(Bloomberg) -- Anheuser-Busch InBev NV’s sales of Michelob Ultra helped the world’s largest brewer make up for a slump in demand for Bud Light in the US following a marketing mishap.
The company has stepped up promotion of Michelob Ultra, which is sponsoring Team USA at the Olympic Games in Paris. A light beer marketed at men and women, it overtook Bud Light and became America’s second-favorite beer in July after Mexican label Modelo Especial, according to industry analysts.
Overall, AB InBev’s volumes in North America fell 3.2% in the second quarter, less than analysts expected.
Shares of AB InBev rose 2.2% on Thursday. The stock is up about 9% in the past 12 months.
Renewed marketing of Bud Light is part of wider efforts by AB InBev to recover in the US following boycotts of what was once the best-selling beer in the country after an influencer who is transgender promoted the brand. AB InBev has also signed big sports partnerships with the UFC, and music stars such as Zach Bryan.
The brand is stabilizing and regaining its place with customers, according to AB InBev Chief Executive Officer Michel Doukeris.
“We continue to invest in the properties and activations that all customers love,” he said on a call with analysts. “Most of the investment in the activities of Bud Light will be concentrated in the back end of the year with the NFL.”
However, overall total volume fell by 0.8% in the second quarter, missing estimates, due to a downturn in demand in China, which has been hit by poor weather. Customers in the mainland, where AB InBev sells global labels as well as local brands Sedrin and Harbin, have also been pulling back on discretionary spending, sending volumes down 10.4%.
China Woes
AB InBev is not alone in suffering from a tough market in China. Earlier this week rival Heineken NV took an €874 million ($945 million) impairment on its stake in the largest brewer in the mainland, due to weak consumer demand. And last month, Remy Cointreau SA reported a slump in sales as consumers pulled back in China in the wake of a pandemic-era boom.
The maker of Stella Artois said it’s focused on improving production efficiencies and marketing efforts around its biggest brands, reiterating its full-year earnings growth outlook of between 4% and 8%.
Analysts at Jefferies said that AB InBev had ovedelivered with strong performance in the US, Latin America and South Africa.
(Updates with CEO comment)
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