Tough Quarter for Anheuser-Busch InBev

That occasion came in the third quarter. Following a similar narrative from Heineken yesterday, AB InBev blamed the weather for its weak volumes in North America, and the hurricanes in the region almost certainly contributed to a 5.6% decline in divisional volumes (management attributed a reduction in EBITDA of 2 percentage points to the impact of the hurricanes). Still, it seems likely that competitive pressures are equally to blame for the share and volume performance. Secular pressures from the shift to craft beer are likely to continue contracting ABI's U.S. volumes, and we expect the business to be managed for cash flow optimization, rather than growth, in the medium term.

While the U.S. continues to drag, ABI's growth engines remain in Latin America and Africa, and these regions posted mixed results in the third quarter. Brazil grew by almost 10% organically, which represented a welcome turnaround after several quarters of volatility. South Africa is still performing below our medium-term expectations, but with the market still at an early stage of development, we have conviction that the beer volume decline of 2.5% is not representative of the medium-term volume and mix opportunity, driven by demographics and premiumisation.

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