Budweiser to invest more into online as virus hits its offline business

Budweiser APAC, the Asia Pacific arm of beer giant AB InBev has disclosed plan to invest more in e-commerce as the coronavirus affects consumer lifestyle habits and hit demand from restaurants and nightspots.
Its latest financial result showed the group reporting a loss of US$6 million for the 1st quarter, a dismal performance compared to a profit of US$259 million in the same period last year. In addition, its quarterly revenue also dropped from US$1.6 billion to US$956 million.
Although signs are showing that a recovery will happen in 2nd quarter as China and Korea started to reopen their economy, Budweiser is not taking any chances and it plans to relocate resources to its e-commerce businesses.
Jan Craps, co-chair and chief executive of Budweiser APAC said, “E-commerce is already growing strong double digits in the past and it’s accelerated. We see very strong double-digit growth in e-commerce. When you look at the channels like Meituan and Ele.me, the new models of O2O, we see a triple-digit growth during the crisis.” Jan is referring to “online to offline” interactions and China’s 2 dominant food delivery platforms.
Budweiser saw its beer volumes in China fell 46.5% over the quarterly period, however it expects a slight recovery in April. It will intensify marketing of its premium and super-premium beers such as Budweiser, Corona, Stella Artois and Hoegaarden of which demand had expanded during the pandemic. China has huge growth potential for premium beer as this segment only has 16% share of overall beer market presently, far lower than 40% in matured beer markets.
Overall, the blow to the global beer industry is set to continue as most countries in the world are still in lockdown mode. Many countries have also banned the manufacture and sales of liquor during the pandemic. It was estimated that beer consumption at bars and restaurants/cafes took up a quarter of global sales volume, however in terms of sales value, it has a higher share due to higher profit margin.
Facing this tremendous challenge, beer makers are moving swiftly to trim costs. Carlsberg, the world’s 3rd largest brewer has slashed costs on consultants, training, facilities, technology, travel and entertainment. Rival Heineken trims non-essential spending, while many of its sports sponsorship costs have disappeared as events have been postponed. As many bars, cafes and restaurants might disappear completely by the end of this year, the offline channel of distribution seems to be under serious threat and beer makers need to seriously consider alternative modes of distribution.