Anheuser-Busch InBev (NYSE:BUD) Q3 2025 Earnings Call October 30, 2025 09:00 AM ET Company ParticipantsFernando Tennenbaum - CFOMichel Doukeris - CEOConference Call ParticipantsMitch Collett - AnalystSimon Hales - AnalystAndrea Pistacchi - AnalystLaurene Whyatt - AnalystRobert Ottenstein - AnalystEdward Mundy - AnalystCeline Pannuti - AnalystOperatorWelcome to AB InBev's third quarter 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Off ...

Anheuser-Busch InBev (NYSE:BUD) Q3 2025 Earnings Call October 30, 2025 09:00 AM ET Speaker0Welcome to AB InBev's third quarter 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer, and Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab in the Reports and Results Center page. Today's webcast will be availa ...

3Q25 Results October 30, 2025 Legal disclaimer Certain statements contained in this report that are not statements of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the future filings of the Company with the competent securities regulators or other authorities, in press releases, and in oral and written statements made by or with the approval of the Company that are not statement ...

Core Insights - AB InBev has enhanced its competitive position through a focus on premiumization and innovation, achieving a 6.5% year-over-year increase in EBITDA in Q2 2025 despite volume pressures in key markets like Brazil and China [2][6] - The company's strategy emphasizes value-driven growth, leveraging high-margin brands and consumer insights to shift towards products that offer pricing power and brand loyalty [2][3] Premiumization Strategy - AB InBev's global portfolio includes megabrands such as Corona, Budweiser, Stella Artois, and Michelob Ultra, which are central to its premiumization strategy [3] - The company owns eight of the world's ten most valuable beer brands, with Corona's revenues growing by 7.7% outside of Mexico, and Michelob Ultra and Stella Artois rising in global rankings [3] Innovation and Product Development - Innovation is a key growth driver, with successful launches like Michelob Ultra Zero and Busch Light Apple, catering to health-conscious and younger consumers [4] - The focus on developing no- and low-alcohol options broadens appeal across various consumption occasions [4] Digital Transformation - AB InBev is enhancing its competitiveness through digital transformation, with platforms like BEES achieving a 63% year-over-year increase in gross merchandise value, reaching $785 million [5] - Direct-to-consumer digital platforms generated $134 million in revenues, improving operational efficiency and enabling data-driven decision-making [5] Future Outlook - The premiumization and innovation strategies position AB InBev well for sustained market leadership, adapting to long-term consumer shifts and economic dynamics [6] - Despite short-term volume softness in regions like Brazil and China, the company's focus on value creation and premium growth is expected to maintain its competitive edge [6] Stock Performance - AB InBev's shares have declined by 12.1% over the past three months, underperforming the industry and broader Consumer Staples sector [7] - The stock trades at a forward P/E ratio of 14.63X, higher than the industry average of 13.65X, indicating that investors may be anticipating stronger growth prospects [10]

Core Insights - Constellation Brands slightly beat expectations in its second-quarter earnings report despite a downturn in the alcohol market, leading to mixed sentiments among shareholders [1] Financial Performance - Net sales for the quarter were $2.48 billion, down from $2.92 billion a year ago, but slightly above the expected $2.46 billion [6] - The company reported a profit of $466 million for the quarter [6] - Overall beer sales declined by 7% year-over-year, while revenue from the wine and spirits category fell by 19% year-over-year, following a 21% drop in the previous quarter [6] Market Challenges - Constellation faces significant challenges, including a 50% import tax on aluminum cans, which does not apply to bottled beer [2] - Economic uncertainty has led to reduced discretionary spending, particularly among Latino consumers, who make up about half of Constellation's customer base [2] - Gen Z's disinterest in alcohol consumption is evident, with only 54% of US adults reporting alcohol consumption, the lowest level in nearly 90 years [2] Competitive Landscape - Michelob Ultra has overtaken Modelo as America's top-selling beer, indicating a shift in consumer preferences [3] - The company's share price has decreased by approximately 37% this year, with a 17% drop occurring in September alone [3] - Analysts have expressed skepticism about finding positive catalysts for US beer trends, leading to a downgrade of the company's stock by Barclays [3] Industry Trends - The craft beer market is experiencing a downturn, with more craft breweries closing than opening in the past 18 months, a trend not seen in over 20 years [4]

Group 1: Lockheed Martin - Lockheed Martin derives approximately 75% of its $71 billion sales from contracts with the U.S. Department of Defense, making it a key player in the defense contracting industry [2][3] - The F-35 contract is the largest defense procurement program ever awarded and is expected to provide stable revenue through the 2060s, benefiting long-term investors [3] - Lockheed Martin recently introduced Vectis, a new drone designed for collaboration with fighter jets, indicating the company's adaptability and continued growth potential in the defense sector [5][6] - The company has a price-to-earnings ratio of 27 and offers a dividend yield of 2.7%, providing investors with both income and stability [6] Group 2: Ambev - Ambev is the largest brewer in Latin America and the Caribbean, holding monopolistic positions with approximately 60% beer market share in Brazil and over 70% in Bolivia [8][9] - The company has significant growth potential as per capita beer consumption in Latin America is lower than in developed countries, presenting opportunities for volume growth [10] - Ambev benefits from a trend of consumers preferring foreign beers, allowing it to leverage Anheuser-Busch InBev's premium portfolio [10] - The company maintains a high-yield dividend of 7.6% and is well-positioned to sustain its market share through economic cycles [11] Group 3: Investment Outlook - Both Lockheed Martin and Ambev offer healthy dividends, long-term growth potential, and competitive advantages, making them suitable for dividend-focused portfolios [12]

Core Insights - Michelob Ultra has become the top-selling beer in the US, surpassing Modell Especial in retail sales by volume over the past 52 weeks, according to Circana data [1] - The beer's popularity is attributed to effective marketing strategies at major sporting events, including the FIFA Club World Cup and the upcoming 2026 World Cup in the US [2] - Despite Michelob Ultra's success, the overall retail beer sales in the US have declined nearly 5% in the first half of 2025, totaling $34.7 billion [3] Industry Trends - The light lager style beer is also leading in sales at bars and restaurants, indicating a shift in consumer preferences towards lower-calorie options [2] - A Gallup survey reveals that only 54% of US adults report drinking alcohol, marking the lowest level in nearly 90 years, with a growing belief that moderate drinking is detrimental to health [3] - The trend towards lower-calorie beers like Michelob Ultra may be a response to changing consumer attitudes towards alcohol consumption [4]

Group 1 - Michelob Ultra has become the best-selling beer in the US, surpassing Modelo Especial during the 52 weeks ended September 14, according to Anheuser-Busch InBev [1] - Michelob Ultra also led sales in bars and restaurants over the past year, as reported by Nielsen IQ [1] - Bud Light, previously the top-selling beer for over two decades, faced a significant decline in sales due to a controversial partnership with a transgender influencer, leading to a boycott [2][3] Group 2 - Constellation Brands, which owns Modelo Especial and Corona, has experienced a sales slump attributed to declining demand among Hispanic consumers, who represent about half of its business [4][6] - Economic concerns, such as rising food prices and a weak job market, have caused Hispanic consumers to reduce their beer consumption, impacting Constellation's sales [6] - Constellation has revised its full-year forecast, expecting a 2% to 4% drop in net beer sales, down from previous expectations of flat sales to a 3% increase [7] Group 3 - AB InBev's shares have increased by 17% this year, while Constellation's shares have fallen by 40% [7] - Tariffs on aluminum and Mexican imports have posed additional challenges for beer manufacturers [7]

Core Insights - Michelob Ultra has surpassed Modelo Especial to become the best-selling beer in the United States, marking a significant shift in the market dynamics [1][2] - AB InBev's Michelob Ultra's rise comes after a challenging period for the company, particularly following the backlash against Bud Light [2] - Constellation Brands is facing challenges, including tariffs and declining demand from its core Hispanic consumer base, which has historically been significant for Modelo Especial [3][4] Company Performance - AB InBev's stock has increased by over 16% this year, reflecting the positive impact of Michelob Ultra's sales performance [4] - In contrast, Constellation Brands' shares have decreased by 39%, indicating struggles in its business operations and market position [4] Market Dynamics - The shift in consumer preferences has led to Michelob Ultra becoming the top seller in both retail and bar/restaurant channels [1] - Constellation Brands has revised its fiscal year forecast, expecting a decline in net beer sales by 2% to 4% due to lower volumes and tariff impacts, a change from its previous expectation of flat to 3% growth [4]

Core Insights - Michelob Ultra has become the top-selling beer in America, surpassing all competitors including Modelo Especial, largely due to its strategic marketing during major sports events [1][2][3] Group 1: Market Position - Michelob Ultra has claimed the top spot in retail channels for the latest 52 weeks, as well as in bars and restaurants, according to data from Circana and NielsenIQ [3][9] - The brand's rise effectively ends Constellation Brands' reign at the top, which was held by Modelo Especial until June 2023 [5][7] Group 2: Strategic Partnerships - Anheuser-Busch has secured significant sponsorships, including being the NBA's first global beer sponsor and the official beer sponsor for FIFA World Cup 2026 and LA 2028 [2] - Michelob Ultra has a 30-year partnership with the PGA Tour, which has contributed to its brand visibility and growth [2][8] Group 3: Brand Growth and Marketing - The brand has been positioned around active and social lifestyles since its launch in 2002, which has resonated with its target demographic [8] - Anheuser-Busch identified Michelob Ultra's expansion as a top priority in 2019, recognizing it as a key growth driver [8] Group 4: Industry Trends - The backlash against Bud Light due to its marketing campaign has shifted consumer preferences, allowing Michelob Ultra to capitalize on this opportunity [5][7] - Draftline Technologies reported that Michelob Ultra has the largest share of U.S. draft lines, indicating strong market presence [9][10]