SeekingAlpha  Sep 10  Comment 
Motley Fool  Sep 2  Comment 
Consolidation hasn't paid off as planned for big beer companies.
Channel News Asia  Aug 29  Comment 
The U.S. International Trade Commission said on Wednesday it would investigate whether certain Anheuser Busch InBev NV beverage dispensing systems and components infringe a Heineken NV patent.
Yahoo  Aug 28  Comment 
The megabrewer has crafted a strategy to dominate almost all segments of the beer industry.
Yahoo  Aug 26  Comment 
Two of the biggest sin stocks have almost as many similarities as differences.
Motley Fool  Aug 26  Comment 
Investors won’t want to miss these recent quotes from the beer king's CEO.
Motley Fool  Aug 20  Comment 
The brewer is bucking trends in craft beer and the brewing industry as a whole.


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.[1] 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.[2] 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.[3]

Anheuser-Busch InBev realized over $250 million in cost savings due to the merger.[4] By the end of the integration process in 2011, the company expects to realize synergies of $2.25 billion.[5] These synergies have allowed the company to grow revenues and EBITDA even in the face of the global recession.[1] 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.[6]

Company Overview

Anheuser-Busch InBev NV is engaged in producing, marketing, distributing and selling a portfolio of over 200 beer brands. These include:

Global flagship brands

  • Budweiser
  • Stella Artois
  • Beck’s

Multi-country brands

  • Leffe
  • Hoegaarden

Local champions

  • Bud Light
  • Skol
  • Brahma
  • Quilmes
  • Michelob
  • Harbin
  • Sedrin
  • Klinskoye
  • Sibirskaya Korona
  • Chernigivske
  • Jupiler.

The Company also produces and distributes soft drinks, particularly in Latin America.

Business Financials

Second Quarter 2010 Results[7]

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.

2009 Results[8]

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.

Business Segments


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.

North America (45% of 2009 EBITDA)[9]

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:

  • Bud Light Golden Wheat became the newest member of the Bud Light franchise
  • Bud Light Lime has been a huge success in Canada, fueling 50% market share growth in the Bud Light family.
  • Michelob ULTRA signed seven-time Tour de France winner Lance Armstrong as the brand’s spokesperson
  • SELECT, the world’s lightest beer, launched in test markets across the U.S.

Latin America North (26.8% of 2009 EBITDA)[9]

Top brands in the zone include Brahma, Skol, Stella Artois, and Budweiser.[10] AB InBev also has a strong soft drink presence in Brazil, with 18% of the market.[11]

Latin America South (6.7% of 2009 EBITDA)[9]

Top brands in the zone include Brahma, Andes, Pilsen, Stella Artois, and Budweiser.[12]

Western Europe (7.5% of 2009 EBITDA)[9]

Top brands in the zone include Bass, Leffe, Hoegaarden, Beck's, Stella Artois, and Budweiser.[12]

Central and Eastern Europe (4.6% of 2009 EBITDA)[9]

AB InBev's Central and Eastern Europe segment includes Russia, the Ukraine, and Serbia.[13] Top brands in the zone include Staropramen, Beck's, Stella Artois, and Budweiser.[12]

Asia Pacific (2.7% of 2009 EBITDA)[9]

AB InBev's Asia Pacific segment includes China and South Korea.[14] Top brands in the zone include Harbin, Cass, Budweiser, and Beck's.[12] 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.[15]

Global Export and Holding Companies (6.7% of 2009 EBITDA)[9]

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.[12]

Trends and Forces

AB InBev Must Successfully Adapt to An Increasingly Consolidated Brewing Industry

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.[16] 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.[17] 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.

Commodity Cost Fluctuations Affect Margins

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.[18] 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.

Euro (EUR) Affects International Performance

Another trend affecting AB InBev is the relative strength of the Euro (EUR). Although the company is based in Belgium, AB InBev derives 85% of its operating income from outside the eurozone, including 30.7% in Brazilian reals, 9.8% in U.S. Dollar (USD), and 6.5% in Russian Ruble (RUB).[19] Because of this, the company is very sensitive to the strength of the euro. As foreign currencies weaken relative to the euro, goods sold in foreign markets are worth less euros back in Belgium, lowering earnings. Thus, if the euro strengthens (as it did in the first half of 2008 and second half of 2009), it has a negative effect on AB InBev's earnings. In 2008 alone, currency fluctuations had a negative €235 million effect on revenue.

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.[20] 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:

  • SABMiller (SAB-LN) is AB InBev's largest competitor, with a global footprint almost as large. Unlike AB InBev, SABMiller (SAB-LN) has a significant presence in Africa, where it has operations in 10 countries. However, Africa remains a young market and beer consumption per capita is very low, with an average of less than 10 liters/year. This pales in comparison to consumption in Europe, which averages above 60 liters/year.[21]
  • Heineken N.V. (HINKY) operates primarily in western and central Europe. However, the company has little penetration into the Americas. In 2008, it sold 19 million hectoliters of beer in these regions, in comparison to AB InBev's 160 million hectoliters. Unlike AB InBev, however, Heineken N.V. (HINKY) has a significant presence in Africa and the Middle East.[22]
  • Molson Coors Brewing Company (TAP) operates primarily in Canada, the US, and the UK. In the US, the company has entered a joint venture with SABMiller (SAB-LN) to improve operations and better compete with AB InBev. Sales to markets outside of the company's three primary regions are done via export.[24]
AB InBev Market Share by Country[25]
Country Market Share Country Market Share
USA 49.9% Luxemburg 48.5%
Mexico (Modelo) 55% The Netherlands 15.7%
Canada 42.9% UK 21.8%
Cuba 45.1% Germany 9.6%
Brazil 67.5% Italy 7.8%
Venezuela 4.1% Bulgaria 26.6%
Peru 10% Croatia 39.7%
Ecuador 8.9% Czech Republic 15.6%
Dominican Republic 11.3% Hungary 25.1%
Guatemala 15.7% Serbia 54.3%
Argentina 74.4% Montenegro 92.3%
Paraguay 93.1% Romania 19.2%
Bolivia 97.1% Russia 18.4%
Chile 13.3% Ukraine 37.5%
Uruguay 97.1% China 15.4%
Belgium 57.7% South Korea 41.1%
France 9.7%


  1. 1.0 1.1 2008 Annual Report.
  2. 2008 Annual Report.
  3. About AB-InBev.
  4. AB InBev ups merger savings target, to cut capex.
  5. 2008 Annual Report.
  6. 2008 Annual Report.
  7. "Anheuser-Busch InBev reports Second Quarter and Half Year 2010 Results"
  8. AB-InBev 2009 Overview
  9. 9.0 9.1 9.2 9.3 9.4 9.5 9.6 Anheuser-Busch InBev Annual Report 2009
  10. 2008 Annual Report.
  11. 2008 Annual Report.
  12. 12.0 12.1 12.2 12.3 12.4
  13. 2008 Annual Report.
  14. 2008 Annual Report.
  15. http://www.chinadaily.com.cn/bizchina/2008-07/31/content_6893908.htm.
  16. MillerCoors Proud History.
  17. TAP 2008 10-K pg. 25  
  18. Craft Brewers Reformulate Beer to Cope With Hop Shortage.
  19. 2008 Annual Report.
  20. 2008 Annual Report.
  21. Where We Operate.
  22. Heineken International Key Figures.
  23. Markets.
  24. Wikinvest Molson Coors Brewing Company.
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