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A-B's Up Down Year

Feb 1, 2008 - Anheuser-Busch sales were up in 2007, but fell short of Wall Street's expectations, in part because of lagging sales of Corona.

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The business of beer brewing companies can be confusing.

The good news for A-B was that U.S. beer sales increased 8 percent in the fourth quarter and estimated U.S. beer market share was 48.5 percent in 2007, up from 48.2 percent in 2006.

Grupo Modelo - which makes Corona, is partly owned by Anheuser-Busch and has been a big driver of A-B's recent profit growth - saw equity income drop 12%.

Edward Jones analyst Jack Russo said the earnings miss was partly due to a higher-than-expected tax rate, in addition to Modelo's stumble.

"The core business looked to be about the same," Russo said. "The beer industry had a pretty good year in 2007. But unfortunately, this Modelo piece is big" for Anheuser-Busch, he said. An expected period of weaker contributions from Modelo will be a drag on A-B's results, he said.

Benj Steinman, publisher of Beer Marketer's Insights, pointed out that core brands Budweiser and Bud Light continue to lag, down 1% for the year. Growing overseas sales and revenues from imports that A-B distributes are the only forces driving up sales, he said.

"The consumer preferences are seemingly shifting to craft beers and, to a lesser extent, imports," Steinman said.


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