A-B: Too Much Too Fast?

Distributors express concerns in analyst survey.

As Anheuser-Busch brings crafts and imports into its portfolio and pushes out dozens of new products, distributors are concerned that it's getting distracted and losing focus on its core brands.

That's one of the findings in Citigroup's proprietary survey of beer wholesalers, published in a report on Thursday by analyst Bonnie Herzog.

To be sure, wholesalers (and Herzog) think A-B is right to try new things. The concern is over whether it's going about it in the right way.

From the report:

"While overall wholesaler sentiment is positive about the longer-term impact of A-B's strategy, there is frustration around the lack of growth of the core brands and the overall feeling that A-B is trying to do too much and as one survey participant commented that 'they are letting things fall through the cracks."

Elsewhere, Herzog writes:

"...we have concerns that (A-B) may be losing focus in the process and eventually this could negatively impact the company's future earnings given that the trademark brands make up over 65% of A-B's domestic beer volumes."

In the report, Herzog lowers her 2008 earnings per share estimate by five cents to $3.06.

Herzog's report dovetails with observations by beer industry trade magazines that A-B may be experiencing clogs in its "funnel strategy" of bringing higher-margin brands to its distributors. Click here to see previous Brew Blog coverage on that subject.