Dive Brief:
- Anheuser-Busch InBev reported Thursday its fourth quarter net profit fell to $2.29 billion from $2.53 billion last year as revenue declined to $10.72 billion from $12 billion the prior year.
- U.S. volumes declined, and Budweiser and Bud Light lost market share in the U.S. where domestic beers are falling out of favor. U.S. margins also took a 7% hit due to 1.1% sales declines to retailers combined with additional marketing costs.
- The company didn't provide an update on the potential SABMiller takeover currently in the works besides expecting the deal to close in the second half of the year. AB InBev has also worked out provisional sales agreements of U.S. and European brands to Molson Coors and Asahi respectively.
Dive Insight:
AB InBev's flagship Budweiser and Bud Light brands continue to struggle in the U.S. It expects sales and marketing investments to grow in the range of 8% to 12% in 2016 after increasing 9.4% last year. That includes a packaging overhaul for Bud Light, announced in December, and the support of celebrity-driven Super Bowl ads. The company also recently announced a new media campaign for Bud Light Lime-A-Rita, which has faltered after flavor innovations failed to keep consumers' interest.
These moves are key because much talk has surrounded the SABMiller takeover and AB InBev's forays into the fast-growing craft beer segment. But AB InBev can't stop pushing Budweiser and Bud Light in the U.S. These are flagship brands in the company's largest market, and losing a significant portion of market share would mark a huge financial hit for the company.
Bud Light lost 40 basis points last year, contributing to the decline in U.S. revenue. With the right strategy, Bud Light could find a way to regain some of the ground it's lost to craft beer and imports.