InBev is feeling the pressure
THE WORLD'S biggest brewer, InBev, reported revenue growth of 4.5 per cent to €3.71bn during the second quarter of 2008, but admitted that it was "far from satisfied" with the company's performance.
Figures show that the brewing giant's beer volumes in the UK were down 4.1 per cent compared to last year.
Overall profits were €1.24bn during the second quarter, compared to €1.232bn a year ago, although InBev says in its financial report that this represents "organic growth" of 4.7 per cent.
The company added that the underlying strength of its brand portfolio - which includes Stella Artois and Beck's - coupled with continued strong investment behind those brands, led to market share being maintained or increased in eight of its top 10 markets, including its three key Western European markets.
Despite beer volumes being down in the UK, InBev claims it is still ahead of the industry, resulting in higher market share.
One of the significant factors in the company's strategy for this year is its efficiencies, which led to savings of 11.3 per cent in overhead expenses. That, in turn, allowed InBev to free up more resources for its brand building, innovation and sales programmes, with a 6.9 per cent increase in sales and marketing expenses.
"Our second quarter results were better than the first quarter, as anticipated, but still below our aspirations," admitted InBev boss Carlos Brito. "Although industry growth in some key markets is below last year, we delivered market share results in the majority of our markets.
"Our overall pricing is healthy, but rising costs continue to put pressure on our margins."
Meanwhile, the Busch dynasty is set to capitalise on its deal to sell the family brewing business to InBev.
New details released on the terms of the US$52bn deal to sell Budweiser brewer Anheuser-Busch (A-B) to InBev show that A-B chief executive August A. Busch IV will make around US$7m in fees from a five-year consultancy deal following the sale, which is expected to be complete by the end of the year.
He will also get a US$10.35m lump sum when the deal is signed and sealed, as well as about US$33.6m from stock options.
