AB InBev loses £220m in revenue due to coronavirus

By Nikkie Thatcher

- Last updated on GMT

Worldwide problem: coronavirus has hit countries across the globe
Worldwide problem: coronavirus has hit countries across the globe

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Global brewer AB InBev reported its revenue dropped as a result of coronavirus – this particular strain is known as Covid-19 – in the first two months of 2020, in its trading results.

It also reported an expected loss of approximately £132m in earnings before interest, taxation, depreciation and amortisation (EBITDA) in China.

Similarly, Diageo also predicted a decline for its 2020 fiscal year​ as the outbreak shut off a prime source of trade.

AB InBev’s trading statement said: “The impact of the Covid-19 virus outbreak on our business continues to evolve. The outbreak has led to a significant decline in demand in China in both on-premises and in-home channels.

“Additionally, demand during the Chinese new year was lower than in previous years because it coincided with the beginning of this outbreak.

“For the first two months of 2020, we estimate the outbreak has resulted in lost revenue of approximately US$285m (about £220m) and lost EBITDA of approximately US$170m (about £132m).”

It also said the business will continue to evolve its top-line growth to be more balanced between volume and revenue per hectolitre, as its employs the category expansion framework across its footprint to reach new consumers with different price points and styles.

The statement added: “In the 2020 financial year, we expect EBITDA growth of 2 to 5%, with the majority of our growth to be delivered in the second half of the year.

“In the first quarter of the 2020 financial year, we expect EBITDA to decline by about 10%, given the impact of Covid-19 on our results as well as a challenging comparable, especially in Brazil.

“The outlook for the 2020 financial year and the first quarter reflects our current assessment of the scale and magnitude of Covid-19, which is subject to change as we continue to monitor the development of the outbreak.”

Significant year

Meanwhile, the global brand reported results with its domestic subsidiary Budweiser Brewing Group UK&I seeing growth.

President of the UK&I arm Paula Lindenberg said: “Our UK business grew in revenue by high single digits in 2019, driven by strong performances from our global brands and craft portfolio.

“It has been a significant year for us because we moved our head office to central London and rebranded to Budweiser Brewing Group UK&I, using the power and recognition of our global brand to introduced our renewed ambitions, which include creating a nation of smart drinkers and championing Britain’s iconic beer culture.”

She also outlined how individual brands have been performing across the on and off-trade, highlighting stand-out products.

Lindenberg added: “Stella Artois remained the number one selling alcohol brand in 2019 and continues to grow year on year.

“The brand continued its partnerships with iconic events including the Wimbledon Championship and Ascot Racecourse. Building on the premium credentials, 2019 saw us launch a new accreditation scheme in partnership with Beer Marque to improve beer quality and increase premium experiences across UK venues.

“Corona had an outstanding 12 months with year-on-year growth of 11.7%. The brand brought incremental growth to the beer category throughout 2019 and increased its footprint in the on-trade.

“We launched Corona on draught, which provides a super-premium experience for consumers, while adding value and volume for customers to the much-loved Corona in a bottle.

“Corona also continued its mission to help rid the world’s seas of plastic by organising 68 UK beach cleans and cleaning a total of 5.8 million metres squared. This mission, along with growing Corona draught, will remain areas of focus in 2020.

“Our global brand Budweiser became the first beer brand to partner with the England senior women’s football team, supporting the Lionesses throughout their run at the FIFA Women’s World Cup 2019.”

Positive growth

She added: “Our low and no-alcohol portfolio remains a focus area for the business as we look to meet our ambitious ‘smart drinking’ goals.

“Bud Light is growing in value and volume, and has achieved double-digit growth in the on-trade. It was also announced as the sponsor of the England senior men’s team, which will be a focus in 2020.

“Our craft and speciality brands had a great year in 2019, Camden Hells and Camden Pale Ale were in the top 10 contributors to craft category growth in the off-trade. Camden grew both in the on-trade and off-trade. Goose Island IPA also saw double-digit growth.”

Lindenberg went on to state the company’s commitments over the coming months, specifically around sustainability.

She said: “Beyond our brands, we made significant commitments to customers. We announced our plan to bring our drinks dispense service in-house in 2020 to improve flexibility and reliability for customers, and we launched Raising the Bar, our fairer system for draught connection fees in pubs and bars. We also launched a partnership with leading renewable energy supplier Opus Energy to offer a green energy tariff to our on-trade customers.

“Notably, we announced a multimillion-pound investment in new technology that will allow us to eliminate plastic rings from can packaging across our entire UK-produced beer range by the end of 2020. The removal of plastic rings from all UK products, eliminating 850 tonnes of plastic from the market, will have a significant impact in reducing plastic from supermarket beer shelves and is a big step towards a more sustainable future.

“We are fully invested in innovation, bringing Mike’s Hard Sparkling Water to the market. At 5% ABV, the alcoholic sparkling water has 99 calories per 330ml can, meeting a consumer demand for an alcoholic drink with natural flavours.

“This year, we launched draftLine, our new in-house creative agency, which offers social listening and responding, digital content production and media buying, bringing cutting-edge creativity closer to our business and ultimately to our consumers.”

Looking forward for the business, Lindenberg said the company will be focusing on accelerating growth.

She added: “We will also be focusing on Bud Light’s sponsorship of the England senior men’s team at the Euro 2020 tournament, making an impact in sustainable brewing by brewing all of our beers with 100% renewable electricity, and working to create a nation of smart drinkers by enhancing our no and low-alcohol portfolio.”

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