What you need to know: AB InBev’s latest results highlight the challenges the world’s largest brewers have faced for months: a geopolitical crisis in Eastern Europe has led to weaker beer sales in Russia and the Ukraine. Russia is an important market for the beer industry, though sales there have been pressured for a while as the government has sought to reduce the consumption of alcohol in the country. AB InBev reported that 40% of the company’s beer volume decline in the latest quarter was due to weakness in Europe, driven by Russia and Ukraine. AB InBev’s Russia beer volume alone slumped 20%.
AB InBev, which produces Budweiser, Stella Artois and Beck’s, isn’t the first beer company to warn of weak sales in Eastern Europe. Rivals Heineken and Carlsberg have both reported a softer performance in the region, with Carlsberg even trimming its expectations for the year as a result of the problems in Europe.
The big number: Total volume in the U.S. slid 3.7%. AB InBev continues to loss market share, but said those declines have eased in the third quarter compared to the first half of 2014. The biggest brewers have been losing market share to craft brewers, which reported a 20% increase in retail sales last year, and the overall beer industry has faced pressure from wine and spirits.
What you might have missed: While AB InBev reported weaker volume for its four larger regions, the smaller Mexico and Latin America South divisions posted modest increases. Mexico’s beer market is performing well as a result of a strong economy in that region, and AB InBev said Bud Light’s volumes in that region more than doubled from a year ago. But other notable markets — including Germany, Canada, China and Brazil — reported weaker beer volumes for a variety of reasons: cold weather, soft consumer spending, or poor fundamentals for the overall industry.