AB InBev (NYSE: BUD) executed a solid Q3 performance. On Thursday the beverage alcohol giant reported a rise in its profit and revenue, with top-line revenue surpassing analyst’s estimates. AB InBev raised its full-year guidance and in pre-market trading the stock increased approximately 4.6%. Revenues improved 11.4% from last year’s Q3, coming in at $14,274 million and beating the Zacks Consensus Estimate of $13,423 million.

In a statement, CEO Michel Doukeris praised the company’s Q3 performance, which he asserted was “driven by relentless execution, investment in our brands and accelerated digital transformation.” As AB InBev begins its final quarter of the year Doukeris plans to continue focusing on the company’s prospering Beyond Beer portfolio.

More Investments Coming

During the Q3 earnings call Michel Doukeris spoke to the strength of the company’s evolving Beyond Beer portfolio and committed to investment and growth in the category. “Our Beyond Beer brand continued to add profitable growth, delivering $1.2 billion in revenue year-to-date,” Doukeris stated. “…[W]hen we think about seltzers, I always go back to the point that seltzers and Beyond Beer are very good for the industry.”

The Beyond Beer category has experienced major growth over the last two years in the US and Canada thanks to the popularity of hard seltzer and ready-to-drink (RTD) beverages. Doukeris attributes this growth to the fact that “seltzers and Beyond Beer…attract consumers from outside of the category and more than 50% of growth of our Beyond Beer and seltzers, they are from wine and spirit occasions and consumers.”

Doukeris went on to explain that even though the US and Canada have grown their RTD markets in different ways, both have had successful results, “The manifestation of this Beyond Beer, it came across these markets in different shape[s] and form[s], right? So what’s first ciders, then seltzers, then ready-to-drink cocktails. In Canada, there’s a very strong ready to drink beverages, but also vodka seltzers.”

While hard seltzers boomed in the US, Canadian consumers were experimenting with canned cocktails. The Canadian market began exploring hard seltzers after witnessing their rise in the US. AB InBev is home to hard seltzer brands such as Bud Light Seltzer, Michelob Ultra Seltzer, Travis Scott’s Cacti, Bon V!v and more. The beverage company also owns several flourishing RTD brands including Cutwater Spirits and Ritas.

Room to Grow

According to Doukeris, there is still plenty of room to grow the Beyond Beer market in the US and Canada, “I think that seltzer and Beyond Beer will continue to grow in North America. Of course, we’ll discuss this at the beginning of the year, we said that growth would be around 20 to 50%. As of today growth is around 20%, the bottom end of what we said there, and we continue to grow 1.8 times what the category is growing.”

Last year Anheuser-Busch committed to investing $1 billion in its US facilities to support the production of the company’s hard seltzer brands. The alcohol giant has also made strategic moves to acquire existing RTD brands such as Cutwater Spirits and Ashland Hard Seltzer.

In Q4 Anheuser-Busch must continue focusing on its Beyond Beer efforts in the global market. As the RTD market matures in the US, consumers overseas have become interested in the bubbly beverages. Doukeris explained, “And we do have capabilities because of the packaging in which the Beyond Beer shows up because of the channels and because of our ability to constantly innovate, to take advantage of this, not only North America, but also globally, we’re very well equipped as we expand Beyond Beer globally. Look at South Africa, the results of Flying Fish in Brutal Fruit there. Look at Mexico, how fast we’re gaining, sharing the Beyond Beer, and then we continue to expand this in other markets.”

In Mexico Michelob Ultra Hard Seltzer controls nearly half of the market. The company is also actively expanding Mike’s Hard into several additional global markets.

Doukeris, who took over as AB InBev’s CEO earlier this year, championed the Beyond Beer category for years in his former position as President of Anheuser-Busch North America. On his first day as CEO, Doukeris created a LinkedIn post where he listed his 6 Key Priorities. One of which was “adding profitable growth in Beyond Beer globally.”

Going forward, Anheuser-Busch intends to ensure its Beyond Beer category has the resources it needs to keep growing. Doukeris insisted, “We continue to invest, we continue to innovate and we’re very excited with ready-to-drink cocktails.”

Shirani Jayasuriya
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