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REUTERS/Ricardo Moraes
Brazilian unemployment reaches into the double digits.
BREW BLUES

Brazilians can’t even afford to drink their problems away

Chase Purdy
By Chase Purdy

Food Reporter

Unemployment in Brazil has become so pernicious a problem that Brazilians are starting to see it reflected in the bottoms of their empty beer mugs.

Anheuser-Busch InBev, the global brewing giant with brands including Budweiser, Corona, and Stella Artois, said its beer sales by volume (pdf) dropped 10% in Brazil in the first quarter, versus the same period a year earlier. It put the blame squarely on a “very challenging macroeconomic environment.”

The plunge led a 1.4% decline in total global sales by volume across all AB InBev properties.

Economists have said they expect the Brazilian labor market to weaken even more in coming months, spurred on by the deterioration of consumer confidence and a thorny political scandal that threatens the ouster of president Dilma Rousseff.

But AB-InBev said in its earnings report that April sales trends were more encouraging, and it still anticipates net revenue in Brazil “to grow by mid to high single digits in the full year.” It didn’t specify why, and the company wasn’t immediately available to comment.

“I don’t know if I’m as optimistic as they are, but they did show some turnaround in the month beyond the reporting period,” said Linda Montag, an analyst at Moody’s. “This company has been operating in Brazil for a very long time, and we do expect volatility in emerging markets.”

Montag said AB InBev—which commands nearly 70% market share in Brazil—has been working to cut costs by using more returnable packaging. The upcoming Olympic games in Rio de Janeiro might also add a boost. Plus, as Montag notes, large companies oftentimes come out ahead after periods of tough economic times because they’re big enough to weather them.

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