Category Investments

AB InBev: The king of beer

22 March 2023 Allan Gray
Jithen Pillay

Jithen Pillay

As the world's largest and most profitable brewer, Anheuser-Busch InBev (AB InBev) faces investment concerns and risks that are overly reflected in the current stock price.

Despite the market's unease, there is significant potential for the company to grow its beer volumes, reduce input costs, and manage its high levels of debt.

This is the view of Jithen Pillay, analyst at Allan Gray, who says that the investment case for the brewer is strong, despite the current market sentiment.

“There is significant potential for long-term growth and cash flow generation for ANH, and investors should not overlook the company's potential,” says Pillay.

Reasons he cites for this include that the company's new CEO is focused on organically growing the share of the company's products, increasing beer consumption in previously underserved areas, and introducing new and innovative beverages. ANH's e-commerce app, BEES, has also helped increase sales, with material runway for growth. Despite high input cost inflation, the company is positioned to weather these challenges through disciplined pricing, a tiered-price portfolio of beer brands, and the migration of middle-to-high-income consumers to its global brands. Finally, despite its high debt levels, ANH has access to extremely favorable debt terms.

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