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AB InBev (BUD) Keen on Premiumization Strategy, Stock to Gain
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, has been focused on offering premium beer variants, keeping on track with the consumer premiumization trend in the alcohol industry. Premiumization refers to the growing consumer demand for premium alcohol products. This led alcohol makers to adopt the premiumization strategy to bolster their premium portfolio. AB InBev is no exception to this trend. In fact, the premiumization of the beer industry has been a key growth opportunity for AB InBev.
The company has been investing to develop a diverse portfolio of global, international and crafts and specialty premium brands in its markets. Apart from the premium brands, the company’s global brands lead the way in premiumization.
The company’s above-core portfolio grew revenues by mid-teens in second-quarter 2023, driven by strength in Modelo Especia. The company’s three global brands — Budweiser, Corona and Stella Artois — advanced 18.4% outside their home markets in the second quarter. The Corona brand grew 23.7%, Stella Artois improved 14.5% and Budweiser increased 16.9% outside their respective home markets.
The company’s focus on premiumization has been well-reflected in its share price, with the stock outperforming the industry and the sector. Shares of this Zacks Rank #3 (Hold) company have rallied 17.1% in the past year against the industry’s decline of 0.4%. The stock also fared better than the sector’s fall of 3.2% in the same period.
Further optimism on the stock is reflected by its forward sales estimates, which suggest notable growth. The Zacks Consensus Estimate for BUD’s 2023 sales suggests growth of 5% from the year-ago period’s reported number.
Image Source: Zacks Investment Research
Other Things to Drive Stock
Within the premiumization strategy, the company has also been keen on the expansion of the Beyond Beer portfolio and investments in B2B platforms, e-commerce and digital marketing. These efforts collectively position the company for growth in the long term.
AB InBev is steadfastly growing its Beyond Beer portfolio, including products like Ready to Drink Beverages, which include Canned Wine and Canned Cocktails, Hard Seltzers, Cider and Flavored Malt Beverages. The Beyond Beer trend has been recently gaining popularity due to the rise in demand for low-alcoholic or non-alcoholic drinks. The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line.
Notably, the Beyond Beer portfolio contributed more than $385 million to the total revenues in second-quarter 2023. The global Beyond Beer business’s revenues improved mid-single digits in the second quarter, driven by the expansion of Brutal Fruit in Africa and the Vicky portfolio in Mexico. This was somewhat offset by sluggishness in the malt-based seltzer industry in the United States.
Additionally, AB InBev has been investing in new capabilities for several years to better connect with customers and consumers. Its digital platform has been rapidly growing, leveraging technology, such as B2B sales and other e-commerce platforms, including BEES and Zé Delivery. The company is witnessing an acceleration in the B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months.
Ab InBev’s digital transformation initiatives have been on track, with B2B digital platforms contributing about 64% to its revenues in the second quarter. The company noted that the monthly active user base of BEES reached 3.3 million users as of Jun 30, 2023. Its omnichannel direct-to-consumer ecosystem generated more than $385 million in revenues in second-quarter 2023.
Key Picks
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Dutch Bros (BROS - Free Report) , Barfresh Food Group (BRFH - Free Report) and Keurig Dr Pepper (KDP - Free Report) .
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings per share suggests growth of 29.7% and 25%, respectively, from the year-ago period’s reported figures. BROS has a trailing four-quarter earnings surprise of 44.6%, on average.
Barfresh currently has a Zacks Rank #2. Shares of BRFH have declined 32.1% in the past year. The company has a trailing four-quarter negative earnings surprise of 157.1%, on average.
The Zacks Consensus Estimate for Barfresh’s current financial-year sales suggests growth of 8.7% from the year-ago period’s reported figure. The consensus mark for the company’s loss per share has narrowed by 65.85% from the year-ago quarter’s reported loss.
Keurig Dr Pepper has a trailing four-quarter earnings surprise of 1.5%, on average. It currently carries a Zacks Rank #2. Shares of KDP have declined 20.8% in the past year.
The Zacks Consensus Estimate for Keurig Dr Pepper’s current financial-year sales and earnings suggests growth of 6% and 7%, respectively, from the year-ago period's reported figures.
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AB InBev (BUD) Keen on Premiumization Strategy, Stock to Gain
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, has been focused on offering premium beer variants, keeping on track with the consumer premiumization trend in the alcohol industry. Premiumization refers to the growing consumer demand for premium alcohol products. This led alcohol makers to adopt the premiumization strategy to bolster their premium portfolio. AB InBev is no exception to this trend. In fact, the premiumization of the beer industry has been a key growth opportunity for AB InBev.
The company has been investing to develop a diverse portfolio of global, international and crafts and specialty premium brands in its markets. Apart from the premium brands, the company’s global brands lead the way in premiumization.
The company’s above-core portfolio grew revenues by mid-teens in second-quarter 2023, driven by strength in Modelo Especia. The company’s three global brands — Budweiser, Corona and Stella Artois — advanced 18.4% outside their home markets in the second quarter. The Corona brand grew 23.7%, Stella Artois improved 14.5% and Budweiser increased 16.9% outside their respective home markets.
The company’s focus on premiumization has been well-reflected in its share price, with the stock outperforming the industry and the sector. Shares of this Zacks Rank #3 (Hold) company have rallied 17.1% in the past year against the industry’s decline of 0.4%. The stock also fared better than the sector’s fall of 3.2% in the same period.
Further optimism on the stock is reflected by its forward sales estimates, which suggest notable growth. The Zacks Consensus Estimate for BUD’s 2023 sales suggests growth of 5% from the year-ago period’s reported number.
Image Source: Zacks Investment Research
Other Things to Drive Stock
Within the premiumization strategy, the company has also been keen on the expansion of the Beyond Beer portfolio and investments in B2B platforms, e-commerce and digital marketing. These efforts collectively position the company for growth in the long term.
AB InBev is steadfastly growing its Beyond Beer portfolio, including products like Ready to Drink Beverages, which include Canned Wine and Canned Cocktails, Hard Seltzers, Cider and Flavored Malt Beverages. The Beyond Beer trend has been recently gaining popularity due to the rise in demand for low-alcoholic or non-alcoholic drinks. The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line.
Notably, the Beyond Beer portfolio contributed more than $385 million to the total revenues in second-quarter 2023. The global Beyond Beer business’s revenues improved mid-single digits in the second quarter, driven by the expansion of Brutal Fruit in Africa and the Vicky portfolio in Mexico. This was somewhat offset by sluggishness in the malt-based seltzer industry in the United States.
Additionally, AB InBev has been investing in new capabilities for several years to better connect with customers and consumers. Its digital platform has been rapidly growing, leveraging technology, such as B2B sales and other e-commerce platforms, including BEES and Zé Delivery. The company is witnessing an acceleration in the B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months.
Ab InBev’s digital transformation initiatives have been on track, with B2B digital platforms contributing about 64% to its revenues in the second quarter. The company noted that the monthly active user base of BEES reached 3.3 million users as of Jun 30, 2023. Its omnichannel direct-to-consumer ecosystem generated more than $385 million in revenues in second-quarter 2023.
Key Picks
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Dutch Bros (BROS - Free Report) , Barfresh Food Group (BRFH - Free Report) and Keurig Dr Pepper (KDP - Free Report) .
Dutch Bros currently carries a Zacks Rank #2 (Buy). Shares of BROS have lost 16.3% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings per share suggests growth of 29.7% and 25%, respectively, from the year-ago period’s reported figures. BROS has a trailing four-quarter earnings surprise of 44.6%, on average.
Barfresh currently has a Zacks Rank #2. Shares of BRFH have declined 32.1% in the past year. The company has a trailing four-quarter negative earnings surprise of 157.1%, on average.
The Zacks Consensus Estimate for Barfresh’s current financial-year sales suggests growth of 8.7% from the year-ago period’s reported figure. The consensus mark for the company’s loss per share has narrowed by 65.85% from the year-ago quarter’s reported loss.
Keurig Dr Pepper has a trailing four-quarter earnings surprise of 1.5%, on average. It currently carries a Zacks Rank #2. Shares of KDP have declined 20.8% in the past year.
The Zacks Consensus Estimate for Keurig Dr Pepper’s current financial-year sales and earnings suggests growth of 6% and 7%, respectively, from the year-ago period's reported figures.