Anheuser-Busch InBev now but still appears on the NYSE as BUD, suggesting that there’s really only one product worth mentioning. But in the midst of the disorganized management and power struggles that led to the highly profitable takeover (for shareholders anyway), the American public started to turn its back on mass-produced domestic beers.
Instead, they started opting for Mexican imports and hand-crafted beers produced in small batches for better taste.
The Straight Numbers
The volume of the brewer dropped about 6% in the third quarter, with a 4% drop since the beginning of the year.
What’s interesting about Budweiser is that it’s really feeling the hit in America, while gaining popularity in other parts of the world. Global sales may have been down 2.2% in the latest reports, but they were up 4.4% if analysts ignored the US market.
What this means is that Budweiser may well be able to thrive without the help of pickier Americans — if they can continue to increase their global appeal. This worldwide trend seems to be happening for other traditionally domestic brands as well, suggesting that many other countries are developing a taste for the consistency and convenience of these mega-brewers.
A Chinese Story
One major global market for Anheuser-Busch lies in China (population: 1.4 billion), which analysts have been quick to say is headed for an economic slowdown soon. But the CEO of Anheuser-Busch InBev Carlos Brito isn’t necessarily worried.
When analysts foretell of doom and gloom, he believes that the drag will happen outside the high-end market, which is the niche his company has managed to occupy. He believes that these segments will continue their growth trends, and while his products may never fully reach the mainstream, they will be able to occupy a larger segment of the market.
So far, it’s Budweiser, Corona, and Stella Artois that are driving the growth, with the latter two brands being billed at the very top of the line for Chinese buyers.
The Craft Beer Revolution
Craft beer has steadily inched its way forward in the market, and now accounts for 12% of the entire American beer economy. This is an interesting phenomenon, especially considering that so many conglomerations in America have ceded control of their business to foreign corporations. Of the 6,000 operating breweries in the nation, 95% of them are either regional companies or craft breweries.
This change in the market has caused Anheuser-Busch to sit up and take notice. They operate about a dozen or so craft breweries, and they’re not going to let this opportunity go to waste to capitalize in the American space.
It’s clear that Budweiser isn’t exactly falling by the wayside anytime soon, whether discussing international or domestic sales. However, the management seems to fully understand how to prepare for the changes ahead. To that end, the company is introducing new strategies to increase their relevancy.
With around 60 brands under their umbrella, they’re concentrating on their craft brewers to boost circulation in America as well as the rest of the world. They’re introducing more green technology to the breweries, and focusing more on community efforts to build relationships and strengthen goodwill. They’re also focused on getting the public more education about how and when to enjoy their beers by encouraging more tours and seminars about what goes into a great beer.
Regards,
Ethan Warrick
Editor
Wealth Authority