AB InBev Struggling in Brazil

The last anyone heard of Anheuser-Busch InBev, the massive beverage (beer) conglomerate was scooping up small brands left and right.  But the company has apparently encountered some difficulties, now posting lower-than-expected fourth quarter results. This is mostly a result dropping sales in Brazil thanks to the country’s looming economic recession.

Thus, the brewer reported, on Thursday, fourth-quarter beer volume fell more than 7 percent (in Brazil) which is actually worse than the categories overall drop of 6.2 percent in the country. As such, Anheuser-Busch InBev has chosen to forgo bonus payouts for chief executive Carlos Brito—and most of the top members of his management team—following the earnings crash.

Last year, the company’s net profits fell by 43 percent to only $4.6 billion, with a particularly weak fourth quarter.  Profits were down 64 percent in the fourth quarter.

“When we do not meet our objectives, we take responsibility for it,” the company expressed in a statement. “Performance has been disappointing in fiscal year 2016, and as a result, most of the executive board of management will not receive bonuses this year.”

Similarly, Brito relayed, in a press conference, “If you own a bakery and don’t make any money one year, you don’t get a bonus — this is the same thing. After a bad year, that’s when you see leaders rising to the occasion.”

Anheuser-Busch InBev, of course, is the company who brews/distributes Budweiser (et al), Stella Artois, and Corona. In all, the company has 36 breweries in Brazil, alone.

With this initiative, the company said it now expects to save some money in its pending $100 billion merger with industry rival SABMiller, to hit $2.8 billion. This is up from its previous estimate of $2.5 billion. SABMiller was actually forced to sell off its stake in a several brands—to include Peroni and Grolsch—in order to secure regulatory approval for this pending deal; a deal that has closed in 2016.

The combined company, then, boasts a portfolio of approximately 500 beers; and that includes 7 of the top 10 beer brands around the world.

With all this in mind, AB InBev reports new optimism that business in Brazil will improve. The company has been in Brazil for roughly three decades, so there is no reason to believe they cannot regain some footing. And with some strong growth in both Mexico and Europe—and market share gaining in China—AB InBev might only need to wait out the storm.

Latest News