AB InBev's sales rise despite Bud Light backlash

Anheuser-Busch InBev (BUD) reported higher third-quarter sales, even as the brewer continued facing boycott backlash in the U.S. over an Instagram post by transgender influencer Dylan Mulvaney. The controversy has dented Bud Light's market share. However, AB InBev said it has a "good grip" on the situation and a plan to recover lost market share in America. The beverage company also announced a $1 billion share buyback program.

Yahoo Finance's Brooke DiPalma examines how Anheuser-Busch InBev is capitalizing on the growing popularity of premium brands and discusses how AB InBev's deals with the UFC and NFL provide opportunities to expose premium imports to new demographics.

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Video Transcript

AKIKO FUJITA: AB InBev, Carlsberg, and Heineken all growing their top lines in the third quarter thanks to price increases and consumers choosing pricier beverages. But AB InBev is still seeing its revenues affected by the Bud Light boycott. Yahoo Finance's Brooke DiPalma was on the earnings call to give us the details here. Brooke, on higher prices though, the question is how much longer consumers are willing to pay a premium.

BROOKE DIPALMA: Absolutely, Akiko. I mean, how much longer are they willing to pay is certainly a question that many analysts as well as consumers are even putting up and tossing the idea with. But most importantly, premium brands is something of a trend that we are seeing in the industry.

It's one of the biggest growth opportunities that AB InBev said on the call with brands like Budweiser, Stella Artois, and Michelob Ultra saying that their portfolio is well positioned to meet this demand for premium and pricier beers. But in addition to that, they did add that the markets that they're in do remain dynamic, and they continue to invest in long term growth in order to deliver profitability.

But some other takeaways from the call is really that $1 billion buyback program that they announced in the release. They weighed in and added more color on the call saying that it will be effective almost immediately and will happen over the course of the next 12 months. And it's really in an effort to maximize value creation for its shareholders. And on that fallout from the boycott, the company said they have a good grip on what they need to do now in the us markets and how they plan to proceed from here.

They said they do not think they're out the new normal yet, of course, following that backlash that happened nearly seven months ago after they teamed up with transgender influencer Dylan Mulvaney and then faced a boycott and then a reverse boycott. But they did say they're seeing stable market share now and improvement in the last quarter. And they even added that while Bud Light drinkers are ready to come back and open to the idea of drinking again, they continue to work towards regaining that market share.

And marketing spend is one thing that they're really emphasizing. Of course, many of us have seen that Easy to Sunday ad during this NFL season. And they also have that UFC deal set to start on January 1, 2024. And they're really looking to capitalize on the growth of the UFC that they've seen in recent years, hoping to jump on that bandwagon as well.

RACHELLE AKUFFO: Now, Brooke, something else that we've been noticing, of course, GLP1 or the weight loss drugs, they've been such a big topic in the food and beverage industry. Any mention of that on the call?

BROOKE DIPALMA: Yeah, Rachelle, I feel like nowadays, you just can't go on earnings call with at least one question. Sometimes there aren't always, but there certainly was one today from a Goldman Sachs analyst who asked about the potential risk to volume growth on the call. Anheuser-Busch CEO weighed in.

MICHEL DIMITRIOS DOUKERIS: At this stage, I think that's too early to assess any overlap or change in behavior in relevant consumer groups. You see that the penetration of these rugs is still very small, and that is like a relatively wide range of points of view on where this is going with very limited data. I think that for us, we don't see any impact so far in the business.

BROOKE DIPALMA: And he went on to say that they're not in the indulgence business. They do have a range of low-calorie, low-carb, and non-alcohol offerings, which we're seeing a slight pickup in as well but no data yet to see a full direct impact.

RACHELLE AKUFFO: We do keep hearing that theme about it being too early, at least yet, to really see that impact. But it'll be interesting to see if that shows up in future earnings calls. Our very own Brooke DiPalma, thanks so much.