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Pricing Actions, Premiumization to Aid AB InBev's (BUD) Growth
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, is slated for growth on continued consumer demand for its brand portfolio. Accelerated digital transformation, pricing actions, revenue management initiatives and continued premiumization have been driving its growth trajectory.
The company has been focused on offering premium beer variants, keeping on track with the consumer premiumization trend in the alcohol industry. It 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, BUD’s global brands lead the way in premiumization.
The company’s focus on premiumization and pricing actions has been well reflected in its share price, with the stock outperforming the industry and the sector. Shares of the Zacks Rank #3 (Hold) company have rallied 20.8% in the past three months compared with the industry’s growth of 6.7%. The stock also fared better than the sector and the S&P 500’s gain of 8.5% and 10.7%, respectively, 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 4.5% from the year-ago number.
Image Source: Zacks Investment Research
Premiumization Strategy
Within the premiumization strategy, BUD 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 it for growth in the long term.
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, premiumization of the beer industry has been a key growth opportunity for AB InBev.
Beyond Beer Initiative
AB InBev is steadfastly growing its Beyond Beer portfolio, including products like ready-to-drink beverages like 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 total revenues in third-quarter 2023. The global Beyond Beer business’s revenues improved mid-single digits in the third quarter driven by growth globally. This was led by expansion of Flying Fish in Africa and the Vicky portfolio in Mexico. This was somewhat offset by sluggishness in the malt-based seltzer industry in the United States.
Digital Transformation
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. It is witnessing an acceleration in B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months.
Hurdles to Counter
AB InBev’s continues to witness elevated costs stemming from commodity cost inflation and investments to support long-term growth, which are weighing on EBITDA margin.
Key Picks
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Dutch Bros (BROS - Free Report) , Fomento Economico Mexicano (FMX - Free Report) and Molson Coors (TAP - Free Report) .
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings suggests growth of 30.6% and 81.3%, respectively, from the prior-year levels. The consensus mark for BROS’ earnings per share has been unchanged in the past 30 days.
Fomento Economico Mexicano, alias FEMSA, currently flaunts a Zacks Rank #1. FMX has a trailing four-quarter earnings surprise of 23.2%, on average.
The Zacks Consensus Estimate for FEMSA’s current financial-year sales and earnings indicates a rise of 32.3% and 60.3%, respectively, from the year-ago numbers. The consensus mark for FMX’s earnings per share has been unchanged in the past 30 days.
Molson Coors currently carries a Zacks Rank #2 (Buy). TAP has a trailing four-quarter earnings surprise of 41.3%, on average.
The Zacks Consensus Estimate for Molson Coors’ current financial year’s sales and earnings implies an improvement of 9.1% and 28.8%, respectively, from the year-ago reported number. The consensus mark for TAP’s earnings per share has been unchanged in the past 30 days.
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Pricing Actions, Premiumization to Aid AB InBev's (BUD) Growth
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, is slated for growth on continued consumer demand for its brand portfolio. Accelerated digital transformation, pricing actions, revenue management initiatives and continued premiumization have been driving its growth trajectory.
The company has been focused on offering premium beer variants, keeping on track with the consumer premiumization trend in the alcohol industry. It 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, BUD’s global brands lead the way in premiumization.
The company’s focus on premiumization and pricing actions has been well reflected in its share price, with the stock outperforming the industry and the sector. Shares of the Zacks Rank #3 (Hold) company have rallied 20.8% in the past three months compared with the industry’s growth of 6.7%. The stock also fared better than the sector and the S&P 500’s gain of 8.5% and 10.7%, respectively, 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 4.5% from the year-ago number.
Image Source: Zacks Investment Research
Premiumization Strategy
Within the premiumization strategy, BUD 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 it for growth in the long term.
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, premiumization of the beer industry has been a key growth opportunity for AB InBev.
Beyond Beer Initiative
AB InBev is steadfastly growing its Beyond Beer portfolio, including products like ready-to-drink beverages like 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 total revenues in third-quarter 2023. The global Beyond Beer business’s revenues improved mid-single digits in the third quarter driven by growth globally. This was led by expansion of Flying Fish in Africa and the Vicky portfolio in Mexico. This was somewhat offset by sluggishness in the malt-based seltzer industry in the United States.
Digital Transformation
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. It is witnessing an acceleration in B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months.
Hurdles to Counter
AB InBev’s continues to witness elevated costs stemming from commodity cost inflation and investments to support long-term growth, which are weighing on EBITDA margin.
Key Picks
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Dutch Bros (BROS - Free Report) , Fomento Economico Mexicano (FMX - Free Report) and Molson Coors (TAP - Free Report) .
Dutch Bros currently sports a Zacks Rank #1 (Strong Buy). BROS has a trailing four-quarter earnings surprise of 57.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales and earnings suggests growth of 30.6% and 81.3%, respectively, from the prior-year levels. The consensus mark for BROS’ earnings per share has been unchanged in the past 30 days.
Fomento Economico Mexicano, alias FEMSA, currently flaunts a Zacks Rank #1. FMX has a trailing four-quarter earnings surprise of 23.2%, on average.
The Zacks Consensus Estimate for FEMSA’s current financial-year sales and earnings indicates a rise of 32.3% and 60.3%, respectively, from the year-ago numbers. The consensus mark for FMX’s earnings per share has been unchanged in the past 30 days.
Molson Coors currently carries a Zacks Rank #2 (Buy). TAP has a trailing four-quarter earnings surprise of 41.3%, on average.
The Zacks Consensus Estimate for Molson Coors’ current financial year’s sales and earnings implies an improvement of 9.1% and 28.8%, respectively, from the year-ago reported number. The consensus mark for TAP’s earnings per share has been unchanged in the past 30 days.