The two JSE-listed giants completely changing themselves for all to see

AB InBev and British American Tobacco must completely change their product offerings to better align with modern consumer needs.

The two JSE-listed companies are moving away from their traditional focus on beer and tobacco products, respectively, to offering a more diversified product mix.

AB InBev has pivoted towards offering alcohol-free alternatives to some of its most popular beer brands, such as Budweiser Zero, Corona Cero, and Stella Artois Liberté.

As the owner of South African Breweries, the company also sells Castle Free as an alcohol-free alternative to its flagship Castle Lager brand.

In its results for the second quarter of 2026, AB InBev reported total revenue growth of 5.6%, while its total volumes grew by 0.9%.

PSG Wealth Manager Ricus Reeders pointed to the company’s move towards becoming a more diversified beverage company as a key driver of this positive growth.

“If you look at the increase in sales in their non-alcoholic drinks, and obviously their premium beer products are still doing pretty well,” Reeders said.

“It remains a quality defensive play, which is not a bad place to be in an uncertain market environment. The results were decent, and I like the new avenues of growth.”

During the second quarter of 2026, AB InBev recorded a 27% increase in revenue from non-alcoholic beverages, despite a 1.1% decline in non-beer volumes.

Not all of AB InBev’s markets recorded positive growth, however, with its China market reporting a 9.7% volume decline.

The recent FIFA World Cup was seen as a boost to the company’s sales, with the brewer being appointed as the Official Beer Sponsor of the tournament.

Reeders pointed to Coca-Cola as another beverage company which has seen success after diversifying its product lineup, and said AB InBev should follow its lead.

“As I just mentioned with Anheuser’s move into a broader beverage or drinks company, it is that sector that is growing,” Reeders said.

“If you can diversify away from your traditional market and explore new avenues, as Coca-Cola is doing, you remain an excellent quality defensive company. The price move on those results bears witness to that.”

BAT goes smoke-free

Similar to AB InBev, British American Tobacco’s (BAT) move towards non-combustible product offerings has been seen as a positive step for the company’s growth.

Aside from the six cigarette brands the company sells in South Africa, it also offers vapour and nicotine pouch products through its Vuse and VELO brands, respectively.

In the company’s results for the first half of 2026, it reported that smokeless products now accounted for 19.8% of group revenue, while the number of consumers of these products grew to 35 million.

Nitrogen Fund Managers Managing Director Rowan Williams pointed to external factors which have driven BAT’s move away from traditional smoking products.

“There’s been a relaxation in the regulatory environment, the potential to get into a number of new markets where they are still somewhat regulated, and also clamping down on illicit alternative products,” Williams said.

“That all points to growth and diversification away from traditional tobacco to more of a consumer products business that has sustainable demand at reasonable margins.”

BAT’s diversification into smokeless products comes at a time when it has begun winding down its domestic cigarette production in South Africa.

The company announced in January that it would shutter its sole cigarette manufacturing facility in Heidelberg by the end of 2026, threatening 230 jobs.

The facility currently operates at just 35% of its total capacity, with the exponential growth of South Africa’s illicit cigarette trade directly contributing to volume losses.

It is estimated that the trade of illicit cigarettes accounts for as much as 75% of South Africa’s total cigarette market.

Despite this, Williams believes that continued diversification away from cigarettes and other traditional smoking products could serve the company well in the long term.

“As it diversifies away from its base, the quality of the earnings stream is much better and is getting a much higher rating as a result,” Williams said. “They have done a very good job of diversifying their income streams.”

BAT holds a secondary listing on the Johannesburg Stock Exchange, listing in 2008 as part of a restructuring that saw Remgro and Richemont spin off their 30.1% combined stake in the company.

AB InBev has also held a secondary listing on the JSE since January 2016, nine months before it acquired SABMiller, becoming the world’s largest beer company.