Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Budweiser Brewing Co APAC Ltd (BDWBF, Financial) achieved strong market share gains in South Korea, driven by mid-single-digit volume growth and mid-teens revenue increase.
- The company continues to lead the premiumization of the beer category in China, with Premium and Super Premium portfolios contributing approximately two-thirds of revenue.
- In India, Budweiser Brewing Co APAC Ltd (BDWBF) outperformed the industry with double-digit net revenue growth within its Premium and Super Premium portfolio.
- The company maintained a low-risk rating from Sustainalytics, ranking fourth among 85 beer, wine, and spirits companies, highlighting its commitment to sustainability.
- Budweiser Brewing Co APAC Ltd (BDWBF) expanded its geographic footprint, with Budweiser distribution targeted to increase from 220 to 235 cities in China, indicating a strategic focus on long-term growth.
Negative Points
- Total volumes for the first nine months of 2024 decreased by 8.1%, with revenue declining by 6.1%, reflecting challenges in key markets.
- In China, volumes decreased by 14.2% in the third quarter, impacted by weak consumer sentiment and a soft industry, particularly affecting the on-premise channels.
- Normalized EBITDA decreased by 6.2%, with a slight decrease in the EBITDA margin, indicating pressure on profitability.
- The company faced adverse channel mix effects, which partially offset the benefits from revenue management initiatives and favorable brand mix.
- Budweiser Brewing Co APAC Ltd (BDWBF) experienced market share losses in China, attributed to low consumer confidence and increased competition from other beer brands.
Q & A Highlights
Q: What are the specific challenges Budweiser Brewing Co APAC Ltd is facing in China compared to competitors like Heineken and Pearl River?
A: Jan Craps, CEO, explained that the soft consumer environment in China, particularly in the on-premise channel, is impacting their performance. The company is focusing on premiumization and channel expansion, especially in the in-home segment, to counteract these challenges. They are also adjusting inventory levels with wholesalers to ensure long-term market health.
Q: How does Budweiser APAC view the profitability trend in the South Korean market?
A: Ignacio Lares, CFO, noted that revenue in South Korea grew by mid-teens due to pricing strategies and market share gains. The company anticipates continued margin growth driven by pricing, operational efficiencies, and premiumization, with no barriers to further margin recovery.
Q: What is Budweiser APAC's strategy for developing a premium portfolio in China's in-home channel?
A: Jan Craps highlighted the company's efforts to expand its route-to-market in the in-home channel, leveraging digital tools like BEES for distribution. They are focusing on premium drinking occasions and have seen mid-single-digit growth in Premium and Super Premium volumes in this channel.
Q: Can you elaborate on Budweiser APAC's geographic expansion strategy in China?
A: Jan Craps discussed the company's city maturity model, which tracks over 300 cities to prioritize expansion. They aim to increase Budweiser distribution from 220 to 235 cities, focusing on consumer demand and market maturity to drive premiumization and distribution growth.
Q: What is the outlook for the South Korean market in terms of pricing and competition?
A: Jan Craps mentioned that the company recently announced an 8.1% price increase for Premium brands in South Korea, effective November 1. They expect continued margin improvements driven by pricing, operational efficiencies, and mix, with a focus on maintaining strong brand momentum.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
