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Oct 01, 2014

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Craft express rolls on

Anheuser-Busch sales falter, but smaller breweries stay on fast track

July 28, 2005 - As American Beer Month draws to a close, the America's and the world's largest brewery announced bad news. On the flip side, the craft breweries indicated business celebrated in style, revealing figures that indicate grow continues at an impressive rate.

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The Colorado-based Brewers Association estimates that craft beers sales were up 7.1% in the first half of 2005, following 7% growth in 2004. The association defines a craft brewery as a brewpub, microbrewery, regional specialty brewery or contract brewing company whose majority of sales is considered craft beer.

Meanwhile, Anheuser-Busch's second-quarter net income fell 9.9%, as the brewer suffered by volume declines amid stiffer competition from rivals.

The St. Louis-based company, best known for Budweiser and Bud Light, gave a weak outlook for the rest of the year. To promote sales, it plans to raise prices only once in 2006, rather than its usual twice-a-year price increases. Chief Financial Officer Randy Baker said the change was designed to "enhance the acceptance of price increases."

Sales were nearly flat at $4.02 billion, compared with $4.01 billion a year earlier. Baker said the company had "good sales leading up to July 4, good sales around July 4, then a drop off after that." He said the industry "is not showing the strength we had hoped."

Analysts attribute Anheuser's woes to competition from rivals such as SABMiller (Miller Brewing Co.) and an increasing consumer preference for wine and mixed drinks. "Miller is a much abler competitor than they were a few years ago," said Legg Mason analyst Mark Swartzberg. He said Anheuser's competitive price discounting "is deeper than we expected, and the volume benefit is less than expected."


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