百威英博

Anheuser-Busch InBev’s second-quarter results included organic revenue growth of 5.6%, volume growth of 0.9%, and normalized EBITDA growth of 5.8%, all ahead of company-compiled consensus. Shares fell around 2% intraday on July 30.

Why it matters: Top-line growth was supported by a favorable year-ago comparison in the Americas and a boost from FIFA World Cup activations. Premium beer growth surpassed our expectations, with revenue per hectoliter up 4.2%. We expect InBev’s megabrands (including Corona, Stella Artois, and Michelob Ultra) to continue driving beer growth. We expect InBev to reach the high end of its reaffirmed guidance for EBITDA growth of 4%-8%. We expect higher marketing investment to be offset by cost management. Weakness in China continued, where InBev’s volume underperformed the market. We expect the industry in China to remain soft for the remainder of the year; however, rebounding sales in other markets should more than offset this.

The bottom line: We maintain our EUR 74/$85 fair value estimate for wide-moat InBev. At current levels, shares appear fairly valued. We see long-term industry headwinds for brewers, including health and wellness trends and a declining midtier beer segment. However, we believe InBev’s "Beyond Beer" investments and strong premium beer portfolio position the firm well to drive future growth. Our medium-term estimates are unchanged. We project a five-year revenue compound annual growth rate of 4.8% and 2030 operating margin before special items of 27.2%. Our forecasts fall in the middle of InBev’s medium-term target of 4%-8% EBITDA growth.

We increase our fair value estimate to $85 per share from $83 per share, driven by changes to our weighted-average cost of capital framework. Under the updated WACC methodology, we lower our WACC estimate to 7.5% from 7.8%. The change reflects a more granular representation of our existing risk assessment. Our fair value estimate implies a fiscal 2026 price/earnings multiple of 21 times and an enterprise value/sales multiple of 4 times.

We forecast that InBev’s revenue will grow at a 4.8% compounded annual growth rate over the next five years. In fiscal 2026, we expect organic revenue growth of 5.3%, with volume growth of 2.1%. While 2026 has a favorable base of comparison from the year-ago period, we expect gradual stabilization in China and the United States, and a further sales boost from the FIFA World Cup. Beyond this, we expect InBev to reach a structural growth rate of 4.4%, which is in line with the 4%-5% growth we assume for most other multinational consumer product companies. Across all markets, we expect volume to grow in line with our industry estimates. This includes flat volumes in the United States and Europe, roughly 3.0% growth in Latin America, 2.0% in the APAC market, and 5.0% in Africa. We expect positive price/mix to contribute to top-line growth driven by premiumization.

Gross margin has weakened over the last five years, due to the pandemic, followed by a period of input cost inflation and an overall geographic mix shift. However, 2024 marked a change in the trend, with a 140-basis-point gross margin improvement, driven by efficiencies and premiumization taking effect in key markets. Looking ahead, we expect gross profit to grow in line with revenue, supported by expanding premium sales as a proportion of revenue.

We project operating margin before special items to expand to 27.2% in 2030 from 26.7% in 2025. We expect InBev to garner efficiencies in distribution and administrative expenses. However, we expect a step-up in advertising and promotion expenses to capture future organic growth. We expect the firm can achieve its medium-term target of 4%-8% EBITDA growth.

Cost advantage and intangible assets support InBev's Morningstar Economic Moat Rating of wide.

Beer is a scalable business; however, for many firms, achieving scale-based advantages is limited because of the provincial nature of beer consumption. Local brands are often leaders in their respective markets, and imported or craft brands are marked as a premium offering. InBev does not face this constraint, as it is the largest brewer in the world with 26% global market share, and a near-monopoly position in several geographies. InBev owns more than 500 brands, including six of the top 10 brands sold in the world, while distributing a long tail of local beers. This scale has translated to procurement, manufacturing, and distribution efficiencies for InBev, where the firm can produce at a lower cost relative to its peers. This is evidenced in the firm's industry-leading gross margin, which has averaged 56% over the last five years. This is on par with narrow-moat Heineken, and above narrow-moat Carlsberg (46% five-year average), wide-moat Constellation Brands (51% five-year average), narrow-moat Boston Beer Co (44% five-year average), narrow-moat Asahi Group Holdings (37% five-year average), and no-moat Molson Coors (38% five-year average).

Through consolidation, InBev is one of the top buyers of barley, hops, and malt. While factors such as inflation and supply influence raw-material pricing, we believe InBev's scale allows the firm to benefit from bargaining power against suppliers. We believe this is reflected in the firm having the lowest five-year CAGR of cost of goods sold per hectoliter among peers. With sourcing often localized in beer production, we think this effect is exemplified in regions with greater beer market consolidation, where brewers build regional scale advantages. To illustrate, InBev holds the largest market share in North America and enjoys significantly higher profitability than its closest competitor, Molson Coors.

We see scale-based benefits across InBev's different product categories. For lower-end categories, demand is generally inelastic, and customers are more likely to opt for cheaper brands during downcycles. However, customers switch among brands with similar taste profiles, with price influencing decision-making. InBev's cost leadership enables competitive pricing, allowing the firm to hold share through economic cycles. On the flip side, the long-term trend of premiumization has resulted in a gradual demand increase for premium beer. InBev's extensive manufacturing and distribution footprint enables swift scaling up of brands to meet growing demand. For instance, Budweiser was introduced to the Chinese market in 1995. Over the past decade, the brand's market share has doubled in the region, becoming the top-selling foreign beer brand.

As aforementioned, customers switch among brands within categories. For example, North American Bud Light sales sharply dropped in 2023 following a campaign that was not well received by consumers. Over the same period, Coors Light and Miller Lite took share. Brand choice can be conspicuous in markets undergoing premiumization, with customers trading up to premium beer. However, we don't see evidence of loyalty for one brand over another with the same positioning. Customers hold the bargaining power, and we think brand intangibles are less prevalent for beer, while availability and pricing are the key determinants in purchasing decisions. In on-trade consumption, availability is more prominent as customers minimize search costs. Pricing as a decision factor is more prevalent in developing markets, where consumers are more price sensitive. For example, despite Ambev's premium portfolio having decades-long market presence, Heineken quickly took share when it entered Brazil thanks to competitive pricing.

Instead, we think InBev's intangible assets lie in its relationships across its supply chain and route-to-market capabilities. InBev has decades of expertise behind its extensive distribution network, and we think this, paired with its digital and supply chain investments enables leading brands to remain top of mind across markets. Going up the value chain, InBev's supply arrangements have been in place for generations, and the firm invests in technology to support farmers' harvests of raw materials.

InBev's retail types include grocers, stadiums, wholesalers, restaurants, and convenience stores. Customer contracts typically last a year; however, InBev remains a top choice for retailers because of its expansive beer segment supply. For the retailer, vendor consolidation simplifies the supply chain. While we see limited evidence of consumer brand loyalty in mass-produced beer, retailers prefer to give shelf space to high-demand products, whose business is dependent on volume. For manufacturers like InBev, supplying bestselling brands at varied price points makes them an essential partner to retailers, which, in turn, puts them in a strong position to negotiate for limited available physical shelf space. InBev's bargaining power over its supply chain and channel partners is reflected in its superior working capital, with its cash conversion cycle averaging negative 295 days over the past decade. This is significantly more efficient against Heineken (negative 149-day average over the past decade), as well as other multinational peers. Channel partners are willing to fund InBev's working capital because of their higher confidence in the popularity and selling velocity of their products. In our view, achieving a network at such scale would be so timely and expensive for new entrants or smaller competitors that we see little threat to InBev's system. Given InBev's deep relationships and criticality to parties across its value chain, we think it is unlikely that larger peers could successfully encroach on the firm's well-established network.

InBev's worldwide scale and distribution are colossal. Its top 20 brands each generate more than $1 billion per year in revenue, and its volume sold is more than double that of its closest competitor.

InBev has a 62% economic stake in Ambev and an 87% stake in Budweiser APAC, giving the firm a dominant share across multiple emerging markets.

InBev’s portfolio of premium brands bodes well for long-term premiumization trends, with consumers trading up from domestic to foreign brands.

InBev has expanded into volatile markets including Latin America and Africa, where macro and currency swings, as well as geopolitical events,have a meaningful impact on results.

Beer is a competitive industry, particularly in developed markets, and returns may be squeezed by price competition across categories.

Consumers in developed markets are reducing their consumption of alcohol and switching out of beer and into adjacent categories, including wine, spirits, and ready-to-drink mixed drinks.