Anheuser-Busch InBev SA/NV (BUD)

Executive Summary / Key Takeaways

• Anheuser-Busch InBev is executing a strategic pivot towards organic growth, leveraging its vast global footprint and portfolio of "mega brands" to drive consistent top and bottom-line expansion.
• The company's focus on premiumization, particularly with brands like Michelob ULTRA and Corona, and significant investment in the "Beyond Beer" and non-alcohol segments, is yielding strong market share gains and revenue per hectoliter growth.
• Digital transformation through the BEES marketplace and DTC platforms is enhancing operational efficiency, providing deep consumer insights, and accelerating growth in third-party product sales.
• Robust free cash flow generation and disciplined deleveraging have significantly increased capital allocation flexibility, enabling a substantial increase in shareholder returns through dividends and share buybacks.
• While facing localized challenges in markets like China and Brazil, the company's diversified geographic presence and strategic investments position it for continued EBITDA growth within its 4% to 8% outlook for 2025, supported by a normalizing cost environment.

The Global Brew: A Strategic Evolution

Anheuser-Busch InBev SA/NV, a brewing titan with roots tracing back to 1366, stands as a dominant force in the global beverage industry. Headquartered in Leuven, Belgium, the company commands a vast portfolio of approximately 500 beer brands, alongside a growing presence in spirits-based ready-to-drink (RTD) and non-alcohol beverages. Its journey, marked by significant inorganic growth including the SABMiller acquisition, has more recently pivoted towards a focused three-pillar strategy emphasizing organic growth, digitization, and business optimization. This strategic evolution, initiated in 2021, has reshaped its operational approach and financial trajectory.

The company's overarching strategy is to "lead and grow the category" by focusing investments on its "mega brands"—typically five per market—which now represent 57% of its total business and have increased revenue by nearly 40% since 2021. This disciplined portfolio management, coupled with substantial marketing investments, has reinforced brand power. For instance, Kantar BrandZ recognized AB InBev as owning 8 of the top 10 most valuable beer brands globally in 2025, with Corona and Budweiser leading the pack, and Michelob ULTRA and Stella Artois climbing to #5 and #9, respectively. This strategic emphasis on high-potential brands allows for more efficient allocation of resources and a stronger market presence.

Technological Edge and Digital Transformation

Anheuser-Busch InBev's competitive advantage is increasingly underpinned by its technological differentiation, particularly through its digital ecosystem. The BEES marketplace, a B2B e-commerce platform, is a core technological differentiator. It streamlines the route to market, providing retailers with a comprehensive platform for ordering AB InBev products and, crucially, non-ABI products. This platform captured $49 billion in gross merchandising value (GMV) in 2024, a 19% increase year-over-year, and its GMV has more than doubled since 2021. The percentage of revenue transacted through digital channels has surged from approximately 50% to 75%. The marketplace for non-ABI products alone delivered $2.5 billion in GMV in 2024, growing by 57% year-over-year, and reached $785 million in Q2 2025, an increase of 63% versus last year. This marketplace model offers a highly profitable revenue stream by leveraging existing distribution networks to facilitate third-party sales, effectively expanding AB InBev's share of wallet at the point of sale without direct product manufacturing costs.

Beyond BEES, the company's direct-to-consumer (DTC) digital platforms are enabling a one-to-one connection with consumers, generating 19 million unique orders in Q3 2024 and $560 million in revenue in 2024. These platforms provide invaluable data points—19 million in Q3 2024 alone—which are leveraged to generate deep consumer insights, develop new consumption occasions, and drive incremental revenue. The strategic intent behind these digital initiatives is to enhance operational efficiency, improve customer satisfaction through a seamless ordering experience, and create a data-driven feedback loop for product development and marketing. The "so what" for investors is clear: these technological advancements create a significant competitive moat, driving operational leverage, expanding revenue streams beyond traditional beer sales, and fostering stronger brand loyalty through personalized engagement. The ongoing investment in these digital capabilities, coupled with the application of AI in areas like supply chain optimization and production, aims to further reduce operational costs and enhance agility.

Competitive Landscape and Strategic Positioning

AB InBev operates in a highly competitive global beverage market, facing off against major multinational brewers like Heineken N.V. (HEINY), Carlsberg A/S (CABGY), and Molson Coors Beverage Company , as well as a myriad of indirect competitors.

Compared to Heineken, AB InBev's sheer scale and diversified global brand portfolio offer broader market penetration and a qualitative advantage in geographic reach. While Heineken often emphasizes organic growth and innovation in emerging markets, AB InBev's strategy has historically involved aggressive global expansion and consolidation. AB InBev's established brand loyalty and global supply chain capabilities provide a strong defense against Heineken in shared markets, potentially leading to superior customer retention and market share stability. However, Heineken may exhibit greater agility in niche product innovation, particularly in non-alcoholic segments.

Against Carlsberg, AB InBev's extensive brand portfolio allows for greater market adaptability, contrasting with Carlsberg's more regionally concentrated offerings. AB InBev's strengths in brand recognition and distribution networks provide a qualitative edge in customer loyalty and sales volume, while Carlsberg focuses on operational efficiency through digital supply chain tools. AB InBev's ability to leverage economies of scale for superior resource allocation differentiates it, likely leading to stronger revenue growth from international sales and cash flow generation.

Molson Coors, with its U.S.-centric portfolio, faces AB InBev directly in the North American market. AB InBev's global brand variety and distribution reach surpass Molson Coors' more regional focus. In the U.S., AB InBev's scale and brand loyalty, particularly with brands like Michelob ULTRA and Busch Light, have driven significant market share gains. For instance, Michelob ULTRA officially dethroned Modelo Especial as America's top-selling beer by volume in September 2025, a significant reversal following Bud Light's challenges. This highlights AB InBev's ability to rebalance its portfolio and capture growth in key segments. Constellation Brands (STZ), owner of Modelo Especial, has faced headwinds from declining demand among Hispanic consumers and higher costs, leading to a lowered full-year forecast. This contrasts with AB InBev's Q1 2025 profit jump driven by cost cuts, while Molson Coors (TAP) lowered its guidance due to macroeconomic concerns.

Indirect competitors, including non-alcoholic beverage producers and craft brewers, pose a threat by appealing to health-conscious consumers. AB InBev addresses this through its "balanced choice" portfolio, offering low-carb, low-calorie, sugar-free, gluten-free, and non-alcohol alternatives, which now represent approximately 10% of its beer revenue. The non-alcohol beer segment, led by Corona Cero, is growing at a triple-digit rate, with 65% of its volume coming from new consumers and new occasions. This proactive approach mitigates potential market share erosion from these emerging segments.

Financial Performance and Operational Momentum

AB InBev's strategic execution has translated into robust financial performance, demonstrating consistent growth and margin expansion. In 2024, the company achieved all-time high U.S. dollar revenues of $59.8 billion, with organic growth offsetting translational FX headwinds. EBITDA grew at the top end of its outlook, reaching nearly $21 billion, marking an 8.2% increase over 2023, with margin expansion across all five operating regions. This was driven by disciplined revenue management and ongoing premiumization, which led to a 4.3% increase in revenue per hectoliter.

The positive momentum continued into 2025. In Q1 2025, EBITDA grew by 7.9% at the top end of the outlook, with continued margin expansion. Revenue increased by 1.5% despite a 2.2% volume decline, largely attributed to technical calendar-related factors. The strength of its brands and premiumization drove a 3.7% increase in revenue per hectoliter. Q2 2025 further solidified this trend, with EBITDA increasing by 6.5% and continued margin expansion. Revenue per hectoliter grew by 4.9%, driven by premium brands and strategic revenue management. Overall revenue increased by 3%. This consistent operating leverage resulted in an 8.7% increase in underlying U.S. dollar EPS in Q2 2025, and 17.4% in constant currency.

Geographically, performance has been diversified. In the U.S., the portfolio is building momentum, gaining industry share, and delivering both top and bottom-line growth. Michelob ULTRA and Busch Light were the #1 and #2 volume share gainers in the industry in Q2 2025. In Middle Americas, Mexico and Colombia delivered strong results, with Mexico's revenue increasing by mid-single digits and Colombia achieving record high volumes and double-digit EBITDA growth in Q2 2025. Europe also saw top and bottom-line growth in Q2 2025, with volumes flat but outperforming the industry in five of six key markets, driven by premiumization and margin recovery.

However, challenges persist in certain markets. In Q2 2025, overall volumes declined by 1.9%, primarily impacted by a soft industry in Brazil and underperformance in China. Brazil's revenue declined by 1.9%, though productivity initiatives and margin expansion (216 basis points) offset the top-line decline. China's revenue declined by 6.2% in Q2 2025, with volumes underperforming due to weakness in key regions and the on-trade channel. The company is actively addressing these issues through increased discipline in route-to-market, heightened investments in mega brands, and accelerated expansion in the in-home channel.

Liquidity and Capital Allocation

AB InBev's focus on business optimization has significantly enhanced its liquidity and capital allocation flexibility. Free cash flow saw a substantial increase of $2.5 billion in 2024, reaching $11.3 billion. This strong cash generation continued into 2025, with a $0.5 billion increase in free cash flow in the first half, driven by organic EBITDA growth, reduced net interest expense through deleveraging, optimized net working capital, and improved CapEx efficiency.

A key financial milestone was achieved in 2024, with the net debt-to-EBITDA ratio falling to 2.89x, below 3x for the first time since 2015. This deleveraging journey continued in Q2 2025, with the ratio improving to 3.27x from 3.42x year-over-year, despite seasonal increases. The company has also strengthened its debt maturity profile, with approximately $3 billion in bonds maturing through 2026 and no financial covenants. This increased financial flexibility has enabled a proposed full-year dividend of EUR 1 per share for 2024, a 22% increase, and the announcement of a $2 billion share buyback program, double the previous year's. This demonstrates a clear commitment to returning value to shareholders while maintaining a strong balance sheet.

Outlook, Guidance, and Risks

AB InBev remains confident in its ability to deliver on its 2025 outlook of 4% to 8% EBITDA growth on an organic basis, in line with its medium-term targets. This confidence is rooted in the resilience of the beer category, the strength of its mega brands, and the consistent execution of its strategy. Management anticipates 2025 to be a "normal year" for cost inflation, generally in line with market inflation, a notable shift from the higher commodity price increases experienced in prior years. While Q1 2025 faced a high comparison base due to technical factors, management expects volume performance to improve meaningfully in Q2 and the second half of the year. Net CapEx for 2025 is projected between $3.5 billion and $4 billion, reflecting continued investment in growth and efficiency, with a normalized effective tax rate of 26% to 28%.

Despite the positive outlook, risks remain. The global footprint, while a strength, exposes the company to country-specific challenges, as seen with the slowdowns in China and Argentina. Adverse weather conditions, as experienced in Brazil and the U.S. in Q2 2025, can impact volumes. Consumer confidence, while stabilizing, has not returned to 2022 levels, and value-seeking consumers remain under pressure from inflation in some markets. The on-trade channel in China continues to be weak, necessitating a strategic shift towards the off-premise. However, the company's diversified portfolio, robust innovation pipeline (e.g., Michelob Ultra Zero, Busch Light Apple), and strong digital platforms are key levers to mitigate these risks and capitalize on evolving consumer trends.

Conclusion

Anheuser-Busch InBev is demonstrating a compelling investment thesis, driven by a clear strategic shift towards organic growth and disciplined financial management. The company's ability to consistently deliver EBITDA growth within or above its medium-term outlook, coupled with significant free cash flow generation and deleveraging, underscores its operational effectiveness. The strength of its "mega brands," the strategic expansion into "Beyond Beer" and non-alcohol segments, and the transformative power of its digital ecosystem, particularly BEES, are foundational to its competitive advantage and future growth. While localized market challenges and macroeconomic headwinds persist, AB InBev's diversified geographic footprint, ongoing investments in brand building and innovation, and enhanced capital allocation flexibility position it to continue creating shareholder value. The company's technological leadership, especially in digital distribution and consumer engagement, provides a robust moat, ensuring its relevance and profitability in a dynamic global beverage market.