Anheuser-Busch Cos. reported a 3.7% drop in second quarter domestic beer sales as the company continues to struggle with slumping U.S. beer sales and increased cost pressures in the major brand segment.

The second quarter decline leaves A-B down 3.2% in sales for the year through June.

Second quarter wholesaler sales-to-retailers declined 0.2 percent. Wholesaler inventories were reduced significantly during the quarter, from approximately 1.5 days higher than last year at the beginning of the quarter to over one day lower than 2004 at the end of the quarter.

Net income declined to $607 million, or 78 cents per share, from $674 million, or 83 cents per share, last year. Gross sales remained flat at $4.6 billion, while net sales rose to $4.02 billion from $4.01 billion.

Those results were tempered by strong international sales that helped push total brand sales up 9.2% from the year-ago period.

“Anheuser-Busch had a challenging first six months in its domestic beer business,” said President and CEO Patrick Stokes in a statement. “Both the company and the domestic beer industry experienced volume declines and higher cost pressures.”