Global Beer Leader Trading Below Intrinsic Value as Premiumization Offsets Volume Headwinds

Anheuser-Busch InBev SA/NV (BUD) is the world's largest brewer, producing and distributing beer and other malt beverages across more than 150 countries. The company operates through a portfolio of over 500 beer brands, including global flagships Budweiser, Corona, and Stella Artois; multi-country brands like Beck's, Leffe, and Hoegaarden; and local champions such as Modelo, Michelob Ultra, Brahma, Skol, and Antarctica.

How It Makes Money: BUD generates revenue through the production, marketing, and distribution of beer and adjacent beverages. The company operates a vertically integrated model in many markets, owning breweries, distribution networks, and in some cases, retail relationships. Revenue is split roughly 50/50 between developed and emerging markets, with North America, Latin America, and EMEA each contributing approximately 30-35% of EBITDA.

Customers: BUD's primary customers are wholesalers, retailers (supermarkets, convenience stores, liquor stores), and on-premise establishments (bars, restaurants, stadiums). The company has significant pricing power in most markets due to the strength of its brand portfolio and the scale of its distribution network.

Scale: With trailing twelve-month revenue of approximately $58-60B and EBITDA of $19-20B, BUD is roughly 2x the size of its nearest competitor, Heineken. The company brews approximately 500 million hectoliters annually and employs over 150,000 people globally. Its market cap of $145.9B makes it one of the largest consumer staples companies in the world.

Near-Term (FY2026-FY2027): We expect revenue growth of 3-4% annually, driven primarily by premiumization and modest price/mix improvement rather than volume growth. Volume is likely to remain flat to slightly negative in North America and Europe, offset by low-single-digit growth in emerging markets. EBITDA margins should expand 50-100 basis points annually as premium mix improves and cost efficiencies from the company's "Smart Drinking" and supply chain optimization programs take hold. EPS growth should outpace revenue growth due to deleveraging and share buybacks, reaching $5.00-5.20 by FY2027.

Medium-Term (FY2028-FY2030): We see potential for accelerated growth as emerging market volumes recover and the premiumization trend extends into new categories. BUD's investments in hard seltzers, non-alcoholic beers (Corona Cero, Budweiser Zero), and ready-to-drink cocktails position it to capture share in adjacent categories. Additionally, the company's B2B digital platform (BEES) now serves over 3 million customers and is improving route-to-market efficiency in emerging markets. We model revenue growth accelerating to 4-5% and EBITDA margins reaching 37-38% by FY2030, implying EPS of $6.00-6.50.

The financial trajectory is driven by three factors: (1) premiumization lifting revenue per hectoliter at 4-5% annually, (2) modest volume growth of 0-1% as emerging market recovery offsets developed market declines, and (3) deleveraging reducing interest expense by $300-500M annually. The combination produces mid-to-high single-digit EPS growth despite low-single-digit revenue growth, a dynamic that should support multiple expansion as the market recognizes the quality of these earnings.

Market Size/TAM: The global beer market is estimated at approximately $700-750B in retail sales value, with BUD capturing roughly 25-30% of the global profit pool. The broader alcoholic beverage market, including spirits and wine, exceeds $1.5 trillion. Beer volumes have been flat globally for the past decade, but value has grown at 3-4% annually due to premiumization.

Competitive Positioning: BUD is the undisputed global leader in beer, with roughly twice the volume of Heineken and significantly more than Carlsberg or Molson Coors. The company's scale advantages in procurement, distribution, and marketing are substantial and difficult to replicate. However, the competitive landscape is evolving: craft brewers continue to take share in developed markets, and spirits have gained share of total alcohol consumption, particularly among younger consumers.

Named Comparables:

• Heineken N.V. (HEIA.AS): The closest global competitor, with strong positions in Europe, Africa, and Asia. Trades at ~16-18x earnings, similar to BUD.
• Carlsberg A/S (CARL-B.CO): Smaller, more Europe-focused brewer with a growing presence in Asia. Trades at ~15-17x earnings.
• Molson Coors Beverage Company (TAP): Primarily North America-focused, with a smaller international footprint. Trades at ~10-12x earnings, reflecting slower growth.
• Constellation Brands (STZ): Primarily a wine and spirits company but owns the Modelo and Corona brands in the U.S. through a perpetual license. Trades at ~18-20x earnings.

DCF Analysis: We employ a two-stage discounted cash flow model with a weighted average cost of capital (WACC) of 7.5% — reflecting BUD's low beta (0.78), investment-grade credit rating, and stable cash flows — and a terminal growth rate of 2.5%. Our explicit forecast period runs through FY2035, with free cash flow growing from approximately $10B in FY2025 to $15B by FY2035. This produces an enterprise value of approximately $210-220B, or an equity value of $160-170B. After adjusting for net debt of ~$70B, we arrive at an intrinsic value of $88-95 per share, suggesting the stock is undervalued by 19-28% at the current price of $73.98.

Comparable Company Multiples:

BUD trades roughly in line with its peer average on both P/E and EV/EBITDA, but we believe it deserves a premium multiple given its superior scale, geographic diversification, and deleveraging story. Applying a 17-18x P/E multiple to our FY2027 EPS estimate of $5.35 yields a price target of $91-96, consistent with our DCF analysis.

• Volume Declines in Developed Markets: Beer consumption in North America and Europe has been declining at 1-2% annually for the past decade, and this trend could accelerate due to changing consumer preferences, health consciousness, and competition from spirits and non-alcoholic alternatives. A faster-than-expected decline would pressure revenue and margin expansion.

• Emerging Market Volatility: Approximately 40% of BUD's volume comes from emerging markets, exposing the company to currency fluctuations, political instability, and macroeconomic shocks. A severe recession in Brazil, Mexico, or South Africa could significantly impact earnings.

• Regulatory and Tax Risks: Beer is a heavily regulated product, and governments frequently increase excise taxes or impose advertising restrictions. Scotland's minimum unit pricing and Ireland's alcohol advertising ban are recent examples. Further regulation could dampen consumption and increase compliance costs.

• Currency Headwinds: BUD reports in USD but generates a significant portion of revenue in other currencies. A strengthening dollar reduces reported revenue and earnings, as seen in recent quarters. Sustained dollar strength could offset underlying operational improvements.

• Competitive Pressure from Craft and Spirits: The craft beer movement and the rise of spirits-based ready-to-drink cocktails have taken share from traditional beer. While BUD has responded with its own craft and premium offerings, the competitive landscape is more fragmented and challenging than in the past.