Two major players in the beer industry — Anheuser-Busch InBev SA and Heineken NV — are likely to be affected by this, too.
Morgan Stanley analysts, led by Sarah Simon, indicated that there’s a possibility third-quarter sales in Latin America may fall below expectations after A Seleção and El Tri were eliminated from the tournament on Sunday — effectively dampening hopes for a beer-drinking surge that might have occurred had they advanced to the July 19 final.
“We believe that the bulk of the beer volume increase stems from ‘deep run’ games,” the analysts noted in a message to clients.
They specified that AB InBev, known for brands like Corona and Skol, is the “most exposed,” given its significant sales in Mexico and Brazil, while Heineken also has noteworthy exposure.
On Monday, both companies’ shares fell, with AB InBev closing down more than 4% in Brussels and Heineken dropping 1.4% in Amsterdam.
Constellation Brands Inc. — responsible for distributing Corona and Modelo in the US — also ended the day down 4.9%, marking its lowest point since November 20. Boston Beer Co. and Molson Coors Beverage Co. similarly saw declines. Meanwhile, Ambev SA, a Brazilian branch of AB InBev, closed 2.5% lower in São Paulo.
Brazil was eliminated from the tournament by Norway, with Erling Haaland scoring two goals. This represents the first time Brazil has not reached the quarter-finals in a World Cup since 1990, when they were defeated by a Diego Maradona-led Argentina. Concurrently, Mexico lost to England in a thrilling five-goal match at Estadio Azteca in Mexico City.
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For Simon and her fellow analysts at Morgan Stanley, Brazil’s early exit is anticipated to have a more significant effect than Mexico’s, thanks to its larger beer market and greater expectations ahead of the World Cup.
“We perceive this negative impact mainly as a lack of additional growth that would have arisen had either team moved forward in the competition,” they expressed.
Attention now turns to the US national team, set to play against Belgium later on Monday. Approximately 20% of AB InBev’s revenue is generated in the US, where the team has performed well thus far, and they received a boost when striker Folarin Balogun was cleared to play after President Donald Trump intervened to have a penalty against him rescinded.
However, the extent to which this will compensate for lost beer sales in Latin America remains uncertain.
“Considering the country’s shorter football history, the benefits of deep runs for beer sales in the US are less well established and could yield unexpected positive results if the team continues to advance, particularly given the host-nation factor and the scale of the US beer market,” the Morgan Stanley analysts remarked.
