South Africans drink a lot of beer: AB InBev, which bought SAB Miller in 2016, makes one in four beers sold globally, and we are one of its biggest markets. So it’s not surprising that the company took a $2.5 billion write-down tied to a worst-case scenario for how the coronavirus pandemic would affect sales here. Their scenario was not wrong, as we now know: the government has twice banned the sale of alcohol to take pressure off hard-pressed health services. Those alcohol bans show in AB InBev’s sales figures – the company says volumes in South Africa have dropped over 60% in the quarter. So as South African drinkers bemoan their empty fridges and the effect of the ban on the economy, its worth remembering that the ban has global ramifications. – Renee Moodie
Budweiser brewer takes $2.5 billion write-down in South Africa over Covid-19
By Saabira Chaudhuri
Anheuser-Busch InBev NV reported a sharp drop in second-quarter sales as beer consumption across much of the world dropped and took a $2.5 billion write-down on its business in South Africa, where alcohol sales have been banned.
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Still, revenue topped analyst estimates, and AB InBev — which makes one out of every four beers sold globally — said its performance was improving rapidly. Though volumes fell 32% in April and 21% in May, they rose 0.7% from a year earlier in June.
Shares in the company rallied 8% on Thursday.
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The Budweiser brewer said global revenue dropped 18% on an organic basis, compared with the year-earlier quarter. That strips out currency changes and acquisitions and beat analysts’ forecasts for a 23% decline.
Covid-19 propelled many countries the world over to institute lockdowns that required consumers to stay at home and bars and restaurants to shut. In the U.S., brewers have been hit less badly than elsewhere because the majority of beer is sold through supermarkets, which have remained open.
Big bet on Africa
AB InBev said its U.S. revenue dropped 5.9%, a stronger performance than in most other regions, helped by the gradual reopening of bars in many states. In recent weeks, however, some parts of the U.S. have been hit by climbing infection rates and deaths, triggering new restrictions.
In South Africa, one of AB InBev’s biggest markets, the company took a $2.5 billion write-down tied to a worst-case scenario for how the virus will affect sales there.
AB InBev made a big bet on Africa a few years ago when it bought SABMiller in a $100 billion-plus deal.
South Africa, in particular, has emerged as one of the hardest-hit countries by the pandemic. The country has twice banned alcohol sales to curb pressure on the nation’s health service. On Thursday, AB InBev said volumes in South Africa dropped over 60% in the quarter.
