What's going on?

AB InBev (ABI), the world�s largest beer brewer and owner of iconic brands Budweiser and Stella Artois, reported warm and weak earnings on Tuesday � and its stock sank 2%.

What does this mean?

ABI grew its first-quarter sales by 6% compared to the same time last year, thanks to higher prices for its malty goods and a greater number of units sold. However, it fell short of both sales and profit expectations � with currencies in emerging markets like Brazil and Argentina (ABI generates 40% of its revenue from Latin America) weakening against the US dollar partly to blame.


Amid the clouds, there were silver linings: AB InBev�s market share in the US shrank at the slowest pace in 25 years (as consumers picked up more craft beers) and its sales in Brazil grew by 17%, seemingly recovering from political disruptions.

Why should I care?

For markets: When in doubt, go public?

With sales and profit missing expectations, investors were focused on AB InBev�s roughly $100 billion of debt � which it acquired along with rival SABMiller in 2016. To reduce debt and avoid expensive �refinancing� down the road, ABI�s considering raising cash by selling shares in its Asian business to investors who�d then be able to trade them on the stock market. Some analysts estimate that business to be worth $50 billion (the whole company�s worth $142 billion). And the possibility has led some investors to chase ABI’s stock, which has already bubbled up this year.

The bigger picture: All eyes on China.

China remains key for beverage companies due to its sheer size, large young adult consumer base, and rising disposable income levels. If ABI�s Asian business does �go public�, a local listing may help the company find local partners � hot on the heels of rival Heineken�s strategic partnership with a Chinese beer producer. With Chinese consumers preferring to buy local brews over imported brands, partnerships may be the way to go in the world�s biggest beer market.