A-B Strategy Works – For Now
Adding high end brands fuels growth – stock prices rise
Anheuser-Busch’s recent strategy of adding new brands, mostly high-end, to it’s portfolio has succeed; for now. A-B’s announcement that beer shipments increased in 2007 and in the most-recent quarter sent its stock soaring. Prices rose 5% after it report.
Although A-B’s shipments increased by 2% during the year most of the growth was in imports. A-B’s core brands continue to lose share; shipments increased by only 0.3 percent.
The overall growth was “due to the success of our initiatives to broaden the company’s beer portfolio,” said August A. Busch IV, chief executive, in a statement. The wider portfolio and a planned increase in marketing to accelerate core beer sales “position Anheuser-Busch for growth in volume and earnings” this year, he said.
Sales from distributors to retailers grew 1.3% for the full year and fourth quarter of 2007, adjusted for the number of selling days. But after acquired and imported brands were subtracted out of the equation, sales of core brands actually fell.
“Momentum remains elusive for A-B,” said Mark Swartzberg, an analyst with Stifel, Nicolaus & Co., in a research note Monday. “Core brands have yet to produce sustained growth.”
