Whatâs Going On Here?Brewer AB InBev reported the first drop in quarterly sales volume since the pandemic on Thursday. What Does This Mean?The name AB InBev might not ring any bells, but if youâve ever cracked open a cold one like Budweiser, Corona, or Stella Artois, then youâre familiar with the worldâs biggest brewerâs boozy offerings. But last quarterâs tumbling sales in the US â the firmâs biggest market â might have investors needing some Dutch courage: the harsh winter was more suited to mulled wine than beer, it turns out, and some shoppers balked at the companyâs price hikes. And with the tail-end of Chinaâs zero-Covid policies denting Asian demand too, the firm posted a surprise drop in the total amount of beer sold last quarter. Luckily, though, AB InBev had price increases and premium beers to fall back on, meaning that overall profit climbed past expectations. Why Should I Care?For markets: The price isnât right.
That update left investors feeling flat, and even the prospect of bubbling demand from reopened China couldnât fix that. See, these results show the company's hit a roadblock: prices are getting so high that theyâre scaring thirsty drinkers off. And rivals Carlsberg and Heineken are feeling the pinch too, warning investors that cost-conscious consumers could make for a thorny year. In the end, even AB InBev's spoonful of sugar â an upped dividend â couldn't help its medicine go down, and shares fell by 5%.
The bigger picture: Unlucky for some.
Europeans are certainly stuck for beer money these days. Eurozone inflation slowed by less than expected last month, and core inflation â which strips out volatile costs like food and energy â hit a new record (tweet this). So watch this space: there could be even more hikes in store for the region, which would squeeze consumers even tighter. | 