AB InBev Earnings Show the Bud Light Brewer’s Rally Is About More Than Just Beer

Fans with Michelob Ultra cups and drinks carriers during a FIFA World Cup match between Mexico and South Africa. (Carl Recine/Getty Images)

Key Points

Anheuser-Busch InBev reported third-quarter earnings of $1.21 a share on revenue of $16.51 billion, beating analyst expectations.
The brewer’s beer sales volumes slipped 0.1% from a year ago, but non-beer volumes jumped 4% during the third quarter.
Anheuser-Busch InBev reported a 35% increase in non-alcoholic revenue and a 19% jump in sales for its Beyond Beer segment.

Health-conscious consumers are cutting back on booze—but that doesn’t mean Anheuser-Busch InBev stock is headed for a hangover.

The Bud Light and Michelob Ultra brewer posted better-than-expected earnings and revenue for the third quarter on Thursday, even as beer sales volumes slipped 0.1% from a year ago. The company blamed the drop on China, where volumes slumped 16.8%.

That was offset by a 4% jump in non-beer volumes, with zero-alcohol lagers and ready-to-drink cocktails both growing market share.

The company reported a 35% increase in nonalcoholic revenue and a 19% jump in sales for its Beyond Beer segment, which includes Cutwater and the Flying Fish lineup of flavored lagers.

Created with Highcharts 9.0.1AB InBevSource: FactSet

Created with Highcharts 9.0.12026Oct.60.062.565.067.570.072.575.077.580.082.585.087.5$90.0

Both those divisions can help add froth to the stock’s recent rally.

Barron’s named AB InBev as a stock pick earlier this month. The company has used innovations including smart yeast strains and de-alcoholization machines to improve its zero-alcohol offerings, boosting brands like Corona Cero and Michelob Ultra Zero.

“Go back 20 years ago and the taste of zero-alcohol beer wasn’t great. Now with new technology and new processes, most people can’t even tell the difference,” CFO Fernando Tennenbaum told Barron’s on Thursday.

The Belgian brewer’s American depositary receipts, which trade under the ticker BUD, slid 1.9% in Thursday’s premarket trading. Investors may have been opting to lock in some profit, with the stock up 26% so far this year.

AB InBev reported third-quarter earnings of $1.21 a share early Thursday, as revenue jumped 4.9% from a year ago to $16.51 billion. Analysts polled by FactSet were looking for earnings of $1.14 a share on revenue of $16.27 billion.

The company still expects to deliver its full-year outlook of 4% to 8% growth in earnings before interest, taxes, depreciation, and amortization. It said its board had approved an interim dividend of 0.40 euros (45 cents), up from €0.15 last year.

Write to George Glover at george.glover@dowjones.com

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