Given the way U.S. beer sales are heading toward macro-breweries, Anheuser Busch InBev NV (ADR) (NYSE: BUD) is becoming an emerging markets brewer.
Sixty-five percent of estimated fiscal 2017 sales for the world’s largest brewer are coming from potentially high-growth emerging beer markets. This by definition makes it an emerging markets brewer.
“We believe that its beer operations are structurally advantaged owing to their dominant positions and high exposure to growing emerging markets. We believe this justifies a valuation premium,” said Berenberg analyst Javier Gonzalez Lastra.
Berenberg set a Buy rating on ABInbev with a 116 euro price target.
According to Berenberg, all the macro-breweries in the U.S. are facing difficulties with demographic trends and expects the situation to become worse.
Increasing competition from craft breweries and changing consumer tastes have delivered a blow to ABInbev’s U.S. beer business where its sales value growth has turned negative after underperforming in the premium light segment, which accounts for over 50 percent of U.S. net sales.
ABInbev’s acquisition of SABMiller has successfully reduced exposure to North American headwinds for the company however.
While estimates in the U.S. were reduced by 4 percent year over year in the second half, recent weakness in the US dollar is offsetting most of the expected declines in North America.
Related Link: This BUD’s For You; Argus Goes Bullish For Anheuser Busch
Image Credit: By Dorisall at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons
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