The end of 2022 delivered a soft finish for the world’s largest beer manufacturer. In the U.S., Anheuser-Busch InBev’s depletions (sales-to-retailers) and shipments (sales-to-wholesalers) declined -7.6% and -8.6%, respectively.
A-B attributed the declines to “phasing of price increases and poor weather in December,” with CEO Michel Doukeris characterizing Q4 as a “one-off complicated quarter.”
Nevertheless, bolstered by price increases and “other revenue management initiatives,” A-B’s Q4 U.S. revenue increased +2.5%, with revenue per hectoliter up +12.2%. EBITDA in the quarter increased +3.1%.
Full-year U.S. depletions and shipments declined -4.1% and -4.2%, respectively, which the company said was “estimated to be below the industry.” Revenue grew +2.3%, as revenue per hectoliter increased +6.7%. EBITDA was flat.
Notably, A-B said its above core beer offerings (Michelob Ultra, Stella Artois, Kona Big Wave and Estrella Jalisco) and beyond beer brands generated more than 40% of its revenue. Those offerings have increased revenue by $850 million compared to pre-pandemic levels in 2019. Michelob Ultra increased volume “high-single digits.”
A-B’s beyond beer portfolio of spirits-based, ready-to-drinks offerings increased volume “strong double-digits,” led by canned cocktail brand Cutwater, which A-B said is the No.1 spirits-based cocktail in the U.S., and Nütrl, the second best-selling vodka seltzer behind E. & J. Gallo’s High Noon Sun Sips. Those two A-B brands combined increased revenue more than +70%.
Worldwide, A-B’s beyond beer business generated $1.6 billion in revenue, growing “low-single digits,” with “soft malt-based seltzer” sales in the U.S. partially offsetting the global growth.
Non-alcoholic (NA) beer Budweiser Zero was the No. 1 NA beer by volume in the U.S. in Q4, A-B said.
A-B’s Worldwide Revenue Tops $57 Billion, Gross Profit of $31 Billion
A-B’s worldwide business generated revenue growth of +11.2%, on revenue per hectoliter growth of +8.6% for full-year 2022. A-B generated $57.786 billion in revenue (+11.2%) and $31.481 billion (+5.8%) in gross profit.
Worldwide volume increased +2.3% for the full year, with owned beer volumes up +1.8% and non-beer volumes up +5.2%. The company’s volume reached 595,133,000 hectoliters (nearly 507.2 million barrels) for the year, with beer volume of 517,990,000 hectoliters (around 441.4 million barrels), non-beer volume of 73,241,000 hectoliters (62.4 million barrels) and third-party output of 3,903,000 hectoliters (3.3 million barrels).
In Q4, A-B’s worldwide revenue increased +10.2% in Q4, as revenue per hectoliter increased +11.2%. However, volume declined -0.6% in Q4, as beer volume declined -0.9%, with non-beer volumes up +1.9%, but unable to offset the declines.
Due to the “record high volumes and top-line growth” across all regions, A-B said it generated around $5.5 billion in revenue ahead of pre-pandemic levels in 2019, as volumes increased +5.8% compared to ‘19.
Full-year EBITDA grew +7.2%, and quarterly EBITDA increased +7.6% in Q4.
B2B platforms now account for 63% of A-B’s revenue growth, with its BEES program now up to 3.1 million users. The company said more than $450 million of revenue and 69 million e-commerce orders were placed via its direct-to-consumer platforms in 2022.
2023 Forecast
A-B is projecting EBITDA growth in the range of +4% to +8%, with revenue expected to grow ahead of EBITDA due to a “combination of volume and price.”
In terms of the U.S. beer market in 2023, both consumers and the demand for beer are “resilient,” Doukeris said. A-B does not see any significant trade-down that could cause concern for the rest of the year. Instead, Doukeris noted “consumers changing a little bit” in the channels they buy from and “changing a little bit [with] package” size.
“People are buying more in larger formats, both in terms of the chain, supermarkets and the packs,” Doukeris said. “And people stay more at home. So penetration consumption at home is being bigger, which in a way is very good for beer because beer has [the] highest share of throat in home.”
Fresh Innovation Strategy Performing Better Than Brand Extensions
Asked how A-B plans to balance supporting its core brands and innovation, Doukeris said the company needs “to be able to invest in the core and renovate, create excitement around our core brands.”
“We need to continue to innovate in this beyond beer space that offers us incredible opportunities for growth, especially with female consumers,” Doukeris said.
However, he said the company has learned from the past when it comes to innovation in the beyond beer space, noting that new brands “catered” to a specific consumer and occasion do better to gain share in the “long term” than brand extensions do.
“They start lower than when you extend brands from our core brands,” Doukeris said. “But they build a much more sustainable model.”
Doukeris pointed to Nütrl as an example of the success of that model.
Budweiser Had ‘Hell of a Run’ with World Cup Despite Alcohol Restrictions
The 2022 FIFA World Cup, held in November and December in Qatar, was “a great opportunity once again” for A-B to “activate” its brands across “different geographies,” Doukeris said.
The international soccer tournament was plagued with controversy, including Qatar officials banning alcohol sales at stadiums two days before the event kicked off. A-B paid a reported $76 million to be the official beer sponsor of the event, featuring its flagship Budweiser, but was forced to pivot and only sell its non-alcoholic brand Budweiser Zero to fans attending matches.
Still, Budweiser had “a hell of a run” and posted “very strong results in brand equity across the globe” from its FIFA World Cup campaign and the international awareness the brand received during the event, with signage, campaigns, and a Budweiser “ultimate championship celebration” for Argentina, the winning country of the tournament.
Through digital campaigns, Budweiser also “gained 500 million consumers,” showing “the power of integration of brand campaigns and our digital products,” Doukeris said.
“The interest for the sport’s [at an] all time high and [there’s] huge excitement built up now for the next event,” he continued.
The next FIFA World Cup will take place in the U.S., Canada and Mexico in June 2026. A-B is reportedly seeking a $47.4 million deduction in its $112 million sponsorship deal for the tournament due the limitations it faced during the Qatar tournament.
No Comments on Craft Strategy
A week after layoffs at several of its craft breweries, A-B leadership did not comment on its craft strategy.
Last week, A-B shut down operations at Platform Beer Co. in Cleveland, Ohio. The craft brewery was acquired in August 2019 and was the smallest craft brand within the company’s Brewers Collective craft division, not including brands acquired from Craft Brew Alliance (CBA) in 2020. Platform will live on with three IPAs, which will be produced elsewhere in A-B’s network.
Following the Platform news, layoffs were reported at Houston, Texas-based Karbach Brewing; Patchogue, New York-based Blue Point Brewing; Lexington, Virginia-based Devils Backbone; and Asheville, North Carolina-based Wicked Weed. Multiple sources have also told Brewbound of multiple layoffs at Goose Island Brewery in Chicago.
Asked to confirm details about the layoffs, Andy Thomas, president of A-B’s High End division, said in a statement to Brewbound:
“Winning in craft remains a key pillar of our strategy to lead and develop the Premium segment, but winning means something different in today’s marketplace than it did a few years ago. This week, several of our craft brewery partners announced local team updates that will allow them to better address evolving consumer needs and trends in their home markets and beyond. As the craft industry continues to transform, we’re staying laser focused on continuing to lead growth in the segment.”
A-B has not returned additional requests for clarification on how many breweries and employees have been affected.