The share price of Anheuser-Busch InBev (AB InBev), the world’s largest brewer, has fallen by more than 40% since its 2016 acquisition of SABMiller — an ironic outcome for what was, at the time, one of the most ambitious corporate mergers in history.
The deal, worth more than $100bn, was meant to solidify AB InBev’s dominance in the global beer industry. Instead, it saddled the company with a vast debt burden and greater reliance on volatile emerging markets where currency depreciation and inflation have eroded profitability. The company’s net debt-to-ebitda ratio stands at 3.27, still elevated compared to peers and well above its long-term target of 2, despite years of focused deleveraging.
This heavier emerging-market tilt wasn’t without rationale. With volume growth in mature markets largely stagnant, these regions offered the potential of sustained long-term volume expansion. The problem is that the past nine years have coincided with a persistently strong US dollar, meaning that even when local-currency earnings were robust, their conversion into AB InBev’s reporting currency often disappointed. Latin America — home to core markets Mexico, Brazil and Colombia — now generates 56% of the group’s profits, amplifying the impact of currency swings. Layer on a sharp global interest rate upcycle, after years of ultra-cheap credit that helped finance the SABMiller deal, and the company’s substantial debt burden has become even more onerous, eroding net income and curbing financial flexibility.
To compound its woes, AB InBev has also suffered self-inflicted wounds, most notably in the US market. Once the US’s top-selling beer, its flagship Bud Light became embroiled in a politically charged advertising controversy in 2023, sparking a consumer boycott that significantly dented sales. Two years later, despite heavy promotions and efforts at product repositioning, the brand has yet to recover and has slipped to third place overall. Though AB InBev has not disclosed precise figures for the decline, industry data suggests that Bud Light’s US volumes remain well below their pre-controversy benchmark.
Fortunately, not all is gloom. AB InBev’s portfolio includes several fast-growing brands that have picked up some of the slack. Michelob Ultra, a low-calorie beer with strong health-orientated positioning, has emerged as a standout performer. “Michelob Ultra is growing this year in all 50 states in the US,” CEO Michel Doukeris said during a recent earnings call, adding that in some key regions the brand commands as much as an 11% share. Busch Light, another mainstream brand, has also gained traction, particularly with younger audiences, thanks in part to limited-edition offerings such as Busch Light Apple. Innovations such as Michelob Ultra Zero, a low-calorie, alcohol-free version of the original, have found meaningful adoption, especially among 21- to 24-year-olds.
This shift is indicative of a broader trend in the beer industry, where premiumisation and category expansion are replacing pure volume growth. While global beer volumes have plateaued — AB InBev’s own were down 1.9% in the second quarter of 2025 — revenue per hectolitre is rising. The company posted a 4.9% increase in this metric during the quarter, driven largely by price increases, favourable mix and premium brand growth. In fact, the company’s top 50 “mega brands” now account for the majority of sales, with net revenue for this cohort rising 5.6%. Corona, one of AB InBev’s flagship premium global brands, grew revenues by 7.7% outside Mexico and delivered double-digit volume growth in more than 30 markets.
Regionally, performance has been mixed. North America showed positive momentum in the second quarter, with revenue and ebitda both rising. “Our market share momentum accelerated,” Doukeris noted, citing strength in Michelob Ultra and Busch Light. However, US industry-wide volumes remain below historical trends, hampered by high food inflation and changing consumer preferences. In Europe, the company had flat volumes despite macroeconomic pressures. “Consumers are enjoying the taste of brands such as Leffe with meals in France and Italy,” Doukeris said, citing success in repositioning beer for more food occasions.
Latin America remains a mixed bag. Colombia posted record volumes, while Brazil suffered from weather disruptions and tough pricing dynamics, with volumes and revenue declining. Yet ebitda still grew 5.3% in Brazil, thanks to productivity gains. Mexico delivered low-single-digit volume growth and mid-single-digit revenue gains, benefiting from premium portfolio expansion despite some weather-related softness late in the quarter. With Latin America now generating more than half of AB InBev’s profits, its fortunes weigh heavily on group results, magnifying the importance of stability and growth in these markets.
In South Africa, premium and super-premium volumes rose in the mid-teens, increasing AB InBev’s market share in both beer and “beyond beer” segments, the latter including brands such as Brutal Fruit and Redd’s. In Asia-Pacific, China was again the weak link. Volume and revenue declined amid a sluggish recovery in sales through bars, restaurants and other hospitality venues, compounded by increased government scrutiny of alcohol consumption in those settings. That said, the company is investing heavily to grow its presence in the off-premise channel — retail outlets such as supermarkets and liquor stores — where its market share is smaller than the industry average.
The long-term structural headwind for AB InBev — and the wider beer sector — is shifting consumer behaviour
Financially, AB InBev continues to make slow progress on its balance sheet. Free cash flow improved by $500m in the first half of 2025 compared to the previous year, helped by reduced interest expense, better working capital management and more disciplined capex.
Yet the dividend remains modest — yielding about 2% — making it underwhelming for income-seeking investors. Though the company has completed a $2bn share buyback programme, management has yet to commit to further buybacks despite what it calls “increased flexibility”.
From a valuation perspective, AB InBev trades at a forward p:e of about 16, which is undemanding relative to its historical norms. Though sales volumes have been flat, management has grown both ebitda and earnings through pricing power and efficiency gains, with underlying earnings rising 8.7% in dollars and 17.4% in constant currency in the second quarter.
The long-term structural headwind for AB InBev — and the wider beer sector — is shifting consumer behaviour. Younger legal-drinking-age consumers are drinking less beer overall and exploring new categories such as ready-to-drink cocktails, hard seltzers and nonalcoholic alternatives. AB InBev is responding. Nonalcoholic beer revenue jumped 33% in the second quarter, and the company now leads in seven of its 13 top nonalcoholic beer markets. According to the company, 65% of that volume came from new consumers and occasions, rather than cannibalisation of traditional beer sales.
That said, nonalcoholic beer and ready-to-drink products still account for a small slice of total turnover. AB InBev doesn’t provide an exact percentage, but it’s estimated to be in the single digits. Whether this segment can scale meaningfully to offset volume pressure in core categories remains an open question. CEO Doukeris remains optimistic: “We are uniquely positioned to drive engagement across all categories,” he said, highlighting upcoming global events such as the Winter Olympics and the 2026 Fifa World Cup, which are expected to lift brand visibility and generate new drinking occasions.
In summary, AB InBev is navigating a complex and uneven landscape. It remains a powerful global franchise with unrivalled brand strength and distribution reach. Its commitment to premiumisation, innovation and digital transformation is yielding results. But the structural challenges are real: stagnant beer consumption in developed markets; underperformance in China; and lingering brand damage in the US, combined with a still-heavy debt load and a dividend that’s hardly compelling.
Investors hoping for a rerating might have to be patient. While AB InBev is guiding for 4%-8% ebitda growth this year, it acknowledges that volume growth is off the table in the near term. For now, its focus remains on extracting more profit from less beer. Whether that strategy proves sustainable will determine the next chapter in the AB InBev story.
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