Why The Coronavirus Could Hurt Budweiser Beer

Sales for Anheuser-Busch InBev (BUD) could soon run dry in China as the coronavirus epidemic grips the country.

China comprises about 9% of Anheuser-Busch Inbev’s estimated $55 billion in annual sales this year, points out veteran beverage analyst Laurent Grandet of Guggenheim in a new note to clients. With the country at a virtual standstill — and no signs of economic activity picking up aggressively this month as coronavirus fears run rampant — demand for beer sales is likely to fall off a cliff.

At the same time, Budweiser’s cost base in China is likely to remain high as it operates 33 facilities in China, including a brewery in Wuhan. Grandet notes Anheuser-Busch InBev is also building a new brewery for Corona in China, which he believes will supply the country and surrounding country with the Mexico-inspired beer brand.

The one-two punch of plunging sales and elevated costs in China could wallop Bud’s bottom line in the first half of 2020.

Anheusher-Busch InBev didn’t immediately return Yahoo Finance’s request for comment on the status of its China operations.

more on finance.yahoo.com