Solving the most complex strategic problems of the world largest FMCG companies.
Strategy | Organic Growth | Digital Route-To-Market - Ecommerce, DTC, EB2B | M&A
Good example of using price to manage up cash margin in a declining market:
- Base line of declining volumes
- Falling cash margin
- Raise prices, accept a little extra volume loss
- Cash margin fall less
There’s a price elasticity (as analysts reference) but still price rise best way to mitigate declining cash margin from underlying volume loss; a bit more volume loss is best option given huge benefit to margin. We see here: Volume and mix -2%; Price +5%; Organic sales +2%; Margin 56% +2%tge points, I.e.: 2% Cash margin improvement despite falling volumes. Expect brand premiumization, new packs, higher prices overall now in declining beer category. Use price-up to manage cash margin positive in a declining market.
Solving the most complex strategic problems of the world largest FMCG companies.
Strategy | Organic Growth | Digital Route-To-Market - Ecommerce, DTC, EB2B | M&A
AB InBev: 𝐩𝐫𝐢𝐜𝐞 𝐞𝐥𝐚𝐬𝐭𝐢𝐜𝐢𝐭𝐲, 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐨𝐧 𝐟𝐫𝐨𝐦 𝐜𝐡𝐞𝐚𝐩𝐞𝐫 𝐜𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐨𝐫𝐬 & 𝐜𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 𝐢𝐧 𝐂𝐡𝐢𝐧𝐚 𝐰𝐞𝐢𝐠𝐡𝐭 𝐢𝐧 𝐫𝐞𝐬𝐮𝐥𝐭𝐬
Three key drivers for missed top-line we heard a lot during this Q3 earnings season & that explain ABI top-line miss for Q3
Stock price lost 5% since announcement this week and 50% since its 2016 peak post the SAB-Miller acquisition
BEES (ABI EB2B) continues to fly & increasingly display promising optionalities
𝐄𝐱𝐜𝐢𝐭𝐢𝐧𝐠 𝐭𝐢𝐦𝐞𝐬 𝐟𝐨𝐫 𝐀𝐁𝐈
More details:
ABI Q3 FY24 results summary:
- NR: $15Bn
- OSG: 2.1%; Volume/Mix: -2.4%; Price: 4.5%
- GM%: 55.6%; +183 bps vs Q3 FY23
- Adj OI%: 27.2%; +171 bps vs Q3 FY23
Results by divisions:
- North America: NR: $3.9Bn, OSG: 1.5%; Volume/Mix: -0.4%; Price: 1.9% Adj. OI%: 35.1%; +363 Bps vs Q3 FY23
- Middle Americas: NR: $4.1Bn, OSG: 1.9%; Volume/Mix: -2.2%; Price: 4.1% Adj. OI%: 50.4%; +343 Bps vs Q3 FY23
- South Americas: NR: $2.9Bn, OSG: 5.6%; Volume/Mix: -0.6%; Price: 6.2% Adj. OI%: 31.0%; +156 Bps vs Q3 FY23
- EMEA: NR: $2.3Bn, OSG: 8.2% Volume/Mix: 2.7%; Price: 5.5%, Adj. OI% 33.2%; +80 Bps vs Q3 FY23
- Asia Pacific: NR $1.7Bn, OSG: -9.5%; Volume/Mix: -11.4%; Price: 1.9% Adj. OI%: 29.8%; -213 Bps vs Q3 FY23
- Global Export & Holding Companies: NR: $0.1Bn, OSG: 2.3%; Volume/Mix: -20.5%; Price: 22.8%
Bees:
- GMV: $12.1Bn (+14% vs Q3 FY23)
- # of orders: 9.5M (+31 vs Q3 FY23)
- 72% of ABI’s revenue is from eB2B
- $0.6Bn of sales captured from 3P sales (+51% vs Q3 FY23)
- Live in 28 markets
𝗧𝗼 𝗴𝗲𝘁 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀, 𝗳𝗼𝗹𝗹𝗼𝘄 𝘂𝘀 & 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗙𝗠𝗖𝗚 𝗖𝗘𝗢 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿: https://lnkd.in/ea4gy65y
𝗔𝗯𝗼𝘂𝘁 𝘂𝘀:
FF&A solves the most complex strategic problems of the world largest FMCG companies across Corporate Strategy, Organic Growth, Digital RTM (Ecommerce, DTC, EB2B) and M&A. 14 out of the world 20 largest FMCG companies are repeat Clients (more on FF&A website: https://lnkd.in/dc6jY4Qp)
https://lnkd.in/g8XYybMA
Solving the most complex strategic problems of the world largest FMCG companies.
Strategy | Organic Growth | Digital Route-To-Market - Ecommerce, DTC, EB2B | M&A
The US Beer industry landscape is changing fast. AB InBev's North America Normalized EBIT declined by over $1.3 B from 2022 to 2023.
The volume market share decline (relative to Molson Coors Beverage Company and Constellation Brands) contributed to that EBIT decline by an amount of $400 Million.
It has not helped that overall volumes between these three major players has declined by over 4%. It's a general sign of the headwinds facing the beer category as shopper and consumer preferences shift. For #ABInBev, that overall market decline cost them another $200M.
A just less than 4% increase in Net Pricing contributed a +ve $560Million to the Normalized EBIT change, but was insufficient to mitigate the increased inflationary unit costs associated with Cost of Sales and the de-leveraging of other SG&A operating expenses.
It will be interesting to track how these components of EBIT will change for 2024, given growth constraints associated with market share gains and price increase ceilings. Looks like some drastic OPEX cuts might be the only short-term remedy for now as AB InBev looks to rebuild brand equity and volume share.
Send me a DM or write "send" in the comments section and I will forward you the document that also contains the related MVA operating breakdown for #MolsonCoors and #ConstellationBrands.
It's interesting to see how and to what extent Molson Coors and Constellation Brands benefited from AB InBev's headwinds. You will also see why Constellation Brands might be the longer term winner here.
#Beerindustry#beercategory#beerdistribution#Heineken#BeverageAlcohol#Asahi#Carlsberg#BostonBeer#beer#beverages#BudLight#MillerLite#CoorsLight#Corona#ModeloEspecial
The Boston Beer Company shares fell over 15% on Wednesday after the brewer disappointed with fourth-quarter results.
Losses jumped to US$18.1 million over the final three months of the year, from US$11.4 million a year earlier, the group reported on Tuesday, increasing from US$0.93 to $1.49 on a per share basis.
Analysts had been expecting the figure to narrow meanwhile, forecasting losses of US$4.4 million for the quarter, or US$0.29 a share.
This was as shipments retracted by 12.2% to roughly 1.5 million barrels, which pushed revenue 12% lower to $417.4 million.
Such drop reflected a wider fall in demand, the company said, with depletions, which tracks sales by distributors to retailers, declining by 9%.
More at #Proactive#ProactiveInvestorshttp://ow.ly/zRh2105k2Fh
Constellation Brands forecast annual profit above Wall Street expectations on Thursday, banking on resilient demand for its core beer brands despite sticky inflation. Demand across the company's beer brands like Modelo Especial and Pacifico remained strong as consumers stretched their budgets even though living expenses persistently rise. Constellation expects annual comparable…
Solving the most complex strategic problems of the world largest FMCG companies.
Strategy | Organic Growth | Digital Route-To-Market - Ecommerce, DTC, EB2B | M&A
Coca-Cola HBC: Exceeding top-line expectations, raising top-/bottom-line guidance for the year & stock price performing YTD in top decile vs. peers (top 50 listed FMCG companies)
• Some would remember the slight bottom-line miss that triggered a 2% decline on stock price last week
• Some others (like us) will retain the strong top-/bottom-line performance, especially the strong volume growth (+3% in a +>10% pricing context), in a challenging environment (especially considering the CCHBC footprint) that translated into a +17% stock price YTD (top decile performance within the top 50 FMCG companies)
Most FMCG companies would objectively envy those results
Exciting quarters ahead for CCHBC
“This has been a strong first half of the year, even as we navigated challenging environments in several markets. Focused execution behind our 24/7 portfolio drove organic revenue growth of 13.6%. Supported by continued targeted investment, we have delivered organic volume growth across each of our strategic priority categories of Sparkling, Energy and Coffee, and further increased our value share in NARTD”
Zoran Bogdanovic, Chief Executive Officer
Full details below:
H1 FY24
• NR: $5661m (€5,175.6m)
• OSG: +13.6% (Volume: +3.1%; Pricing/mix: +10.5%)
• GM%: 36.1%; +104bps vs H1 FY23
• Comparable EBIT%: 10.9%; -30bps vs H1 FY23
Analyst Consensus (Q2 2024):
• Beats analyst consensus for revenue but misses EPS
FY 2024 Outlook/ Guidance: Raised:
• Organic revenue growth: 8% to 12% (previously set at mid-term target range of 6-7%) [Raised]
• Organic EBIT growth: 7% to 12% (previously +3% to +9%) [Raised]
𝗔𝗯𝗼𝘂𝘁 𝘂𝘀:
FF&A solves the most complex strategic problems of the world largest FMCG companies across Corporate Strategy, Organic Growth, Digital RTM (Ecommerce, DTC and EB2B) and M&A. 14 out of the world 20 largest FMCG companies are repeat Clients
To read our last publication on how to accelerate organic (volume) growth:
𝗙𝗠𝗖𝗚 𝗖𝗘𝗢𝘀: 𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗙𝗶𝗻𝗮𝗹𝗹𝘆 𝗙𝗼𝗿 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 (𝗩𝗼𝗹𝘂𝗺𝗲) 𝗚𝗿𝗼𝘄𝘁𝗵 𝗢𝗿 𝗛𝗼𝘄 𝗧𝗼 𝗦𝘁𝗼𝗽 𝗦𝗵𝗿𝗶𝗻𝗸𝗶𝗻𝗴 𝗧𝗼 𝗚𝗹𝗼𝗿𝘆 - 𝗙𝗿𝗼𝗺 𝗭𝗕𝗕 𝘁𝗼 𝗭𝗕𝗚® (𝗭𝗲𝗿𝗼-𝗕𝗮𝘀𝗲𝗱-𝗚𝗿𝗼𝘄𝘁𝗵)
https://lnkd.in/eV5d39VE
𝗧𝗼 𝗴𝗲𝘁 𝗮𝗹𝗹 𝗼𝘂𝗿 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀, 𝗳𝗼𝗹𝗹𝗼𝘄 𝘂𝘀 & 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗯𝗲 𝘁𝗼 𝗼𝘂𝗿 𝗙𝗠𝗖𝗚 𝗖𝗘𝗢 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀 𝗻𝗲𝘄𝘀𝗹𝗲𝘁𝘁𝗲𝗿: https://lnkd.in/ea4gy65y#fmcg#cpgThe Coca-Cola CompanyCoca-Cola Europacific PartnersPepsiCoCoca-Cola FEMSAThe HEINEKEN CompanyCarlsberg GroupAsahi Europe & InternationalDiageoPernod RicardProcter & GambleMondelēz InternationalJDE Peet'sDanoneKeurig Dr Pepper Inc.https://lnkd.in/eHgrSP_T
A slump in confidence and demand in China has hit the sale of beer at two of the world’s largest brewers.
Anheuser-Busch InBev NV and Carlsberg A/S both reported a decline in volumes that was worse than expected as cautious Chinese drinkers cut back on spending. Further slowdowns in consumption in Argentina and a continued weak consumer environment in the US, one of the largest beer markets in the world, didn’t help either.
AB InBev, the maker of Stella Artois and Budweiser, said volumes dropped 2.4% in the third quarter, more than was estimated by an analysts consensus compiled by Bloomberg. Denmark’s Carlsberg said organic volumes fell 0.2%, which it blamed on damper sales in Western Europe and Asia.
Shares of AB InBev fell as much as 5% in early trading, with not even a $2 billion buyback that was double what analysts expected boosting the stock. Carlsberg’s shares rose as much as 2.9% in local trading, buoyed by the fact that its volume drop in China was less than its bigger rival and it maintained guidance. Both companies’ shares are still down this year and are underperforming the Stoxx 600 Index.
Consumer companies are grappling with customers in many markets globally reaching their spending limits and cutting back, after a period of high inflation left them feeling the pinch. In China, an early surge in spending that followed the ending of the world’s strictest Covid lockdowns has since dropped back significantly. This decline in Chinese demand is hurting a wide range of industries from luxury and consumer goods to mining.
In a bid to win back customers and lost market share, many consumer goods makers are finding they have to limit price increases where they can to ease pressure on consumers and increase advertising budgets.
Carlsberg said its marketing in China is targeted toward supermarkets to encourage consumers to buy beer to drink at home. “Bars and restaurants are suffering quite significantly in this downturn,” said Aarup-Andersen, who added that Carlsberg was still managing to grow market share in the mainland.
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We're seeing a positive trend in global markets, highlighted by several companies reporting significant success in the last quarter. Coca-Cola's recent report of organic revenue growth and raised sales guidance for the full year clearly indicates that consumer confidence and market conditions are on the rise.
Coca-Cola's recent performance showcases the importance of strategic leadership in achieving and sustaining growth. Let's seize this momentum and build strong, resilient teams that can thrive in an increasingly competitive global market.
#FMCG#CPG#TalentAcquisition#MarketGrowth
Have major CPG brands taken pricing too far?
Yesterday, beverage giant #CocaCola released its Q3 2024 earnings, beating Wall Street estimates and reaffirming the high-end of its guidance, despite global volume declines. Earlier this month, #PepsiCo similarly revealed more volume declines, following back-to-back quarters of declines in unit sales across its North American beverage and salty snack businesses.
For a deeper look at Coca-Cola's Q3 earning, clickthrough to read my latest FoodNavigator-USA article.
#Q3earnings#CPGbusiness#BeverageBusiness#FinancialResults#SoftDrinks
Strategic alliances in the food and beverage sector are formal partnerships between companies to combine resources, expertise, and market reach.
These collaborations advance SDGs and solve customer-centric issues. Smaller startups benefit from scale and routes to market, while larger players enhance their portfolios with new, relevant brands and cleaner products.
📊 Implications:
🚀 Innovation: Accelerate the development of clean, nutritious foods.
🌿 Sustainability: Implement sustainable practices at scale.
🤝 Shared Value: Create shared value across supply chains.
📈 Benefits:
⚖️ Equality: Provide opportunities for small startups and ensure fair market access.
🍎 Food Security: Expand access to nutritious and affordable food options.
♻️ Sustainability: Promote sustainable practices and reduce environmental impact.
💡 Solving Customer-Centric Issues:
🥗 Cleaner Portfolios: Offer healthier and more affordable sustainable product options.
🌐 Market Expansion: Reach new customer segments with innovative products.
💎 Value Creation: Enhance brand reputation and customer loyalty
Potential Partnerships:
🍸 Spirits & Premium Mixers (e.g., Diageo + Fever-Tree/ Double Dutch)
🍺 Beer & Non-Alcoholic Alternatives (e.g., AB InBev + Athletic Brewing)
🥤 Soft Drinks & Health Beverages (e.g., Coca-Cola + GT's Living Foods)
☕ Coffee & RTD Beverages (e.g., Starbucks + La Colombe)
🥜 Snacks & Plant-Based Foods (e.g., PepsiCo + Beyond Meat biltong/ jerky)
🍗 Plant-Based Chicken & Fast Food Chains (e.g., TiNDLE + McDonald's)
Mobilising Actions:
C-Suite:
🔍 Identify Partners: Align with partners that support SDG goals.
🧪 Focus on sustainable and nutritious products.
📊 Impact frameworks to measure and report on sustainability impacts.
📉 Strategic Pricing: Develop pricing strategies to make sustainable products affordable.
Policymakers:
🏆 Offer incentives for sustainability-focused collaborations.
🧪 Regulatory Sandboxes: Facilitate innovation through flexible regulatory environments.
💰 Fair Pricing Regulations: Implement regulations to keep prices fair and competition healthy, avoiding monopolies and oligopolies.
⚖️ Regulations; mitigate the 'Us vs. Them' phenomenon in food choices that lead to social dis-ease.
Consumers:
💚 Support Responsible Brands: Choose brands that align with SDG goals.
🔍 Demand Transparency: Seek transparency/ accountability or vote with your feet.
💵 Affordability: Advocate for affordable pricing of sustainable products.
By strategically pursuing these alliances, companies can address pricing, cost, and food security issues across multiple audiences and cultures while accelerating progress toward a more equitable and sustainable food system.
What are your thoughts on the future of strategic alliances in food and beverage? How do you see them evolving?
by Andrew Soteriou
#StrategicAlliances#FoodAndBeverage#Sustainability#SDGs#GoodGrowth
Danish brewer Carlsberg Group is set to acquire UK-based soft drinks maker Britvic plc for £3.3 billion ($4.2 billion). This strategic move marks a significant shift in the global beverage landscape, with far-reaching implications for leadership, trade partners, and consumers.
🕒 2 Minute Briefing:
• Carlsberg's offer of 1,315 pence per share won Britvic's approval.
• Creates Carlsberg Britvic, spanning alcoholic and non-alcoholic categories.
• Britvic's portfolio includes Robinsons, Tango, J2O, and licensed PepsiCo brands.
📊 Implications for C-Suite:
1. Portfolio Diversification: Access to growing non-alcoholic market.
2. Synergy Realisation: £100 million annual cost savings over 5 years.
3. Enhanced Growth: Strengthened position in Western Europe.
4. Strategic Partnerships: Reinforced PepsiCo relationship.
🏪 Trade Partner Considerations:
1. Larger Brand Portfolio: Broad offering across categories.
2. Supply Chain Optimisation: More efficient distribution.
3. Innovation Pipeline: Accelerated product development.
👥 Consumer Impact:
1. Short-term Stability: No immediate changes expected.
2. Future Innovations: Potential for cross-category innovation.
3. Pricing: Potential consumer/ trade squeeze on pricing in the future.
4. Loyalty: Careful brand identity management needed
💰 Pricing and Consolidation Implications:
• Increased pricing power across categories.
• Cost savings may not translate to lower consumer prices.
• Potential reduced competition in certain product categories.
• Greater leverage in retailer negotiations.
• Accelerated product innovations may justify premium pricing.
• Long-term consolidation may lead to gradual price increases.
This consolidation highlights the trend of market concentration in CPG, with potential long-term implications for competition, pricing dynamics and consumer choice in the UK beverage market.
#Strategy#Beverages#MergersAndAcquisitions#CPGStrategy#Consumer#Brands#Competitiveness#CostOfLiving#Pricing#Inflation#PurchasingPower#RevenueGrowth
Citations:
[1] https://lnkd.in/ea_MvuHj
[2] https://lnkd.in/egWUmJGV
[3] https://lnkd.in/ewKFMKZc
[4] https://lnkd.in/eKSfBYfs
Ex-Partner: OC&C, S&, Accenture, Prophet. Senior Advisor - Strategy, PE VCP - Pricing, Go-To-Market, Analytics
1moGood example of using price to manage up cash margin in a declining market: - Base line of declining volumes - Falling cash margin - Raise prices, accept a little extra volume loss - Cash margin fall less There’s a price elasticity (as analysts reference) but still price rise best way to mitigate declining cash margin from underlying volume loss; a bit more volume loss is best option given huge benefit to margin. We see here: Volume and mix -2%; Price +5%; Organic sales +2%; Margin 56% +2%tge points, I.e.: 2% Cash margin improvement despite falling volumes. Expect brand premiumization, new packs, higher prices overall now in declining beer category. Use price-up to manage cash margin positive in a declining market.