A-B earnings up, but disappoint Wall Street

Anheuser-Busch sales were up in 2007, but fell short of Wall Street’s expectations, in part because of lagging sales of Corona.

The business of beer brewing companies can be confusing.

The good news for A-B was that U.S. beer sales increased 8 percent in the fourth quarter and estimated U.S. beer market share was 48.5 percent in 2007, up from 48.2 percent in 2006.

Grupo Modelo — which makes Corona, is partly owned by Anheuser-Busch and has been a big driver of A-B’s recent profit growth — saw equity income drop 12%.

Edward Jones analyst Jack Russo said the earnings miss was partly due to a higher-than-expected tax rate, in addition to Modelo’s stumble.

“The core business looked to be about the same,” Russo said. “The beer industry had a pretty good year in 2007. But unfortunately, this Modelo piece is big” for Anheuser-Busch, he said. An expected period of weaker contributions from Modelo will be a drag on A-B’s results, he said.

Benj Steinman, publisher of Beer Marketer’s Insights, pointed out that core brands Budweiser and Bud Light continue to lag. Growing overseas sales and revenues from imports that A-B distributes are the only forces driving up sales, he said.

“The consumer preferences are seemingly shifting to craft beers and, to a lesser extent, imports,” Steinman said.