Weak consumer sentiment in China is weighing on big brewers’ beer sales, with both AB InBev and Carlsberg reporting bigger than expected volume losses in their latest earnings on Thursday.
Consumer confidence in the country has cratered as a result of a three-year housing slump, hitting the sales of global consumer goods and luxury groups in recent weeks. The Chinese government launched a major stimulus package last month in an effort to reignite confidence.
Carlsberg chief executive Jacob Aarup-Andersen told the Financial Times that the “jury is out around China” next year. He said the stimulus had not moved “the needle” and had yet to dispel a “significant deterioration” in consumer sentiment.
Carlsberg’s volumes in China fell 6 per cent in the third quarter, leading to a drop in group volumes of 0.2 per cent, compared with consensus estimates of a 0.9 per cent uplift. AB InBev, the brewer of Budweiser and Stella Artois, said sales volumes had dropped 2.4 per cent in the third quarter, sharper than an expected 0.4 per cent fall, driven by a 14.2 per cent sales decline in China.
High levels of air pollutants that can cause respiratory, heart and brain issues found in Dublin hotspots
Leo Varadkar is right: basic maths should not flummox a minister or any of us
Dublin hotel bar manager accused of ‘defrauding customers’ by adding 10% service charge to bills
Soc Dems suspend Eoin Hayes for giving incorrect information about sale of shares from firm linked to Israeli military
“Overall volume performance was, however, impacted by a soft consumer environment in China and Argentina,” the company said in its trading update. Argentina’s weak sales were driven by inflationary pressures.
China’s stimulus package, which includes billions of dollars from the country’s central bank to support the stock market and policy rate cuts, has been introduced to counter creeping deflationary pressure.
Retail sales are up less than 1 per cent since the start of the year, while in September China’s consumer price index was up 0.4 per cent year on year, weaker than analysts had expected. AB InBev on Thursday launched a $2 billion (€1.8 billion) share buyback programme, which it said would be completed within the next 12 months. It also narrowed its earnings guidance to full-year growth of 6-8 per cent from its previous 4-8 per cent range.
Carlsberg, meanwhile, maintained its guidance of a 4-6 per cent increase in underlying operating profit this year as growth in India offset weak volumes in the UK, France, and China.
Carlsberg is in the middle of acquiring Britvic, the UK soft-drinks maker. Aarup-Andersen said Wednesday’s budget by the Labour government had not changed the brewer’s view that the country was “structurally very exciting”, with good growth prospects. – Copyright The Financial Times
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
