The Road Ahead for AB InBev

Written by Eashan Trehan

The world’s largest brewer, Anheuser-Busch InBev (AB InBev), has gone through a bumpy road over the past 12-months, with its 5-billion-USD listing in Hong Kong succeeding after a second attempt, the sale of its Australian unit, paring back its dividend payout, and the Covid-19 pandemic shutting down restaurants and bars. The brewery giant, which owns Budweiser, Michelob, Stella Artois, Cass, Corona, and Hoegaarden, among several other names, has over the years relied heavily on inorganic means of growth through M&A activity, acquiring SABMiller, and more recently, a whole host of craft beer brands. This has left the company saddled with a burgeoning load of debt. Its sales in developed markets have also slowed down, following rising health concerns, which has led to AB InBev pursuing premiumisation to sustain its growth through higher prices, instead of volume growth. A bright spot for the brewer has been the Asian market, which has been a key source of growth and there remains sufficient room for growth in the Southeast Asia market.

In this backdrop, the next step on the growth ladder for AB InBev appears to be the seltzer market in the United States of America (USA). The American seltzer industry is presently led chiefly by two brands - “White Claw” and Boston Beer Company owned “Truly”, but AB InBev, though late to the party, is seeking to leverage its most popular brand, Bud Light, to gain a firm foothold in the seltzer market. The company’s market share has recently broken into the double digits, while seltzer industry leader, White Claw, continues to struggle with ramping up its capacity, as demand for its seltzer continues to outstrip its production capabilities.

As 2020 comes to a close, 2021 could be another rollercoaster year for AB InBev, as its longtime CEO, Carlos Brito, prepares to step down after almost two decades at the helm, signaling a leadership shakeup. With uncertainty over when the Covid-19 pandemic will end, looming prospects of intermittent lockdowns, closure of several bars and restaurants, and the need for the company to cut down its debt load, AB InBev appears to have its work cut out next year.

DISCLAIMER: The contents of this website are solely owned by the author of each article and does not represent the views of the Awareness Committee or the Editorial team.