Anheuser-Busch InBev NV (EBR:ABI) is the largest brewer in the world, with 22% of world market share, and 50% of U.S. market share. Created by Belgium-based InBev's acquisition of U.S.-based Anheuser-Busch in 2008, the company is based in Leuven and has operations in 30 countries across the world. The company owns four of the top ten selling beers in the world, holds the number one or two market share in 20 markets around the world, and manages over 300 brands.
Anheuser-Busch InBev realized over $250 million in cost savings due to the merger. By the end of the integration process in 2011, the company expects to realize synergies of $2.25 billion. These synergies have allowed the company to grow revenues and EBITDA even in the face of the global recession. In an effort to further increase margins, AB InBev has implemented a strategy focusing on its three higher margin global brands: Budweiser, Beck's, and Stella Artois.
Anheuser-Busch InBev NV is engaged in producing, marketing, distributing and selling a portfolio of over 200 beer brands. These include:
Global flagship brands
The Company also produces and distributes soft drinks, particularly in Latin America.
Second Quarter 2010 Results
Anheuser-Busch InBev reported revenue growth for the second quarter of 2010 of 4.1%, or 1.5% per hectoliter. On a constant geographic basis, growth in revenue per hectoliters would have been 2.8% for the second quarter of 2010. Second quarter EBITDA grew 5.6% to $3.354 billion USD, with EBITDA margin of 36.6% compared to 38.2% in the second quarter of 2009 with organic improvement of 50 basis points. Normalized profit attributable to equity holders was $1.440 billion USD, compared to $1.134 billion USD in the second quarter of 2009. The company reported normalized earnings per share of $0.90 USD, compared to EPS of $0.72 USD in the year-ago period.
In 2009 AB-InBev grew EBITDA 16.6% in spite of a challenging global economic environment, as well as the complexities of uniting two major companies, divesting assets and deleveraging the balance sheet. EBITDA grew 16.6% for 2009 to reach $13.037 billion USD. AB-InBev's EBITDA margin for the year was 35.5%, up from 30.8% in 2008 on a combined basis.
Revenue for the year was $36.758 billion USD and increased organically by 2.5% FY09. Largely due to continued effective revenue management, revenue per hectoliter rose 4.54%.
Focus Brands grew 1.9% led by Antartica, Brahma and Skol in Brazil, the Bud Light family in Canada, Budweiser and Harbin in China, and Stella Artois in the United Kingdom. In FY09, AB-InBev gained or maintained market share in markets representing approximately 70% of its total beer volumes.
Upon the merger of Anheuser-Busch and InBev, the company announced an ambitious set of commitments to drive the performance of the new company. The company captured $1.1 billion USD in synergies in 2009. AB-InBev maintains its commitment for total synergies from the combination of $2.25 billion USD, with a further $500 million USD expected in 2010.
The Company operates in seven segments: North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, Asia Pacific and Global Export & Holding Companies.
A central focus of the North America Zone in was the successful integration of Anheuser-Busch and InBev. Synergies related to the combination, along with a robust product innovation pipeline and its focus on productivity, allowed North America to deliver strong results in spite of industry volume declines caused by the weak economy.
Among the major product advances during the past year:
Top brands in the zone include Brahma, Andes, Pilsen, Stella Artois, and Budweiser.
Top brands in the zone include Bass, Leffe, Hoegaarden, Beck's, Stella Artois, and Budweiser.
AB InBev's Asia Pacific segment includes China and South Korea. Top brands in the zone include Harbin, Cass, Budweiser, and Beck's. One of the key benefits of the combination of Anheuser-Busch and InBev was the combination of the two companies' geographic footprints in China. Whereas Anheuser-Busch was firmly entrenched in the north of the country, InBev had made great inroads in the south. The combined company now has national reach.
The segment includes the US Entertainment Business (Busch Gardens) and all export activities. The majority of exports are Beck’s, Stella Artois, Budweiser, Leffe, Hoegaarden, Staropramen, and Brahma.
The brewing industry is dominated by a few large players, along with many smaller, specialty and niche companies (e.g., micro-breweries). Consolidation of smaller outfits with larger ones has been a common strategy among large brewers like Molson Coors and SABMiller, all of whom have sought growth through acquisitions. InBev's acquisition of Anheuser-Busch prompted the 2008 creation of joint-venture Miller Coors by SABMiller (SAB-LN) and Molson Coors Brewing Company (TAP) in the United States. The two companies hoped to create a company which would be able to compete with AB InBev's nearly 50% share of the U.S. market. Although the United States is only one market in the company's global operations, it is indicative of global brewer consolidation, and AB InBev will have to contend with this new landscape.
The company utilizes a variety of agricultural and commodity products in brewing and bottling its beverages. For beer, the most important inputs are hops and barley. Barley typically constitutes 8% of the brewing costs of beer, and a significant price increase in barley, for instance, would increase the cost of the company's goods sold and put pressure on margins. Barley prices have increased 85% because of a dwindling supply. Farmers are increasingly attracted to farming crops such as corn and soybeans instead of barley because of the burgeoning biofuel industry. During the commodities superspike of 2007 and 2008, the prices of these commodities rose drastically with general commodities bubble and dramatically pressured margins. They receded in late 2008, but remain elevated, and the possibility of another significant rise in commodities prices represents a constant threat to profits.
AB InBev has broad exposure to foreign currencies and actively hedges a large portion of these to avoid wide swings in earnings from currency fluctuations. Although this hedging insulates from the potential downside of a strengthening euro, it also limits larger gains from drastic down-swings in the euro's value.
AB InBev is the largest brewer in the world. AB InBev is differentiated in that it is a true global brewer, as opposed to companies like Molson Coors Brewing Company (TAP) that primarily operate in only a few countries. This is reflected in product performance, as the company's Bud and Bud Light brands are two of the top three global best selling beers. Additionally, with more than 100 different brands, AB InBev produces a local favorite in each of the countries in which it competes. AB InBev's competitors include:
|Country||Market Share||Country||Market Share|
|Mexico (Modelo)||55%||The Netherlands||15.7%|