Anheuser-Busch announced today that shipments were up 2% in 2007 over the previous year. While the news is presumably good for shareholders, it’s not exactly all that different from recent years when increases have been meager at best.
From the press release:
“Anheuser-Busch achieved increased shipments in 2007 due to the success of our initiatives to broaden the company’s beer portfolio, including the addition of InBev European brands,” said Busch. Wholesaler sales-to-retailers grew 1.3 percent for the full year. Acquired and import brands contributed 170 basis points of growth to shipments and 160 points to wholesaler sales-to-retailers for the full year.
For the fourth quarter 2007 wholesaler sales-to-retailers were up 1.3 percent, on a selling day adjusted basis. The fourth quarter of 2007 had one more selling day than the fourth quarter of 2006. U.S. beer shipments to wholesalers increased 3.4 percent in the same timeframe. Shipments to wholesalers are not selling day adjusted. Import brands contributed 230 basis points of growth to shipments and 180 points of growth to wholesaler sales-to-retailers for the quarter. Wholesaler inventories at year-end were approximately the same as year-end 2006.
“Our expanded beer portfolio along with our enhanced marketing and sales strategies to accelerate core beer sales position Anheuser-Busch for growth in volume and earnings in 2008,” concluded Busch.
Anheuser-Busch Cos., Inc. will announce worldwide beer volume and consolidated earnings results for the fourth quarter and full year 2007 on Jan. 31, 2008.
I’m no economist, but I confess I read economics as a hobby, and the fact that the press release keeps switching between percentages and basis points (which are 100ths of a percentage, e.g. 150 basis points = 1.5%) seems to me like they’re engaging in a bit of prestidigitation. Maybe that is standard practice, I don’t know. But just in case, let’s look at the first paragraph. “Wholesaler sales-to-retailers grew 1.3 percent” and “import brands contributed … 160 points to wholesaler sales-to-retailers.” So unless I’m mis-reading it, doesn’t that mean if imports made up 1.6%, then other products — which would have to be domestic beer, the core brands — fell by 0.3% or 30 basis points? Because if imports “contributed” more than the total, wouldn’t that have to mean the rest of the percentage came from somewhere else?
Similarly, in the next paragraph it is stated that “beer shipments to wholesalers increased 3.4 percent” and “[i]mport brands contributed 230 basis points of growth to shipments.” That would also seem to suggest that domestic beer only increased 1.1%, wouldn’t it? That would seem to contradict Busch’s statement that these numbers would cause one to “conclude” core brands will likely grow “in volume and earnings in 2008.”
Maybe I’m nitpicking, but there is a fishy looking codicil below the press release that begins:
This release contains forward-looking statements regarding the company’s expectations concerning its future operations, earnings and prospects. On the date the forward-looking statements are made, the statements represent the company’s expectations, but the company’s expectations concerning its future operations, earnings and prospects may change. The company’s expectations involve risks and uncertainties (both favorable and unfavorable) and are based on many assumptions that the company believes to be reasonable, but such assumptions may ultimately prove to be inaccurate or incomplete, in whole or in part. Accordingly, there can be no assurances that the company’s expectations and the forward-looking statements will be correct.
And that’s only about 20% (or 200 basis points) worth of the qualifying fine print. It goes on and on in soporific legalese that no one will bother to read, except perhaps the most anal-retentive among us — yes, that means me, dear readers. But what that whole exercise boils down to is this. We think we’re going to do great in 2008 … unless we don’t. Please buy or hold on to your A-B stock because 2008’s going to be great year … unless it isn’t. The political punditry calls it spin, but there are unkinder words for what it really is.
UPDATE 1.8: As if you needed more proof that framing, spin and propaganda works, the next day’s St. Louis Post-Dispatch reported that “[i]nvestors reacted happily to Anheuser-Busch Cos.’ announcement Monday that its beer shipments increased last year and in the most-recent quarter. Shares of the country’s biggest brewer soared nearly 5 percent, their steepest climb in more than 20 months, despite slow growth among the company’s trademark beers.” See, nobody, especially the business press, bothers to check the math or read the fine print.