By Saabira Chaudhuri 

Anheuser-Busch InBev SA reported lower profit for the fourth quarter, blaming higher costs and lost market share in the U.S. to hard seltzer makers.

AB InBev -- the world's largest brewer, with brands such as Budweiser, Bud Light and Michelob Ultra -- said its profit margins were hit by the highest annual increase in commodity and currency transaction costs in the past decade. It said consumers were trading down and spending less.

AB InBev's fourth-quarter net income dropped 75% to $114 million, from $456 million a year earlier. Revenue edged down 1.3% to $13.33 billion.

"Our performance in 2019 was below our expectations, and we are not satisfied with the results," said the company in a statement from its management.

Volumes on an organic basis, which strip out acquisitions and divestitures, rose 1.6%. Input costs, though, rose 4.1%.

In the U.S., its largest market, Budweiser and Bud Light continued to lose market share. The company indicated its rivals have done a better job of capitalizing on a shift to hard seltzers. The fizzy alcoholic drinks are booming in the U.S.

Hard seltzer and other seltzer-like products have a market share of 2.6% of all alcohol in the U.S., up from 0.85% a year earlier, according to industry tracker IWSR. The U.S. market is dominated by White Claw hard seltzer, owned by Mike's Hard Lemonade Co., and Truly Spiked & Sparkling, manufactured by Boston Beer Co.

AB InBev has rolled out its own hard seltzers but so far continues to lag behind the industry. Recently it began selling Bud Light seltzer, which it advertised at the Super Bowl. In August, it rolled out a low-cost Natural Light Seltzer, which has a higher alcohol content than many rival brands. Early last year, it relaunched an existing seltzer brand, naming it Bon & Viv.

Michelob Ultra, a bright spot for many years now, continued to sell strongly. AB InBev said the brand was now the country's second largest by retail sales behind Bud Light, citing data from industry tracker IRI.

For the current year, AB InBev said it expects earnings before interest, taxes, depreciation and amortization growth of 2% to 5%, with most of that delivered in the second half. The coronavirus has resulted in lost revenue of $285 million for the first two months of the year, it estimated, adding that Ebitda will decline 10% in the first quarter, partly due to the virus.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

 

(END) Dow Jones Newswires

February 27, 2020 03:58 ET (08:58 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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