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COMPANY PROFILE

Anheuser-Busch InBev
SA/NV

REFERENCE CODE: 90521A04-0A96-4A64-A465-E502421BFC8B

PUBLICATION DATE: 13 Nov 2015
www.marketline.com
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Anheuser-Busch InBev SA/NV

TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
SWOT Analysis.....................................................................................................4

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Anheuser-Busch InBev SA/NV

Company Overview

COMPANY OVERVIEW
Anheuser-Busch InBev SA/NV (AB InBev or 'the company') is one of the world's largest brewers
based in Belgium. The company has a portfolio of more than 200 beer and other malt beverage
brands, including Budweiser, Stella Artois, Beck's and Leffe. The company has operations in the
Americas, Europe and Asia Pacific. It is headquartered in Leuven, Belgium and employed
approximately 155,000 people as of December 31, 2014.
The company recorded revenues of $47,063 million during the financial year ended December 2014
(FY2014), an increase of 9% over FY2013. The operating profit of the company was $15,111 million
in FY2014, a decrease of 26.1% compared to FY2013. The net profit of the company was $9,216
million in FY2014, a decrease of 36% compared to FY2013.

KEY FACTS
Head Office

Anheuser-Busch InBev SA/NV

Brouwerijplein 1
3000 Leuven
BEL

Phone

32 16 27 61 11

Fax

32 16 50 61 11

Web Address

http://www.ab-inbev.com

Revenue / turnover 47,063.0

(USD Mn)
Financial Year End

December

Employees

155,000

Euronext Brussels
Ticker

ABI

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SWOT Analysis

SWOT ANALYSIS
AB InBev is one of the world's largest brewers based in Belgium. The company's extensive brand
portfolio consisting of globally-recognized flagship brands, several multi-country brands and local
brands enhances brand recall and results in increased brand loyalty. However, stringent advertising
regulations could limit the company's future promotional campaigns and its awareness among the
consumers.
Strengths

Weaknesses

Extensive brand portfolio including three

global flagship brands increases recognition
among global consumers
Diversified and balanced exposure across
multiple geographies helps in business risk
mitigation
Product innovation contributes to sales
growth

Unfunded employee post-retirement

benefits affect the company's liquidity

Opportunities

Threats

Increasing disposable income and cultural

shift towards alcoholic beverages make Asia
an attractive target market
Growing demand for craft beer
Association with FIFA will enhance the
company's brand recognition
Growing beer market in Mexico

Stringent advertising regulations to control

irresponsible portrayal of alcoholic drinks
Booming trade of counterfeit alcohol could
affect the company both in terms of brand
equity and revenue

Strengths

Extensive brand portfolio including three global flagship brands increases recognition among global
consumers
AB InBev offers a portfolio of more than 200 brands including three global flagship brands: Budweiser,
Stella Artois and Corona. The three flagship brands are complemented by multi-country brands such
as Beck's, Leffe and Hoegaarden, as well as many local brands such as Bud Light, Michelob, Skol,
Brahma, Antarctica, Quilmes, Jupiler, Hasseroder, Klinskoye, Sibirskaya Korona, Chernigivske,
Harbin and Sedrin, among others. The company's global brands grew by 5.4% in FY2014, led by
growth in Budweiser, Corona and Stella Artois volumes of 5.9%, 5.8% and 2.5%, respectively. Also,
16 of the company's brands had an estimated retail sales value of over $1 billion in FY2014. In

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SWOT Analysis

addition, six of the top 10 global beer brands belonged to AB InBev's portfolio, including Bud Light,
Budweiser, Stella Artois, Corona, Skol and Brahma, according to an industry source. The company
also commands number one position in terms of sales volume in several beer markets around the
world, including the US, Canada, Mexico, Brazil, Argentina, Belgium, and South Korea. Several of
the company's key brands also have strong heritage. For instance, Stella Artois, whose history dates
back to 1366, is a brand with a well-known international profile and is distributed in over 95 countries.
Leffe, one of the company's multi-country brands, has the longest heritage in AB InBev's beer
portfolio, dating back to 1240. This brand is available in over 45 countries worldwide.
Strong brand portfolio has further strengthened the company's position in an intensely competitive
beverage industry. The increased brand recall and recognition associated with popular brands have
also helped the company in boosting its top-line growth and becoming a leading player in the beverage
category.
Diversified and balanced exposure across multiple geographies helps in business risk mitigation
AB InBev has operations across six geographical zones covering North America, Latin America
North, Asia Pacific, Europe, Mexico, and Latin America South. The company's revenues are also
geographically diversified with a balanced exposure to both developed and developing markets.
In 2014, the company had a market share by volume sales of 46.4% and 42.1% in the US and
Canada, respectively. Also, it is a leading player in the emerging markets like Latin America, where
it holds 68.2% market share in Brazil and 78.1% in Argentina in the beer category. Furthermore, in
Belgium, Germany and the UK, the company holds market shares of 55.7%, 8.6%, and 16.3%,
respectively, in the beer category. AB InBev has a market share of 57.8% in Mexico and 15.9% in
China. Moreover, in April 2014, the company re-acquired Oriental Brewery, one of the leading brewers
in South Korea. Oriental Brewery was earlier sold by the company in 2009. The re-acquisition of
Oriental Brewery significantly strengthens AB InBevs market position in the fast-growing Asian
market. As of FY2014, the company had a market share of 60.4% in South Korea. Further to this,
the company generated about 53% of its FY2014 revenues from the developing regions including
Brazil, Argentina, China, Mexico, Russia, Bolivia, Paraguay, Ukraine and South Korea. During the
same time, the company generated approximately 47% of its revenues from the developed markets.
The company's diversified operations enable business risk mitigation arising out of any economic
impact specific to various countries. Furthermore, balanced exposure to both developing and
developed markets gives the company the dual advantage of leveraging the opportunities in the
fast-growing emerging consumer markets and gaining from the global profit pools that generate high
revenues and margins, respectively.
Product innovation contributes to sales growth
AB InBev has grown the strength of its global and local brands through continued innovation. The
company continues to focus on innovation in several aspects, such as product, packaging and
promotion to generate higher revenues and larger market share.

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SWOT Analysis

Through its continuous focus on innovation, the company was able to introduce various innovative
products across its markets. For instance, in FY2014, some of the companys innovations included
Rita family in the US and MixxTail Mojito in Argentina, through which AB InBev aims to improve its
market share of alcoholic beverage categories other than beer. During the same period, the company
launched Cubanisto, a premium rum flavored beer in the UK, France and Belgium; and Skol Beats
Senses in Brazil. AB InBev also developed Budweiser Brewmaster Reserve in China, which is a
limited edition brew. In addition, the company launched products with packaging innovations. For
instance, it introduced two major new packages in the US, a new 16 ounce re-closeable aluminum
bottle, initially focused on Bud Light, and the first 25 ounce can.
Earlier, in FY2013, AB InBev launched Harbin Cooling across China, following a successful pilot in
selected markets in FY2012. The company also launched Brahma 0,0% and Skol Beats Extreme
in Latin America North. Building on the company's 2012 success with Bud Light Lime Lime-A-Rita,
the company launched Bud Light Lime Straw-Ber-Rita in the US in 2013. This product was the
number one product launch in the US industry in 2013. Product and other innovations enable the
company to build and enhance its brand health. The various innovations also refresh the interest of
existing consumers, while expanding the brands to newer consumers and consumption occasions.

Weaknesses

Unfunded employee post-retirement benefits affect the company's liquidity

The company has significant unfunded pension obligations. AB InBev sponsors various
post-employment benefit plans worldwide. These include pension plans, both defined contribution
plans, and defined benefit plans, and other post-employment benefits. In FY2014, the company's
obligations related to defined benefit plans totaled $8,585 million. In comparison, AB InBev's planned
assets stood at $5,773 million during FY2014, resulting in an unfunded pension obligation of $2,812
million. Such unfunded pension obligations may force the company to make regular cash contributions
to bridge the gap between pension assets and liabilities, pressurizing the liquidity position of the
company.

Opportunities

Increasing disposable income and cultural shift towards alcoholic beverages make Asia an attractive
target market
Like several other consumer products, demand for alcoholic beverages, especially beer is also
increasing in Asia Pacific. According to industry sources, beer is one of the fastest selling alcoholic
beverages in this region. This demand is primarily driven by rising population, increasing disposable
income, and availability of beer in various flavors. The beer market in the Asia Pacific region was
worth more than $150 billion in 2013. Moreover, over the next six years, the demand for beer in this

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SWOT Analysis

region is expected to rise due to launch of new bars and restaurants as well as the reduction in the
rules and regulations related to brewing.
To capitalize on this growth, AB InBev has been strengthening its presence in Asia Pacific. For
instance, in 2011, the company acquired 100% equity interest in Liaoning Dalian Daxue Brewery
Co., one of the top three breweries in Liaoning province.The acquisition complemented the company's
existing presence in China and bolstered its position in Liaoning, China's fourth largest province in
terms of beer consumption. In the same year, AB InBev acquired Henan Weixue Beer Group,
including its Xinyang brewery, Zhengzhou brewery and Gushi Brewery. Henan province is one of
the largest China beer markets with one of the fastest beer consumption growth rates. It is also the
largest in terms of population and therefore an attractive and strategically important region for AB
InBev. In 2013, the company acquired majority stakes in four breweries in China. These acquisitions
expanded the company's production capabilities by nearly nine million hectoliters in China.
Furthermore, in April 2014, AB InBev completed the re-acquisition of Oriental Brewery, which was
earlier sold by the company in 2009 following the combination of InBev and Anheuser-Busch. The
company can leverage the strong presence of Oriental Brewery in the South Korean market, and
further enhance its presence in the growing Asia Pacific region.
AB InBev is also strongly focused on leveraging the increasing spending power of consumers in
China. The company's growth in China is mainly driven by Budweiser and Harbin, both of which
recorded strong growth in FY2014. The company is also working towards bringing in more efficiency
at its facilities and processes in China. The companys presence in the Chinese market was further
strengthened in 2014, when the Corona brand was included in its premium brand portfolio. Growing
Asia Pacific beer market provides an opportunity for AB InBev to further strengthen its market position
in this region. Such emerging markets with abundant growth potential will also add to the company's
top line growth.
Growing demand for craft beer
The craft beer market in the US is growing at a fast pace. According to industry estimates, the craft
beer category in the US grew by 18% in volume terms and by 21% in value in 2014. Additionally,
the number of breweries is increasing at a fast pace in the country, as consumer demand for craft
beer is growing. There were nearly 3,400 craft breweries in the US in 2014, an increase of over 18%
over the previous year. The rising popularity of the US craft beers is spreading to Europe and Asia
Pacific as well.
AB InBev entered the craft beer market with the introduction of craft beer under the Shock Top label
in 2006 and the acquisition of Goose Island in 2011. Further in the recent years, the company
introduced Shock Top Honeycrisp Apple Wheat, a pioneering cider-plus-beer hybrid, and Shock
Top Chocolate Wheat, brewed with chocolate malt. Additionally, in 2014, the company expanded
its craft beer portfolio to include 10 Barrel Brewing Co. of Bend, Oregon, and Blue Point Brewing
Company of Long Island, New York.
The company is thus well positioned to exploit the growing craft beer category in the US and enhance
its top line and profitability.

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SWOT Analysis

Association with FIFA will enhance the company's brand recognition

AB InBev has been associated with the popular FIFA events for 25 years. Budweiser, one of the
flagship brands of the company, has been chosen as the official sponsor of the 2018 FIFA World
Cup Russia and the 2022 FIFA World Cup Qatar. The company will be able to leverage this
opportunity to promote its local leading brands by winning sponsorship rights in select markets with
strong football legacy. Several of the company's brands, including Brahma in Brazil, Harbin in China,
Corona in Mexico, Jupiler in Belgium and the Netherlands, Siberian Crown in Russia, Hasseroder
in Germany and Becks in Italy, among others became sponsors and official beers in their respective
markets in the previous season of the FIFA championship.
2014 FIFA World Cup, which was held in Brazil, opened up an array of opportunities for the company
to promote its brands, with digital activations playing an important role. Although Budweiser was the
official beer of the tournament, 14 of the companys local brands leveraged the platform to further
improve customer engagement in their local markets. Association with popular events like FIFA
World Cup has given the company exposure and recognition as the events are broadcasted to
millions of fans across the world. The company could leverage the popularity of football to promote
its beer brands, enhancing its top-line growth opportunities during the event as well as post event.
Growing beer market in Mexico
The beer market in Mexico is growing at a fast pace. According to MarketLine, the Mexican beer
market grew by 3.5% in 2014 to reach a value of $20,014.1 million. Standard lager was the largest
segment of the beer market in Mexico, accounting for 89.1% of the market's total value during the
year. The Mexican beer market grew by 2.7% in 2014 to reach a volume of 7,133.8 million liters. By
2019, the Mexican beer market is forecast to have a value of $22,330.4 million, an increase of 11.6%
since 2014. On the other hand, the Mexican beer market is forecast to have a volume of 7,791.8
million liters by 2019, an increase of 9.2% since 2014. AB InBev is one of the leading brewers in
Mexico. Thus, the positive outlook augurs well for the company as it would be able to consolidate
its market position in the Mexican market. Additionally, this trend will help AB InBev to penetrate the
untapped markets and increase its revenues.

Threats

Stringent advertising regulations to control irresponsible portrayal of alcoholic drinks

Alcohol companies have been criticized for irresponsible portrayal of alcoholic drinks in
advertisements. Especially in Europe, regulatory authorities have been coming down heavily on
alcohol advertising, claiming that such advertisements fuel binge drinking. There are numerous
restrictions, controls and statutory regulations that govern the advertising strategies of beverage
companies. Most European countries have imposed legal bans on advertising of spirits on television
(TV) and radio; on broadcast advertisements linking alcohol with children, driving, sport or promoting
alcohol abuse; and on sponsorship of TV and radio programs by companies primarily concerned in

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SWOT Analysis

alcohol production. In the US, spirits advertising is subject to high regulation with regulatory authorities
establishing complex standards. Currently, the advertising placement standard requires that at least
70% of the audience for advertising consist of adults of 21 years and older. Furthermore, in 2013,
Turkey introduced a new law that banned alcohol advertising and tightened restrictions on the sale
of alcohol products. The law includes a ban on shops selling alcohol from 10pm to 6am.
Increasingly stringent advertising regulations will restrict the company's promotional activities. The
company could face a challenge due to such stringent advertisement regulations imposed on
manufacturers of alcoholic beverages. This could lessen the high brand impact of its products.
Booming trade of counterfeit alcohol could affect the company both in terms of brand equity and
revenue
The sale of counterfeit alcohol is increasing globally. Counterfeit alcohol refers to the selling of cheap,
fake alcohol under reputed brand names. According to industry sources, more than 30% of the
alcohol consumed in the world is unregistered. Counterfeiting of alcohol products is increasingly
becoming prevalent in China, one of the largest markets in the world. There were several instances
in the recent past, where counterfeit alcohol in large quantities was seized from Chinese cities. For
instance, in 2014, the police in Nanjing (Jiangsu province) seized nearly 250,000 bottles of fake
liquor and wine. Furthermore, in 2014, Interpol (an international police organization) and Europol
(European Union's law enforcement agency) seized nearly 430,000 liters of counterfeit beverages
across 33 countries in the Americas, Asia and Europe.
The trend is only expected to grow in the future. Besides revenue losses, counterfeit alcohol products
also affect the company's brand value since the taste and composition are of poor quality. Moreover,
it could hit the customer confidence as the fake product does not give the desired results promised
by the brand. It then becomes increasingly difficult for companies like AB InBev, to win back
disillusioned customers, since their revenues are mostly driven by brand loyalty. An increasing
counterfeit market, therefore, could affect the company both in terms of brand equity and revenue.

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