AB InBev posts 4% drop in profits

AB InBev, the world’s largest brewer, has reported revenue growth of 6.3% in 2015, despite profits dropping by 4%, with total volumes dipping by 0.6%.

Profits reached US$8.51 billion (£6.11bn) in 2015 compared to £8.86 billion the previous year – a drop of 4%.

Releasing its full year results, the brewer said revenues of its three global brands grew by 12.6% in 2015 with, Budweiser posting a 7.6% increase, Stella Artois 12.5% and Corona 23%. However its total volumes declines by 0.6% with own beer volumes falling flat and non-beer volumes down 4.7%. Profits reached US$8.51 billion (£6.11bn) in 2015 compared to £8.86 billion the previous year – a drop of 4%.

Going forward, the brewer said “premiumizing and invigorating” the beer category as one of its key strategic priorities, citing millenial consumers as its target demographic.

“Getting consumers to see beer in new and fresh ways means we must do the same”, the brewer said in a release. “To encourage this behavior, we have created a Disruptive Growth team to explore opportunities beyond the traditional areas of brands, brewing or marketing campaigns.

“One area being explored by the team is how technology can enhance distribution, packaging, and other aspects of the consumer’s experience. The team has identified a number of “bets” which, while initially small, could eventually become game-changers in the years ahead. For example, digital solutions and craft e-commerce platforms that allow consumers to order beer for quick delivery are being piloted in several countries, including Mexico, Brazil and Canada.”

Developing its footprint within the “near beer segment” is another way in which AB InBev says it is responding to demand for more choice and excitment within the category.

“In particular, we are competing more effectively for share of total alcohol by launching innovative products that offer malt beverage alternatives to wine and hard liquor”, the report read, “We view this near beer category as a major global opportunity. For example, variants of our MixxTail product are now sold in Argentina, the US and China. The success of Skol Beats Senses in Brazil led us to introduce Cass Beats in South Korea. The popularity of brands such as Cubanisto in the UK, France and Belgium also shows the potential of the flavored beer category.”

The brewer also re-confirmed its £71 billion takeover of SABMiller to create the “first truly global brewer”, a deal it said was still on track to complete in the second half of 2016.

“By pooling our resources, we would build one of the world’s leading consumer products companies, benefitting from the experience, commitment and drive of our combined global talent base”, the company said. “Our joint portfolio of complementary global and local brands would provide more choices for beer drinkers in new and existing markets around the world. In particular, the combination would strengthen our position in emerging regions with strong growth prospects, such as Asia, Central and South America and Africa.”

The newly created company is expected to produce about 30% of the world’s beer with the two firms predicting cost savings of at least $1.4bn a year once the merger is completed.