FIFA World Cup 2022, Beer, and the Metaverse, Through the Lens of 'Market Discounts Everything'

“Drinkin' beer out on the lake
In a big ol' boat, kickin' up a wake
It's a good day to be anywhere drinkin' beer”

What is more important than football in a World Cup? Beer. According to a study, for many fans, alcohol is part of the social occasion of attending or watching a match. Even FIFA secretary general Jérôme Valcke once said that

Alcoholic drinks are part of the FIFA World Cup.

In terms of statistics, in June 2014 around 9.7 million hectoliters of beer were sold in Germany (14% Yoy) thanks to the World Cup tournament.

It's Just Business

The main beneficiaries of the high correlation between football and beer are manufacturers themselves. Thanks to the World Cup, AB InBev's Q2 2018 revenue rose 4.7 percent to $14.01 billion. Operating profit rose 7.0 percent on a like-for-like basis to $5.57 billion against the average forecast of $5.49 billion by analysts polled by Reuters. No surprise, Heineken continues to support Euro Cup.

An unexpected turn

The other day it became known that beer and other alcoholic beverages will not be sold in the stadiums of the FIFA World Cup 2022 in Qatar. In order to get a drink fans would need to go to a disused corner of the Doha Golf Club, some kilometers away from stadiums and the main fan zone.

It is worth adding that fans of soccer will not be able to buy alcohol in local liquor stores. What the situation will look like in reality - it's hard to say.

A curious fact, in March of this year there were reports suggesting that AB InBev was trying to pressure the Qatari government to lift the ban on public consumption of alcohol. By the way, in 2014, the company succeeded in achieving its goal at the World Cup in Brazil.

This time the mission turned out to be impossible.

Even Ethan Hunt (Tom Cruise) wouldn’t be able to help on this one.

Digital steps

A case with a World Cup in Qatar, as well as the coronavirus pandemic, could motivate Anheuser-Busch InBev to accelerate its digital transformation.

On top of the B2B investments, the company has already implemented a blockchain solution that allows tracing the production process.

As for the metaverse, the brand partnered with the ZED RUN platform and offered exclusive NFTs to users. Who knows, maybe one day the company will start accepting cryptocurrencies.

To fall or not to fall…in line

Despite the headwinds, including Qatar policy, rising inflation, as well risks of yet another recession, AB InBev’s shares increased by over 11% over the last month.

Moreover, the company is expected to report solid Q2 results.

Analysts at Deutsche Bank even set a price target of €73 for the ABI. The falling EURUSD rate could also help.

On June 10, Fitch Ratings affirmed the long-term rating of BBB. The agency expects its net debt to EBITDA ratio to fall below 3.5x by the end of 2023 due to solid earnings growth as well as a conservative financial policy. Despite the inflationary environment, Fitch expects AB InBev to maintain its strong free cash flow margins in the high single digits.

Final remarks

The fact that fans will not be allowed to consume alcoholic beverages in stadiums in Qatar could impact AB InBev’s quarter results.

The good news is that the market has already discounted it.

Looking forward, the company's management forecasts will play a crucial role in the stock sentiment. Also, it would be interesting to learn about AB InBev’s initiatives in terms of digital transformation, precisely, the implementation of blockchain and possibly cryptocurrencies.