The world’s largest brewer has a problem with non-alcoholic products. By 2025, Anheuser-Busch InBev, valued at $98 billion, wants a fifth of the beer it sells to be non-alcoholic or low-proof. Last year the figure was just 6.7%, roughly the same as in 2020. This detracts from CEO Michel Doukeris’ sustainability credentials, as well as his potential to increase sales and margins. Hangover-free pitchers would need to grow 31% a year to reach the mid-decade goal. That seems like a stretch, even for a company that in 2021 boasted “double-digit” revenue growth in non-alcoholic beer. The group recognizes that things are not going as they should. Not selling more non-alcoholic beer exposes the maker of Leffe and Budweiser to greater regulatory risk, especially in countries like India, where some states have toughened alcohol laws.
In AB InBev’s biggest market, the United States, total beer sales are expected to grow just 3% next year, compared with a 13% increase in the non-alcoholic and very low-alcohol beers segment, according to Euromonitor. . There are also implications for profitability. Although AB InBev doesn’t disclose non-alcoholic beer margins, there are some pointers on supermarket shelves.
Lower-alcohol alternatives are also part of the big brewers’ strategy to counteract the decline in popularity of regular beer, as well as boost revenue by convincing customers to pay more for more sophisticated beers and by expanding the offering to flavored soft drinks with alcohol. For example, the British Sainsbury’s charges 4.7 euros for four bottles of regular Stella Artois and 4 euros for its non-alcoholic premiums. That 12.5% difference is less than the 19% the government collects in the form of alcohol tax, meaning the difference is absorbed by AB InBev or the retailer. Introducing non-alcoholic beers in new countries won’t make much of a difference: they are already sold in 17 of AB InBev’s 20 markets, accounting for 90% of its sales by volume. Therefore, to reach your sustainability goal you will either have to promote healthier beers more or lower prices. This is hard to swallow for AB InBev, which is trying to reduce its net debt to less than twice its gross operating margin, or EBITDA, from four times at the end of last year. Doukeris’s 20% target is highly laudable, but it has given investors yet another weapon with which to whip him.
FOR MORE INFORMATION: BREAKINGVIEWS.REUTERS.COM The authors are columnists for Reuters Breakingviews. The opinions are yours. The translation is the responsibility of EL PAÍS
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