Anheuser-Busch InBev, the brewer of Budweiser, Becks and Stella Artois, has reported rising profits in the second quarter of 2011.
The world’s largest brewer announced net profit of $1.6 billion in 2Q11, up 11.3 percent from $1.440 billion in 2Q10. Total revenue grew 3.7 percent in the quarter, driven by brand building strategies and the implementation of revenue management best practices, the company said in a statement.
The results were achieved against a background of challenging trading conditions in some of its key markets. Distribution expenses have been impacted this year by a higher mix of direct distribution and transfers of product between regions in Brazil. Labor cost increases in Latin America South and transport tariff increases in Central & Eastern Europe have also contributed to the increase in distribution expenses in the first half of the year.
AB’s two largest markets are the United States and Brazil. In the US, industry volumes in 2Q11 were impacted by poor weather, especially in the center of the country, and high gas prices. However, gas prices have moderated in recent weeks and the industry benefited from good volumes during the Fourth of July holiday period.
Beer volumes in Brazil fell 2.6 percent in the quarter, driven by difficult comparables, as beer volumes had seen growth of 13.7 percent in 2Q10, helped by the FIFA World Cup. Low growth in real disposable income is also impacting volumes in 2011.
The company’s 2011 outlook is essentially unchanged from its 1Q11 announcement.
“As expected, volumes gained momentum in 2Q11, despite a difficult comparable driven by the FIFA World Cup in 2010, and we expect this momentum to continue into the second half, especially the fourth quarter,” the statement said.
“Global commodity cost increases should be mitigated through the company’s hedging strategy, procurement savings and further efficiency gains in our operations.”
Budweiser global volumes continue to grow, increasing by 2.5 percent in 2Q11 and by 0.2 percent for the half year. Good results in China, Russia, Canada and other international markets more than offset declines in the United Kingdom and the United States.
Budweiser continues to grow its share of the profitable Chinese premium market, share in Russia continues to increase and Budweiser is the largest brand in the Canadian market.
Stella Artois grew by 0.5 percent globally in 2Q11 and by 3.0 percent for the half year, driven by double digit growth in the United States, supported by the launch of the chalice can, but offset by declines in the UK as a result of the difficult FIFA World Cup comparables.
In Brazil, the brand grew by almost 200 percent in HY11 and is the fastest growing brand in the premium segment. The brand is also growing by double digits in Argentina.
Stella Artois Cidre was successfully launched in the United Kingdom in April and in the first 12 weeks has achieved a 16 percent share of the premium cider category. “We believe that Stella Artois Cidre is on track to become one of the United Kingdom’s most successful new product launches in the consumer product category,” the statement said.
