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InBev Struggles

May 9, 2008 - InBev, the world's second-largest brewer, reported lower than expected first-quarter earnings as volumes declined and costs rose, but it forecast improvement in the second half.

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Worldwide volumes fell by 0.4 percent, although revenue rose 4.8 percent. Beer sales fell in key market Brazil, partly due to inflation, an early Carnival holiday season and poor weather conditions. In eastern Europe, another key driver of growth last year, volumes were off 5.7 percent.

Cost of sales grew by almost 10 percent. InBev said weighted average inflation in the countries in which it operated was moving towards a 5-6 percent range, higher than the 4 percent it had foreseen.

InBev is the brewer of Stella Artois, Beck's and Brahma and like other brewers, has had to cope with far higher costs, particularly in hops and barley.

Cost-cutting across the group has continued, but it is reaping fewer rewards than in previous years. InBev nevertheless said extra savings should offset higher cost of sales.

InBev was overtaken last year by SABMiller Plc as the world's largest brewer by volume.


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