Anheuser-Busch InBev, the world's largest brewer, reported higher-than-expected quarterly earnings on Thursday 27 October as beer sales accelerated, and raised its 2022 outlook to the top-end of its previous forecast range.
AB InBev, the maker of Budweiser, Corona and Stella Artois, sold 3.7% more beer and other drinks during July-September, a growth rate faster than that seen in the first or second quarters, with strong expansion in Mexico and South Africa.
The Belgium-based brewer also succeeded in pushing through higher prices or persuading consumers to shift to higher-priced "premium" brands in all major markets except China, where the "zero-COVID" policy has curbed economic growth.
Chief executive Michel Doukeris told Reuters in an interview that beer was proving resilient in the face of inflation, with consumers still willing to pay a little bit more for "premium" brands as employment remained high.
He said that even in Europe, where consumers are switching to lower cost grocery retailers, they continued to buy established beer brands and, in some cases, were choosing beer instead of higher priced wine or spirits.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 6.5% on a like-for-like basis to $5.31 billion in the third quarter, above the 5.2% forecast by analysts in a company-compiled poll.
The company said it now expects its core profit to rise by between 6% and 8% this year, from a previous range of 4% to 8%, which it maintains as a medium-term outlook.
AB InBev shares rose 6.6% to €50.35, one of the strongest performers on the FTSEurofirst index .FTEU3 of leading European shares.
European Consumer Pinch
AB InBev's largest rivals, far more reliant on Europe, gave a more cautious view of the beer market.
Heineken warned of early signs that European drinkers were starting to cut back after sales rose by less than expected in the third quarter, while Carlsberg warned of weakening consumer sentiment while raising its 2022 forecast.
Heineken said sales in Britain and Italy had declined.
Trevor Bernstein, beverage analyst at Bernstein, noted Heineken had in fact reported beer volume growth double that of its rivals and far higher revenue expansion, although expectations had been for even higher figures.
"It's really about the tone. If anything Heineken results were stronger. Heineken, though, said hold on and be careful," he said.
Carlsberg chief executive Cees 't Hart said on Thursday the Danish brewer had seen little evidence of rising inflation hitting beer sales, but there was a bigger risk of lower volumes and downtrading to cheaper brands in the coming months.
For it and Heineken, Europe represented at least 50% of third-quarter business, against less than 15% for AB InBev.
The continent is experiencing the sharpest shock from higher energy prices linked to Russia's invasion of Ukraine and concerns that consumers, with reduced disposable income, will cut back on non-essential consumer goods such as beer.
Unilever, whose brands include Persil as well as Magnum ice creams, gave a downbeat assessment of consumer sentiment in both Europe and China on Thursday 27 October.
AB InBev's Doukeris said that costs for next year were not expected rise as steeply as in 2022, except for in Europe where there would likely be a greater impact from energy prices.
One bright spot for brewers at least could be the soccer World Cup starting on 20 November, an event that typically leads to a spike in drinking, albeit normally during its regular spot in the northern hemisphere summer.