Conglomerate Altria Group (NYSE:MO) has a wider range of businesses than many people appreciate. Beyond its iconic Marlboro cigarette brand, Altria also makes Middleton cigars, Copenhagen smokeless tobacco, and wines under the Ste. Michelle Wine Estates corporate umbrella. In addition to all of its wholly owned subsidiaries, Altria also made headlines for its position in the beer industry, and the completion of the merger of SABMiller and Anheuser-Busch InBev (NYSE:BUD) has given the company a better-than-10% stake in Anheuser-Busch InBev going forward. Yet as important as the merger and Altria's ongoing position in A-B InBev are to the company, the beer business didn't contribute to profits in 2016, making it this year's winner for Altria's worst-performing segment.

Image source: Anheuser-Busch InBev.

How beer used to make Altria more money

Before the merger, Altria had owned its stake in SABMiller for a long time, and historically, it has been extremely profitable. Between 2011 and 2015, SABMiller added a total of $4.7 billion to Altria's pre-tax earnings, representing nearly a seventh of Altria's total. In 2012, which was a particularly good year, the beer company's contribution amounted to almost a fifth of the tobacco giant's pre-tax profit.

However, in 2016, SABMiller's results weren't as good. The year began slowly, with a $66 million contribution to earnings from SABMiller in the first quarter, which was just half of the previous year's period. Only as the year progressed did things speed up, with second-quarter earnings from the beer business stronger at $199 million, but that was still down from year-earlier levels. The third quarter showed the best performance, with profit of $299 million rising by more than $100 million from the corresponding 2015 figure.

Going forward, Anheuser-Busch InBev will make similar earnings contributions that show up in Altria's financials. However, with a one-quarter lag to take effect due to how the companies' reporting periods line up, what investors already know should be the final tally for 2016 -- meaning that beer will bring in just $564 million in pre-tax profit for Altria this year, or less than 7% of its total bottom line on a pre-tax basis.

What happened to big beer?

One issue has been the health of SABMiller financially. In its most recent fiscal year, SABMiller saw sales fall more than 10%, leading to a drop in profit of close to a fifth compared to the previous year. The company has done a good job of promoting organic growth, and sales volumes were strong throughout much of its global distribution area. Yet foreign currency weakness in many areas of the world held back the company's financial results, and various investments that the beer-maker had made in growth initiatives that didn't pan out as well as hoped led to impairment charges that weighed against SABMiller's profits.

Looking forward, Anheuser-Busch InBev has seen some mixed trends in its long-term performance that could affect Altria going forward. The beer giant steadily grew its earnings from 2010 to 2014, with a huge year in 2013 stemming from the fair-value adjustment of its Grupo Modelo stake. Yet in 2015, profits eased downward slightly. The 2016 fiscal year will be affected substantially by one-time charges related to the SABMiller merger, so Altria's share of those earnings will also suffer a short-term hit.

Will Altria's beer profits recover?

However, in the long run, Anheuser-Busch InBev is excited about its future growth prospects. The merger should open up new opportunities for cost savings, expansion into lucrative markets, and increases in efficiency that could all help boost profit. Investors currently expect profit at A-B InBev to bounce back in 2017, and likely recover all of its lost ground and then some by 2018.

As long as Anheuser-Busch InBev is successful, then Altria should continue to get a substantial portion of its profits from the beer industry. That will be good news for those who like the diversification that A-B InBev offers to Altria and its heavy exposure to the tobacco industry and its attendant challenges, and for those who were disappointed by beer's lackluster addition to Altria's performance in 2016.