The third quarter results for the world’s big brewers are being reported this month in the financial press, and while you might think that declining sales – which almost all of them have experienced, at least in their traditional markets – might translate into decreased profits, or even losses, well, you’d be dead wrong!
- Denver-based Molson Coors overcame a decline in world-wide beer volume to post an 8.8% rise in earnings, as revenue increased for the fourth consecutive quarter from year-earlier levels. (Courtesy of the Wall Street Journal)
- Two years after its ill-timed takeover of Budweiser, the Brazilian-Belgian beer giant is taking on its own customers, gambling that U.S. beer drinkers will swallow above-inflation price increases despite the sluggish economic recovery. AB InBev’s expectation-beating third quarter results suggest that bet may be paying off. (Thanks again WSJ)
- Still, earnings for big beer look better than revenue, said the report. MillerCoors said Wednesday that net income for the third quarter, excluding special items, actually increased, 37%, to $334 million, thanks to cost cutting and price increases. (Credit this time to CSPNet.com)
Yes, you read that right. Demand is down, which if I remember my university economics is supposed to mean that prices are also supposed to drop in order to stimulate sales. But instead, the big brewers are raising prices to the point that rather than having merely a mitigating effect on their revenue stream, it is actually increasing profits.
Or in other words, AB InBev and SAB Miller and Molson Coors are gambling that their North American customers are dupes, and the bet is paying off. Suckers!