Heineken highligths a beer industry going stale

[mr x]

http://www.theglobeandmail.com/report-o ... le2140056/" onclick="window.open(this.href);return false;

A spine-tingling realisation hit investors on Wednesday -- the declining growth of alcoholic beverage makers appears to be here to stay.

Prompted by a 2 per cent drop in Heineken’s first-half earnings per share, investors took to the sector with a hatchet. Heineken’s share price fell 9 per cent, while Anheuser-Busch Inbev and Diageo each lost 2 per cent.

Heineken blamed poor weather and depressed consumer confidence for its bad showing. The problem is that these types of excuses -- impossible to prove or disprove -- have become too common across the industry. Investors may think the sector deserves another de-rating. The last one came with the financial crisis. Beverage groups’ shares moved from trading at between 18 and 22 times expected earnings to the current 9 to 15 times -- a drop more than half as steep again as the S&P 500.

Perennially optimistic chief executives tout their company’s credentials in higher-growth emerging markets, yet most are still failing to deliver growth in either volumes or organic earnings. The reason is simple: beer is still mainly sold in developed markets. For the big four global brewers (Heineken, AB InBev, SABMiller, and Carlsberg), which account for about half of all global sales, about three-fifths of their beer is sold in rich regions.

Acquisitions and consolidation in the sector have not significantly changed the mix. Over the past five years, brewers have completed about $228-billion worth of mergers and acquisitions globally, according to Mergermarket. Three-quarters of that was spent in the developed markets of the U.S. and Europe. Even excluding the $59-billion merger between Anheuser-Busch and Inbev, the proportion is two-thirds. Investors have lived on hopes for too long. Their best strategy may be to wait until the beverage makers start to deliver. That may take some time.

[Tony L]

Just watch. They`ll come for the home brewers now. That`s the reason for their profit decline.
Not that the makers of great beer ( craft ) would have anything to do with it.