Global beer market volume sales in 2014 were forecast to grow by 2%, according to Euromonitor international, primarily driven by the top five global brewers, which account for 48% of global sales. However, the continued volume sales decline in Russia and Ukraine, the dreary performance in the US and Western Europe, and the faltering Chinese beer market are likely to lower actual sales in 2014.
Yet it’s a better year for some global brewers
For A-B InBev 2014 has been a turnaround year as it reported 0.5% volume growth in 2014, compared to the previous year’s decline of 2%. It did so by fighting back in terms of inter-category competition in the US via product development in niche categories such as malt-based RTDs, extensively promoting its key brands in China, and “piggybacking” on the FIFA World Cup in 
Brazil. The Belgian-Brazilian brewer’s halted decline in US volume sales in the fourth quarter is showing signs of potential growth in its North American operations for the coming year. In China it recorded positive growth via its three key brands Budweiser, Harbin and Sedrin in the face of a declining beer market in 2014. Budweiser globally had a positive year, sourcing further growth from the UK and Brazil on the back of its promotional World Cup activities. Furthermore, the Corona portfolio continued to witness volume growth in Mexico and to expand in the export market, as well as gains in margins due to its premium pricing.
There were smiles at Heineken NV’s headquarters in Amsterdam as 2014 volume sales also showed a reverse in performance with 2% growth, following its dismal 2013 performance. The brewer gives credit for its turnaround in volume sales to its operations in Mexico, China and Vietnam, which helped offset its volume sales declines in Central and Eastern Europe. However, global profit margins took a hit as Heineken NV increased its marketing spend in Europe and North America.
It was misery for Carlsberg A/S as the brewer reported a 3% decline in organic volume sales in its 2014 global key financial indicators, brought on by the continued downturn in its key market, Russia. Despite expected net revenue growth, this was at the expense of profits, where the brewer reported a drop in margins as it shifted towards lower-margin markets in Asia Pacific and lost out in Eastern Europe. The Russian decline was offset by Western Europe’s small growth, the Chongqing Breweries acquisition in China in 2014, the opening of its Myanmar operation, and the push for the Tuborg brand on a regional platform in Asia Pacific.
SABMiller Plc showed a slowdown in volume sales in its half-year results, but it is likely to show stagnant-to-low growth upon publication of its full-year results later in 2015. Its US joint-venture operation with Molson Coors Brewing Co, Miller Coors LLP, did not show favourable results, with a 2.5% decline in volume sales to retailers in 2014. This has hit Molson Coors quite extensively, since the US is its key market, driving down volume sales by 1.3% in 2014, which was worsened by its loss of the Corona distribution deal in Canada and the UK.
What’s in the year ahead for global brewers?
The US beer market is expected to witness a continued slowdown in the decline of beer volume sales in 2015, bringing better quarterly results for A-B InBev, SABMiller and Molson Coors. Carlsberg A/S will remain under pressure due to the continued dismal volume sales performance in Russia and its other key European markets, and will concentrate its efforts in Asia Pacific.
The macroeconomic beating taken by the European and North American beer markets in recent years has pushed brewers to concentrate their efforts on maintaining market share and profit margins. A-B InBev maintained its competitive margin prowess in 2014 against its key global competitors with a 39% profit margin (pre-tax), and with a net debt/EBITDA ratio of 2.3 this highlights its financial strength in accumulating capital and improving its credit score to maintain an acquisition strategy in 2015. Some global brewers will be expected to continue to push their premium ranges to safeguard their double-digit margins in 2015, and to allow them to build the capital for future expansionary acquisitions. The rumour mill surrounding the A-B InBev NV and SABMiller Plc consolidation will continue to churn this year, but, as the number one brewer remains relatively quiet on the acquisition front, it could be in preparation for a major move within the beer or soft drinks markets.