Anheuser-Busch InBev’s first quarter earnings call today was overshadowed by an earlier announcement that CEO Carlos Brito will step down this summer after 16 years of leading the world’s largest beer manufacturer.
“When I joined Brahma in 1989, I never imagined the journey our company and I would embark on over the next three decades,” Brito said during a call with investors and analysts. “I’m immensely proud of what this team has accomplished together. We built the leading, most profitable global brewer, with the best brands and, more importantly, the best people. We grew the company both organically and organically through industry-defining combinations.”
Michel Doukeris, president of A-B’s North America zone, will succeed Brito as CEO, effective July 1. Doukeris’ successor has not been announced, but the company will name the new North America leader prior to the transition date.
In Q1, A-B’s global volume increased 13.3% compared to the same quarter last year, which included the onset of the COVID-19 pandemic. Compared to Q1 2019, volume increased 2.8%.
A-B’s global revenue increased 17.2%, to $12.2 billion, while profit increased 14.8%, to $7 billion. Brito attributed the growth to the company’s “favorable brand mix from the outperformance of our premium portfolio.”
Premium products now account for more than 30% of A-B’s revenue, up from about 24% in 2017, according to the Q1 earnings presentation deck. Revenue of the company’s premium portfolio grew by 28% during the quarter, boosting revenue per hectoliter by 3.7%.
Included among premium products are the company’s beyond beer offerings, which are 20% more profitable than A-B’s traditional beer portfolio, according to the presentation deck. The segment delivered $1.2 billion in revenue in 2020 and grew more than 40% in Q1.
“In the U.S. — our largest beyond beer market that represents approximately half of our global beyond beer volume — we have significantly enhanced our presence in the hard seltzer segment with Bud Light Seltzer and the more recent launches of Michelob Ultra Organic Seltzer and Cacti,” Brito said.
A-B ranks third among U.S. hard seltzer producers, behind category leaders Mark Anthony Brands’ White Claw and Boston Beer Company’s Truly Hard Seltzer. Its Bud Light Seltzer holds a 10.4% share of the $4.1 billion segment through April 18, according to wholesaler data and software provider Fintech. Combined with Bud Light Seltzer, the other players in A-B’s hard seltzer portfolio combine to bring the company’s total hard seltzer market share to 14.6%, with Michelob Ultra Organic Seltzer (2.3%) leading the way, followed by Omission Hard Seltzer (0.8%), Natural Light Seltzer (0.6%), Bon VIV (0.3%), and Cacti (0.2%).
A-B aims to expand its beyond beer portfolio outside the U.S. and has seen early success with Michelob Ultra Organic Seltzer in Mexico, Brito said.
“It has already captured approximately 45% market share of the developing seltzer segment, more than the next three brands combined,” he said.
To date, the company has launched more than 90 beyond beer brands in about 40 countries, the most prolific being Mike’s Hard Seltzer, a hard seltzer under the Mike’s Hard Lemonade brand that A-B owns the rights to everywhere but in the U.S. By the end of 2021, both Mike’s Hard Lemonade and Mike’s Hard Seltzer will be available in more than 20 countries.
In the U.S., A-B’s shipments (sales to wholesalers) increased 2.9% and revenue per hectoliter increased 2.4%, which led to a 5.4% increase in total revenue. However, depletions (sales to retailers) declined 0.8%, lagging behind depletions in the overall U.S. beer market.
A-B attributed the decline in depletions to “a challenging comparable from ‘pantry-loading’ behavior in March 2020,” but noted that “healthy volume growth” in April brought depletions back to growth last month.
Year-to-date through April 18, A-B’s off-premise dollar sales have increased 2.1%, compared to the same period last year, which included the March 2020 stock-up period, according to market research firm IRI. Its dollar share of the total beer category declined 1.84%, to 37.73%.
A-B brand families outpacing the overall beer category’s dollar sales growth at 7.1% year-to-date through April 18 include:
- Michelob Ultra — +12.1%;
- Stella Artois — +9%;
- Bud Light Seltzer — 71.1%.
A-B brand families in decline include the Bud family (-2.3%), Natural family (-6.4%) and Bud subpremium family (-11.9%).
“Our 1Q21 results were fueled by our innovations, as we led the industry in total innovations,” the company wrote in the earnings release. “Our above core beer offerings continue to outperform, highlighted by the strong growth of Michelob Ultra and our craft brands. Our seltzer portfolio continues to grow ahead of the industry according to IRI, and we delivered triple-digit growth of our canned cocktail brand, Cutwater.”
In addition to the company’s Q1 performance, Brito also discussed the company’s global efforts to promote vaccination against COVID-19, including donating Super Bowl ad airtime to a vaccine awareness campaign, partnering with Colombia’s Ministry of Health to lead private sector vaccines in that country, and running a vaccination site in Argentina that administered 1,000 shots daily.