Anheuser Busch InBev (ABInBev) is the world’s largest beer-brewing group. Its brands include Budweiser, Bud Light, Becks, Stella Artois, Corona, Skol and the Brazilian Brahma brand. Over the last ten years, the company has implemented an aggressive growth strategy, conducted through acquisitions. The company has now a leading position in many of the world’s largest beer markets. It market include Brazil (market share of around 70%), Argentina (over 70%), the USA (nearly 50%), Canada and Belgium. About three quarters of the company’s revenues are generated in North and South America. A weak Euro is therefore beneficial in terms of the overall performance for European based investors.
The beer market is a question of scale, more importantly it is a key for profitability. Given that ABInBev is the owner of seven key brands, which are among the world’s best-selling beer brands it is advantageously positioned compared to its competitors. The margins generated are well above average and the company produces strong free cash-flows.
Beer sales are most often little exposed to economic swings. It is for this reason that ABInBev offers an investment opportunity with stable growth and below-average economic risks. The company’s sales growth hovers around 5 %, while earnings growth is slightly higher, because of ever better efficiencies. ABInBev shares are highly prices today; yet given the strong underlying growth trend in the beer market, the share price development should continue to do well for the years ahead.