BUD Q1 Earnings Call: Revenue Misses, Margins Expand as Management Focuses on Brand Investment

Beer powerhouse Anheuser-Busch InBev (NYSE: BUD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 6.3% year on year to $13.63 billion.

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StockStory’s Take

Anheuser-Busch’s first quarter results reflected multiple operational and external factors shaping business performance, with management emphasizing the impact of calendar shifts—such as the leap year and later timing of Easter—on shipment volumes. CEO Michel Doukeris attributed most of the 2.2% volume decline to these technical factors, while highlighting strong premiumization trends and the continued momentum of the company’s non-alcoholic portfolio. Doukeris noted that brands such as Corona and Michelob Ultra led share gains in several markets, and he pointed out the increasing contribution of new innovations like Michelob Ultra Zero and Busch Light Apple in the U.S. He also cited resilience in core global markets and a focus on cost discipline, with CFO Fernando Tennenbaum referencing ongoing productivity efforts and local sourcing strategies as drivers behind improved operating margins.

Management’s outlook for the remainder of the year centers on further investments in mega brands and innovation, with a particular focus on premium and balanced choice offerings such as non-alcohol and low-calorie products. Doukeris described plans for heightened marketing activation during the summer, leveraging key global events and partnerships to drive consumer engagement. He stated, “We are uniquely positioned to activate the category,” pointing to upcoming campaigns around Corona’s 100th anniversary and sports partnerships. Tennenbaum emphasized that cost visibility remains high due to hedging and local production, adding, “We have very good visibility in our cost of goods sold.” Both executives expect margin expansion to continue, although they acknowledged potential pressures from macroeconomic conditions and foreign currency movements.

Key Insights from Management’s Remarks

Management attributed the quarter’s revenue miss to calendar-related shipment declines and adverse weather, while margin gains reflected ongoing cost optimization and premiumization initiatives.

• Calendar and Weather Impacts: Leadership explained that the majority of volume decline resulted from leap year effects and the timing of Easter, with adverse weather further dampening industry demand, especially in the U.S. and Mexico.
• Premiumization and Mega Brands: The company cited strong performance from premium and super-premium brands, with Corona outside Mexico growing revenue by 11.2%. Premiumization contributed to a higher revenue per hectoliter, especially in Europe and Latin America.
• Non-Alcoholic Portfolio Momentum: Anheuser-Busch’s non-alcoholic beer segment, led by Corona Cero and Michelob Ultra Zero, posted 34% volume growth globally. Management views this as incremental to category growth, citing new consumption occasions and consumer adoption.
• Beyond Beer and Innovation: The “beyond beer” segment—including ready-to-drink products and flavored malt beverages—accelerated, with double-digit volume growth for brands like Cutwater and Nutrl in the U.S. This follows a strategic portfolio simplification to focus on five global brands in the segment.
• Cost Optimization and Local Sourcing: CFO Fernando Tennenbaum highlighted margin improvements driven by disciplined revenue management, lower capital expenditures, and local procurement. He noted that over 98% of products are locally produced, limiting exposure to tariffs and supporting supply chain resilience.

Drivers of Future Performance

Anheuser-Busch expects brand investments, innovation, and disciplined cost management to shape performance in the coming quarters, while monitoring macroeconomic volatility and consumer behavior shifts.

• Brand Activation and Marketing: Management plans intensified marketing for mega brands—such as Corona’s global anniversary campaigns and sports partnerships—with a goal of increasing consumer engagement during key seasonal periods like summer.
• Innovation in Balanced Choices: The company is expanding its non-alcohol, low-sugar, and low-calorie offerings, expecting these products to contribute incremental volume and revenue by attracting new consumers and broadening consumption occasions.
• Cost and Margin Discipline: Tennenbaum reiterated ongoing efforts to optimize operations and reduce leverage, supported by hedging strategies that provide near-term cost visibility. However, management flagged potential margin pressures in the second half of the year from currency fluctuations and commodity costs.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the effectiveness of summer marketing activations for mega brands, (2) further acceleration of the non-alcohol and balanced choices portfolio, and (3) regional recovery trends in China and Argentina. Cost management outcomes and the ability to sustain margin expansion amid currency and commodity volatility will also be key markers of execution.

Anheuser-Busch currently trades at a forward EV-to-EBITDA ratio of 8.5×. Should you double down or take your chips? Find out in our full research report (it’s free).

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