Carlsberg and InBev tap sales increase

A rebounding European beer market is buoying Anheuser-Busch InBev and Carlsberg, lifting demand for mainstream brands such as Stella Artois and Tuborg.

The UK return of InBev’s Bud Light is fueling sales in western Europe, while Carlsberg’s low-alcohol beer brand Nordic is driving sales in Scandinavia, the companies said separately.

“Europe is definitely picking up for all the beverage alcohol companies as consumer spending is starting to rise in most of the region,” said Trevor Stirling, an analyst at Sanford C Bernstein.

A surge in eurozone economic confidence to the highest in almost a decade stokes beer sales and offers brewers more pricing power, said Stirling.

InBev, the world’s largest brewer, and Danish rival Carlsberg joined Heineken in surprising the market with first-quarter results that beat estimates after headwinds in Latin America and eastern Europe hurt performance through most of last year. Carlsberg’s focus on more expensive beers such as Grimbergen paid off in France and Italy. Sales volume of the Belgian brew rose 25% in the quarter.

“We’re really stepping up the distribution in France, Switzerland, Denmark and Italy,” said Carlsberg CEO Cees ’t Hart, while warning that “growth at these high levels is, of course, difficult to continue”.

InBev shares rose by more than 5%, while Carlsberg gained almost 3%.

Beyond its Stella Artois and Corona, which posted sales growth of 21% and 18%, InBev is also seeking to ramp up sales of more expensive beers in developed markets.

The Belgium-based company announced this week it is acquiring North Carolina’s Wicked Weed Brewing, which will join a stable of craft brands.

The US beer industry is “progressing towards a better place” after years of stagnation, chief financial officer Felipe Dutra told reporters, and Brazil should pick up this year. Carlsberg expects revenue to grow faster than volume this year, helped by pricing power.

The brewers reported first-quarter revenue growth of 3.7% for InBev and 4% for Carlsberg, exceeding the 2.8% revenue growth analysts were expecting for each company.

Sales declines in previous years had spurred intense consolidation, which culminated in InBev’s $103bn (€94.3bn) takeover of rival SabMiller in the industry’s largest-ever deal. The maker of Budweiser is cutting more than 5,500 jobs as it aims to capture $2bn in cost savings from its acquisition of SABMiller in the next three to four years. The company reiterated its forecast that total revenue growth will accelerate in 2017.

Bloomberg