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AmBev margins prove beer can defy inflation

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Brazilian beer giant AmBev is trading lower today after reporting somewhat softer than expected sales but stronger profit margins. This gives us a glimpse into how the brewers are dealing with rising commodity costs. In fact, ABV ( quote ) saw cost pressure from barley and other agricultural markets -- which have soared for many brewers -- ease significantly, letting its overall margins widen by 3 percentage points on a year-over-year basis. Furthermore, while traders are selling the stock today, the fact is that ABV still passed on its costs to consumers, who apparently remain eager to buy beer at any reasonable price. Sales are up 2% over the last 12 months. The beer trade is alive and well, and now that these companies have proved that they can operate profitably in the face of high commodity prices and still maintain their sales. Watch the other members of the beer group to see which ones are willing -- much less able -- to pass on their costs to beer drinkers: GPMCY ( quote ), TAP ( quote ), BUD ( quote ), SBMRY ( quote ), HINKY ( quote ), CABGY ( quote ). There will be winners and losers as the world's emerging markets decouple, with some facing worse inflationary choices than others. The brewers will likewise not all trade alike.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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