By Michael Susin


Anheuser-Busch InBev's shares slipped after the Budweiser brewer posted worse-than-expected sales volumes for the third quarter, dragged by weak consumer spending in China.

The world's largest brewer--which also houses Stella Artois and Michelob Ultra in its portfolio--said Thursday that overall volumes fell 2.4% on an organic basis, a steeper drop than the 0.4% decline analysts had expected.

The company reported a double-digit decline in sales in China, hurt by soft consumer demand and particularly continued spending weakness in bars, pubs and restaurants, AB InBev said. In Argentina, sales fell as overall consumer demand was hit by inflationary pressures.

AB InBev's peers have also highlighted weakening demand, driven primarily by uncertainty about the U.S. economy and worsening market conditions in China. Copenhagen-based Carlsberg on Thursday cited a poor performance in China as its third-quarter sales missed expectations. Dutch brewer Heineken last week said it experienced challenging conditions in some markets and reported lower sales volumes in the Americas and Asia Pacific, despite noting growth in China.

Elsewhere, a downturn in alcohol consumption is hurting the spirits sector. Companies like Diageo, Pernod Ricard and Davide Campari-Milano have flagged a challenging consumer environment.

AB InBev's stock was down 5.5% at 55.20 euros in early afternoon trade on Thursday in Brussels. In the year to date, shares are down nearly 6.0%.

The company's total revenue fell to $15.05 billion from $15.57 billion, driven in part by pricing actions and premiumization--the strategy of shifting toward the higher end of the market. Analysts' consensus for revenue was $15.55 billion, according to an LSEG Refinitiv poll.

Revenue in the U.S. rose 1.8% despite lower volumes, reversing the downturn caused by the Bud Light controversy since April 2023, when Dylan Mulvaney, a transgender social-media star, made an Instagram post about a personalized can of Bud Light received from the brewer as a gift. The post sparked a boycott that turned the U.S. beer industry upside down, with Bud Light losing its spot as the top-selling beer in America.

The company's North America performance was better than expected, with sales growth outperforming peers, RBC analysts said.

Another bright spot for the company has been strong growth in its no-alcohol beer portfolio, with Corona Cero delivering triple-digit volume growth and Budweiser Zero volume up by more than 20%. AB InBev said no-alcohol beer is one of the industry's fastest-growing beer categories.

Consumers in many parts of the world, especially where inflation and pricing remain relatively high, are spending less on alcoholic beverages. The trend also reflects changes in tastes, given the increasing preference for non-alcoholic and low-alcohol options.

The brewer reported a 7.1% organic increase in normalized earnings before interest, taxes, depreciation and amortization--one of its preferred metrics, which strips out exceptional and other one-off items--to $5.42 billion, below the consensus of $5.59 billion taken from LSEG Refinitiv.

Meanwhile, the company launched a $2 billion share buyback program, to be completed within the next 12 months.

Looking ahead, AB InBev narrowed its 2024 Ebitda target to grow between 6% and 8%. It previously anticipated growth for the year to be in line with its medium-term outlook of between 4% and 8%. The guidance is slightly below the company-compiled market consensus of a 8.4% increase.


Write to Michael Susin at michael.susin@wsj.com


(END) Dow Jones Newswires

10-31-24 0825ET