AB InBev Showing Signs of Recovery, Not Everyone Is Happy

Anheuser-Busch InBev (AB InBev) has reported better-than-expected profit growth, citing new signs of a turnaround in Brazil, where a recession is straining the company’s second-largest market.

With this announcement, shares of AB InBev were up 5 percent in the United States.

Now, beer volumes are picking up in Brazil, but Chief Financial Officer Felipe Dutra comments, “We remain cautiously optimistic on Brazil overall. We expect 2017 to be better industry-wise than 2016.”

Accordingly, AB InBev said that its first-quarter core profit rose nearly 6 percent, not including currency fluctuations, in addition to the impact form its $100 billion merger last year with SABMiller. Also, AB InBev has reported more cost savings of $252 million within this period.

As such, Stifel Nicolaus analyst Mark Swartzberg comments, “We think a variety of factors … imply further revenue acceleration and increasing rates of margin expansion as the year progresses,” noting that some of these factors could include things like US beer trends as we approach the summer season, as well as large new markets that can accelerate global brands and macro trends.

AB InBev is now looking ahead to summer, with CEO Carlos Brito commenting to investors and analysts that the company aims to bring back its “America” media campaign, with that snappy packaging from Memorial Day and Labor Day of last year, building on the success the campaign found last year.

Furthermore, AB InBev has also just recently announced its intention to buy up the North Carolina brewery Wicked Weed to add more craft beers and imported beers to its product catalog.

On the heels of these gains, on Thursday, AB InBev shares are up roughly 12 percent on the year, though they are down around 4 percent over the past 12 months.

On the other hand, many craft beer companies across America are not happy about moves like this. Many breweries, in fact, are now pulling collaborations with Wicked Weed to make a statement against future acquisitions.

For example, owner of the Berkeley, CA-based The Rare Barrell, Alex Wallash, comments, “We’ve made a decision not to serve, collaborate with, or affiliate with AB InBev because our values do not align with theirs. In order to stay true to our values, we’re pulling out of the second part of our collaboration [with Wicked Weed], will not be attending their festivals, and will not be able to serve their beer in our tasting room anymore.”

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