AB InBev said sales during the first quarter were $13.07 billion, a 4.7% increase from the same period a year ago. The beer giant's North America sales fell 2.3%, and total sales volume dropped 4.1%. The beer giant, which posted small market share declines in its Budweiser and Bud Light brands, estimated its U.S. market share dropped 0.5% during the quarter.
AB InBev said volumes of its Michelob Ultra brand increased by double digits and was the U.S. top share gainer for the 12th quarter in a row, helped along by two Super Bowl spots. Its Stella Artois brand, which the company is positioning as a premium product, also gained share, along with its regional craft beers.
The company's outlook for the rest of the year is positive, with AB InBev expecting strong revenue and EBITDA growth as it focuses on developing categories and keeping costs below inflation. "Our portfolio of global brands allows us to reach consumers across a variety of occasions, and we see potential for further growth as premiumization continues to be a global trend," the company said in a statement.
Major beer companies continue to struggle in the U.S., a fact underscored by the ongoing challenges AB InBev faces with its iconic Budweiser and Bud Light brands. Consumers are turning away from domestic lagers in favor of Mexican imports, craft beers and wine and spirits. AB InBev's volume share of the U.S. beer market, by far its largest, has fallen from 49.8% in 2009 to 41.5% a year ago, according to the Beverage Marketing Corporation.
"While we acknowledge we still have work to do, we remain committed to and focused on stabilizing Bud Light’s volume trends and share performance within its segment," the company said in a statement. It added that even though "we continue to face challenges on Bud Light, we are seeing consistent improvements in brand health and market share trends."
During the most recent period, brewers blamed much of the downturn on temperatures. AB InBev said sales to retailers in the U.S. dropped 2.3%, which the company attributed to colder-than-normal weather. It did benefit from higher revenue per hectoliter, which grew 1.9%, as consumers paid more and the company closely watched its spending.
The bright spots were in premium and ultra-premium products. Besides Stella Artois and Michelob Ultra, both of which gained market share in the U.S., AB InBev said other top performers during the quarter were the company's Near Beer, or low-alcohol, products, as well as its regional craft portfolio "which outperformed the overall segment." A growing number of consumers are turning to low-calorie and no- or low-alcohol brews as part of a broader health and wellness trend sweeping the food and beverage industry.
Despite a host of new products tied to these preferences and trends, the big players in U.S. beer continue to struggle to curtail slumping sales and stem the loss in market share. AB InBev recently expanded its Michelob Ultra brand by adding 7-ounce bottles to attract more weeknight consumption and introduced Michelob Ultra Pure Gold, which is made with organic grains and has slightly fewer calories and carbs than the original. It also has rolled out Bud Light Orange and Bud Light Lime flavored with real citrus peels.
AB InBev's latest results are similar to those of Molson Coors and Heineken, both of which saw recent volume declines in the U.S. Last week, Molson Coors reported a 5.8% sales drop domestically, while Heineken said its beer volume fell by a "high single digit in a declining US beer market."
Despite its struggles in the U.S., AB InBev said beer volumes increased in China, Colombia, Mexico and Argentina, but fell in Brazil, its second-largest market behind the U.S.
AB InBev has long touted its diverse portfolio of beers that enable it to attract new consumers and its global reach that allow the brewer to offset slowing growth in one region with higher demand in another. AB InBev appears to be making progress to improve its positioning in part by rolling out new products that cater to shifting consumer trends and promoting its premium brews, but its real hurdle is stemming the drop in North America, a challenge that has proven difficult so far.