Big beer brands’ struggles likely to continue into next year, analysts say

LeinenkugelDrinker · Oct 10, 2024

Shares of some of the nation’s biggest brewers have slipped so far this year — and the months ahead don’t look a whole lot better amid shakier demand in the U.S. and abroad, TD Cowen analysts said Tuesday.

Analysts at the firm, led by Robert Moskow, downgraded both Anheuser-Busch InBev, which makes Budweiser and Bud Light, and Constellation Brands Inc., which sells Corona in the U.S., to hold ratings from buy. They also lowered their profit estimates on Molson Coors Beverage Co. and cut their price target on the stock to $56 from $58.

Shares of AB InBev

BUD

-0.06%
were falling 1.1% on Tuesday. Constellation Brands
STZ

-0.22%
was losing 0.9%, while Molson Coors
TAP

0.17%
was down 1.8%.

The analysts made the assessment after last year’s conservative-led boycott of Bud Light, following its brief promotional partnership with a transgender influencer, led to a sharp drop in sales for the brand. The hit to Bud Light’s sales led to gains for other mass-market brewers.

More broadly, beer demand has waned as inflation and other factors rattle global economies and competition among alternatives grows. Younger, health-conscious consumers have increasingly shied away from alcohol.

The analysts said AB InBev was “well positioned in emerging markets longer term,” but said weaker trends in the U.S. and China would constrain near-term gains. They also said gains from potential stock buybacks were unclear and cited “equal-weighted risk-reward” to 2025 financial estimates.

The TD Cowen team said the company has recovered some of the market it lost after the Bud Light boycott. But they added that sales volumes in recent weeks had slipped, and that competition from newer brands has been cutting into demand for several years.

“China has been negative all year due to macro pressure, despite exposure to the relatively insulated super-premium segment,” the analysts wrote. “Mexico sales have come under pressure, at least in the near term, due to cutbacks in government subsidies and unfavorable rainy weather in July-August.”

In Latin America, they noted, AB InBev’s efforts to keep prices low seemed likely to weigh on adjusted profit margins, after they reached a peak before the pandemic.

“Some bulls on the stock think that the company has an opportunity to expand margins back to peak levels,” they said. “However, the company is focused on keeping the category affordable for low-income consumers in these regions, not on protecting its percentage margins.”

On Molson, the analysts said they saw downside to its growth expectations for this fiscal year and the next due to “continued category weakness,” with sluggish summer demand trends potentially weighing on its outlook. And they said that even amid weaker sales trends, investors had become “complacent” about threats to profit forecasts, after most companies that sell consumer packaged goods like food and drinks started out the year with “significant productivity savings and commodity tailwinds.”

Meanwhile, Constellation last week said that alcohol demand had suffered against the current economic backdrop, and that its lower-priced wine and spirits segment was struggling.

While the TD Cowen analysts said Constellation’s beer brands continued to pick up a bigger slice of the market overall, recent trends suggested slowing growth.

“Management attributed the deceleration to rising unemployment among its Hispanic consumers, which they think will reverse next year,” the analysts wrote. “But given that unemployment rates are still quite low compared to history, we take a more conservative view.”
Click to expand...

https://www.marketwatch.com/story/b...continue-into-next-year-analyst-says-971761a3

More bad news for beer sales.

dcotom · Oct 10, 2024

LeinenkugelDrinker said: ↑

More bad news for beer sales.
Click to expand...

Just bad beer, apparently.

elNopalero · Oct 11, 2024

Support your locals, folks!

turfy · Oct 11, 2024

I guess I’m partly to blame since I rarely buy their crap macro beer.

unlikelyspiderperson · Oct 11, 2024

Articles like that are a good reminder of one of my main gripes against these beverage conglomerates. It's not really about the beverage, it's about the ticker price and the quarterly reports and the shareholder desires.

gamepete · Oct 11, 2024

Beer advocate analysts say the excellant beer brands thrive.

Big beer brands’ struggles likely to continue into next year, analysts say

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Big beer brands’ struggles likely to continue into next year, analysts say

LeinenkugelDrinker Pooh-Bah (2,171) Feb 14, 2023 Nevada Society Pooh-Bah Trader

dcotom Grand High Pooh-Bah (6,637) Aug 4, 2014 Iowa BA4LYFE Society Pooh-Bah Trader

elNopalero Grand Pooh-Bah (5,822) Oct 14, 2009 Michigan Pooh-Bah Trader

turfy Pooh-Bah (1,872) Mar 17, 2010 Texas Society Pooh-Bah Trader

unlikelyspiderperson Grand Pooh-Bah (3,966) Mar 12, 2013 California Pooh-Bah Trader

gamepete Devotee (355) Feb 22, 2011 California

LeinenkugelDrinker Pooh-Bah (2,171) Feb 14, 2023 Nevada
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dcotom Grand High Pooh-Bah (6,637) Aug 4, 2014 Iowa
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