AB InBev profit gains on beer demand from Europe and China

London

THE world's largest brewer is ramping up its spending on marketing initiatives ahead of the soccer World Cup this summer, as strong demand in Europe, Mexico and China buoyed earnings in the first quarter.

Anheuser-Busch InBev's (AB InBev) earnings growth of 6.6 per cent surpassed analyst estimates, buoyed by the performance of some brands in new markets, such as Bud Light's debut in the UK. The earlier timing of the China's Chinese New Year also drove demand. The company said it had cost savings of US$160 million related to its purchase of SABMiller in the first quarter.

Budweiser's campaign for the World Cup, the most-watched sporting event globally, began this week.

The initiative comes as AB InBev works to drive more revenue from sporting events and social occasions after the past decade's influx of smaller brands weaned drinkers off its mass-market brews.

To address that challenge, the Leuven, Belgium-based company is investing US$2 billion in promoting its brands and improving their supply chains in the US.

This year's World Cup is held in Russia, a market dominated by Carlsberg. The Danish brewer said last week the Russian market shrank by about 5 per cent in the first quarter, hurt by restrictions on bottling and the threat of international sanctions on the country's economy.

AB InBev's shares have lost about a quarter of their value since the Leuven-based company acquired SABMiller in 2016 in the industry's largest-ever deal.

The first ad in the new campaign involves hundreds of drones flying beer bottles from St Louis, Budweiser's home, down the shores of Rio de Janeiro, through the jungles of Latin America, over snowy mountain ridges, dropping off kegs in Shanghai's city centre, in British pubs and finally at Moscow's football stadium. BLOOMBERG