World Cup, Ritas, South Korea impact Anheuser-Busch InBev's H1 - analysis

What do Brazil, the US and South Korea have in common? They all managed to make appearances in analysts’ notes on Anheuser-Busch InBev’s Q2 and H1 performance - but not necessarily for positive reasons.

The impact of the FIFA World Cup in Brazil last year, competition for the company's Ritas portfolio in the US and South Korea's new organic numbers took their toll on today’s announcement, which Bernstein analyst Trevor Stirling described as "not quite as bad as it looks, but still not good".

"In Brazil," Stirling says in a note this afternoon, "beer volumes were weak in the quarter (-8.6%) suffering from tough World Cup comparatives, along with the weak macro-economy."

Premium and 'near-beer' brands did well in the country, however, led by Budweiser and Skol Beats Senses. Revenues-per-hectolitre grew strongly in Q2, by 15%, as World Cup-related promotional activity a year earlier saw revenue-per-hectolitre rise by just 3.8% in Q2 2014.

In the US, the brewer's sales-to-retailers fell by 1.9% in the half-year, while sales-to-wholesalers were down by 3.5%.

Nomura’s Edward Mundy noted that "US beer-only revenue-per-hectolitre was softer than expected, +1.2%, given mix impact from poor performance of the Ritas".

The Ritas launched in 2012 under the Bud Light banner, with Lime-A-Rita. Since then, the Rita franchise has expanded to include flavours such as Straw-Ber-Rita and Raz-Ber-Rita. Their performance for H1 was said to have been hampered by strong competitive pressure within the segment.

Meanwhile, in South Korea, quarterly volumes decreased by high single digits, with A-B InBev describing the country as a "very competitive environment".

Bernstein’s Stirling embellished a little, saying in a note: "Korea entered organic numbers for the first time in 2Q15, which acted as a drag on figures with implied Korean volumes down in the region of 8% as a result of weak industry volumes and share losses."

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