InBev, the Belgian-based brewer taking over Anheuser-Busch, said in a trading update Friday that it will accelerate cost-cutting efforts and hedge on commodities price exposure as the costs for beer ingredients barley and malt have risen.
St. Louis-based Anheuser-Busch, which has been raising prices and cutting hundreds of jobs to cope with higher costs for grain, labor, packaging and transportation, said U.S. beer volume rose in the third quarter, helped by the national launch of Bud Light Lime.
Goldman Sachs analyst Judy E. Hong said Anheuser-Busch's third quarter indicates a robust domestic beer market and believes consumers are choosing beer instead of other beverages because of value and increased marketing.
Consumers may end up choosing a lower-priced beer but are still unlikely to stop drinking completely
- even in a recession, said Juli Niemann, an analyst for Smith Moore & Co. in St. Louis.
"The last thing anyone gives up is their beer," Niemann said.
Anheuser-Busch said U.S. beer shipments to wholesalers increased 2.3 percent, and sales to retailers rose 3.6 percent. The company also predicted revenue per barrel will rise nearly 4 percent in the third quarter on price increases implemented in late September.
The maker of Budweiser and Michelob has raised prices that affect over 85 percent of the company's U.S. beer sales.
InBev, meanwhile, said its costs will grow more than expected this year but expects the situation to ease in the fourth quarter as prices for basic ingredients start to calm.
It also forecast that total volumes of the beer it sells will increase in the "low single digit percentage range."
"We expect that North America, Latin America North, Latin America South and Asia Pacific will report growth in total volumes, while in Western Europe and Central and Eastern Europe small declines in volumes are expected to occur," the company said in a trading update.
