SAVE THE DATE!

After growing $$ sales and gaining share of US volume in Q3, is the tide finally turning in AB's favor? US Chief Commercial Officer Kyle Norrington made the case at Beer Insights Seminar, touting big mktg spend and untapped potential for its top growth brands. Several are "catching wind in their sails... none bigger than Mich Ultra," said Kyle. It's "the fastest growing brand in category" by absolute volume, and "we don't see that slowing down at all." Ultra's already 15-20 share of category in some Southern states, but AB sees "huge runway" and is investing "big time behind this brand." On other end of value spectrum, Busch Light is also 15-20 share in several Midwestern mkts and "still growing." It's #1 volume beer in 10 states and 3d largest growth brand "in the country." Asked whether AB will "outspend all others to keep beer relevant," Kyle simply replied "yes." And "just for absolute clarity," co's "investing more" in mktg, he added, announcing that Stella will get a Super Bowl spot. That's despite recent cost cuts such as closing a malt facility in Moorhead, ND and trimming brewing ops for Golden Rd and Elysian craft brands. But AB "absolutely" is focused on growing total co volume, Kyle noted, acknowledging that "it's a balance" even if that's "what the ambition is."AB already "had a clear strategy" to make Ultra its #1 bet a few yrs back. And "core of Ultra is healthy and thriving" thanks in part to multi-pronged mktg approach. When US hosts World Cup in 2026, soccer will "never be the same in America, and I don't think Michelob Ultra will be either," Kyle claimed. Next yr Mich Ultra Zero will add "a new dimension" to "thriving" NA beer category where AB's still top supplier. Kyle also pointed to new growth avenues such as RTD spirits brands Cutwater and Nutrl, both "highly incremental" and "firing on all cylinders." Kona Big Wave growing "over 20%" and now AB's "4th biggest" draft handle. On-prem "critically important," said Kyle, who met his wife "in a bar drinking Budweiser."AB Best Positioned to Grow in "Over a Decade," Sez Robert; Organic Growth Outlook Tho Bud Light declines painfully accelerated the process, AB is now in its best position to grow in "over a decade," Evercore ISI's Robert Ottenstein said during Wall St panel at Seminar. Bud Light "was just too big," and couldn't be "all things to all people." (It's still #1 brand by volume, Kyle reminded.) But now brand equities are more clearly defined, Robert believes, highlighting Busch Light's brand building as "best" in the industry. Tho he and others have certainly been critical of AB, "hats off" for coming back in a "pretty strong position" after a "horrendous" 2023, said Robert. One could "say a lot of bad things" about co's US biz, added HSBC's Carlos Laboy. Yet global co is still his top stock pick in beer/bevs. That's based mostly on global prospects and deleveraging, tho Carlos also acknowledged "momentum" on Ultra and Busch Light as other US competitors are having "a harder time."With debt under control, could ABI dive back into M&A? "Cheapest" deal would be to buy rest of AmBev, which trades at just 6X EBITDA, said Carlos. It'd create cost efficiencies in LatAm and is "their kind of story." But while co can "always find" oppys for "bolt-on acquisitions," ABI ceo Michel Doukeris told Yahoo Finance last wk that M&A is no longer co's #1 priority. In recent yrs co "reoriented" to "a more organic growth strategy." So ABI focusing "on our own performance" and "investing in our brands for the long term," said Michel, urging investors to "look at our cash flow generation."Ultra Widened Volume Growth Lead in Latest 4 Wks AB indeed owns 2 of the 3 "fastest growing brands," tho Modelo Especial way ahead in YTD Circana multi-outlet + convenience scans thru Nov 3. It grew volume 8.4% and 7.9 mil cases compared to Ultra +3.8%, 3.7 mil cases and Busch Light +4.9%, up 2.7 mil thru 10 mos. Yet Ultra added the most cases of any brand for 12 wks and widened the gap for 4, when Ultra (+9% and 754K cases) edged out Especial (+7%, 608K cases) with Busch Light close behind (+10%, 509K cases). No other brand in same ballpark. Pacifico #4 and +23%, 178K cases.Ultra and Busch Light Gains Outweighed Bud & Bud Light Declines; Remaining ~1/3 Drag Potential growth path coming into focus as combo of Mich Ultra and Busch Light now bigger than Bud and Bud Light in recent scans. Those 4 are nearly 70% of AB's biz and collectively back in black by both $$ and vol. For L4 wks, Ultra and Busch Light volume grew 9.3%, ~1.3 mil cases while Bud & Bud Light down 4.5%, 680K cases. So those 4 gained ~600K cases. Remaining ~30% of AB's volume fell 5%, 643K cases. Biggest drags from Natty Light, Busch, Natty Ice, Bud Ice and several steeply declining Bud Light seltzers. But could be clearer skies ahead if co's able to shore up those stragglers.

Are Winds Finally at AB's Back? Growth Path Becoming Clearer as Clouds Begin to Lift

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