Despite repeated promises and frequent advertising changes, Anheuser-Busch InBev just can’t seem to figure out how to grow — let alone stabilize — Budweiser and Bud Light in the U.S. But the two domestic brands that were historically the brewer’s backbone are becoming less important as the company proves it can meet Wall Street expectations through cost-cutting, global expansion and acquisitions of hot-selling craft brands in the states.
The diverging paths of AB InBev’s two largest U.S. brands compared with the rest of its business is apparent in today’s second-quarter earnings report. Bud and Bud Light sales fell by mid-single digit percentages in the U.S. as the brands kept losing market share. But globally the brewer’s revenue surged 5% thanks to its philosophy of selling more higher-priced beer in more places. The strategy of expanding Budweiser, Stella Artois and Corona overseas and positioning them as premium brews is paying off. The three brands grew combined revenue by 8.9% in the quarter. In China, AB InBev’s revenue jumped 7.2% as Budweiser continues to surge.
Wall Street was impressed, as AB InBev’s stock price was up by more than 5% as of early afternoon. “We think managers’ track record with Budweiser and Corona Extra outside the U.S. demonstrates strong and increasing competence building end-demand for premium brands,” Stifel stated in a note to investors. “This is at odds with perceptions motivated by continued share loss by their largest brands, Bud Light and Budweiser, in their largest market and contributes to the opportunity in the shares, in our opinion.”
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