Drinking Habits Are Changing So Much Anheuser Busch Created a 'Chief Non-Alcohol Beverages Officer' Role
Nonalcoholic drinks constitute some 10% of AB InBev’s volumes, and it’s aiming to boost the proportion of low and no-alcohol sales to 20% of the total by 2025.
American beer drinkers keep shunning Bud, and Anheuser-Busch InBev is going to extreme measures to meet their changing tastes.
The brewer announced Thursday that revenues in the U.S. had slumped by 3.1% in the second quarter as sales of its major brands—Budweiser and Bud Light—continued to drop. U.S. beer sales dropped 5% by volume.
At the same time, it announced that it will create a new executive position—chief non-alcohol beverage officer—as a response to Millennials and “Generation Z” drinking less than their elders. Lucas Herscovici, currently global marketing VP of strategic functions, will fill the role. Nonalcoholic drinks constitute some 10% of AB InBev’s volumes, and it’s aiming to boost the proportion of low and no-alcohol sales to 20% of the total by 2025, reports the Financial Times. But in the second quarter, the category fell a damaging 43%, according to The Wall Street Journal.
All told, the company failed to meet overall sales growth targets, leading shares to drop nearly 5%. Removing currency changes and acquisitions from the equation, worldwide sales grew 4.7%; analyst estimates had expected 5.4%.
Chief Financial Officer Felipe Dutra acknowledged the failure to meet U.S. targets but reacted stoically, citing the company’s recent efforts to innovate and go upmarket as measures that were gradually lifting the fog. U.S. consumers are increasingly opting for wine, spirits and imported liquor.
In February, the company launched Michelob Ultra Pure Gold, made with organic grains, and in April Bud Light Orange, brewed with citrus peel. Plans are in the pipeline to launch more expensive variants of Budweiser.
The news wasn’t all bad. The company, which is based in Leuven, Belgium, reported a jump in net profit to $1.94 billion for the three months to June 30, from $1.5 billion a year earlier. Lower costs helped offset a 1.2% fall in revenue to $14.01 billion.
The panorama was improved by healthier results outside the U.S.—in Brazil, Mexico, China and Western Europe, with the soccer World Cup in Russia propping up the last.
AB InBev had 200 brands prior to its merger with SABMiller, the London-based brewing giant, in 2016. The combined ABInBev/SAB Miller entity today has some 400 beer brands. The original InBev global brands are Budweiser, Corona and StellaArtois and its international brands are Beck’s, Hoegaarden and Leffe.