Major brewers face declining sales amid tough economic climate
By Felicia Nwosu
Two of the largest global beer producers, Anheuser-Busch InBev and Carlsberg, encountered setbacks in the third quarter of 2024, as consumer demand weakened significantly across several markets. This downturn comes as both companies reported their latest earnings, revealing a drop in sales volumes during the recently ended quarter.
According to a report from Reuters, as these leading brewers navigate a challenging landscape, they face critical decisions regarding their product offerings and pricing structures to regain consumer interest and drive sales in the upcoming quarters.
The chief executive officer of Carlsberg, Jacob Aarup-Andersen, informed Reuters that the company would make short-term adjustments to its long-standing strategy of developing and marketing premium beer brands to counterbalance dwindling sales.
The declines in volumes are particularly pronounced, with consumers, especially in China, tightening their budgets and opting for less expensive beer options. Analysts had projected stronger performances from these leading breweries, yet both AB InBev and Carlsberg fell short of volume forecasts in a challenging consumer landscape marked by sluggish economies and elevated inflation rates.
AB InBev, the world’s foremost brewer, saw a nearly 4% drop in its stock value despite initiating a $2 billion share buyback and raising its earnings guidance. The company reported substantial declines in both revenues and volumes, particularly in China, where figures fell by 16.1% and 14.2%, respectively. Similar trends were observed in major markets such as the United States, Mexico, and Europe, where consumer spending has also decreased.
Carlsberg, the third-largest beer manufacturer globally, faced a volume reduction of 1.3% and highlighted a notably weak consumer base in China as a contributing factor.
Aarup-Andersen noted that in light of significant pressure on premium products, the company would shift some focus toward promoting its mainstream brands effectively.
While AB InBev experienced some growth in its more premium offerings, such as Corona, which saw a 10.2% increase outside Mexico, questions linger about the long-term viability of its strategy, especially in competitive markets.
An investment analyst at Matrix Fund Managers, Siphelele Mdudu, suggested that AB InBev might need to reassess its pricing strategies. If consumers feel squeezed financially, they may turn away from higher-priced beers in favor of more affordable options.
In contrast, Heineken, the second-largest brewer globally, reported a modest volume increase of 0.7% but acknowledged the adverse consumer conditions and fierce competition from local brands in specific markets, such as Cambodia.
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