AB InBev predicts strong profit growth in 2019 as premium focus bears fruit

The world’s largest brewer, AB InBev, has promised strong returns and increased profit growth this year after a renewed focus on premiumisation saw brands like Stella Artois and Corona drive sales,

AB InBev, which makes lagers such as Stella and Corona as well as owning smaller “craft”-focused producers like London’s Camden Brewery and Boston-based Goose Island, reported higher sales than expected in the last quarter of 2018 with a boost of 4.8% for the year as a whole, according to its annual results posted on 28 February. The brewer made USD$8.6 billion in underlying profit in 2018, and attributed much of its growth to the company’s “premiumisation initiatives.”

Paula Lindenberg, AB InBev’s UK president, said that the beer giant’s craft brands had “a great year, with Camden Hells Lager, Camden Pale Ale and Goose Island IPA featuring in the top five contributors to craft category growth in the on-trade, and Goose Island growing the fastest.”

Fourth-quarter core profit rose by 10% to $6.17 billion, higher than the 7% like-for-like increase forecast in a company-compiled poll.

Low and no-ABV beer made up around 8% of the brewer’s beer volumes last year, it said, “leveraging global health and wellness trends.” The company said it expects low and no products to make up 20% of its global volumes by 2025.

Performance, however, was below expectations in Argentina, Brazil and South Africa, which AB InBev said came as a result of “a weak macro economic environment putting pressure on the consumer in all three markets,” as well as volatile currency values.

The news comes after the brewer was forced to cut its dividend in half in October in a bid to pay off some of the debt from its SABMiller acquisition.

AB InBev closed its $79 billion deal to buy SABMiller in October 2016, having sold off a number of brands in Asia and Europe to appease competition regulators.