The King of Beers had mixed news for its annual shareholders meeting. Anheuser-Busch's (NYSE:BUD) net sales increased 2.5% compared with last year's first quarter. Excluding one-time gains, earnings per share declined 4.5% -- which the company attributed to volume declines and higher commodity costs.

Now for the details.

Domestic beer sales decreased 2.7%. Market share dropped half a point from Q1 2004's levels to 51.2% -- still a very regal level. But wholesalers' inventory was up slightly year over year, although levels were still below what they were at the end of 2004.

International beer volume increased 131%. Before hailing, "Hear, hear," realize that international beer volume declined 1.6% if you remove the 2.5 million barrels produced by Harbin Brewery, which Anheuser-Busch acquired in the third quarter of 2004.

The only frothy news came from international equity partners, which provided 13% of volume. Excluding the volume lost from the sale of Anheuser-Busch's stake in Compania Cercecerias Unida, volume increased here by 6.8%. Finally, cheers.

There was a 9.8% increase in sales in the company's two "other" operations, packaging and entertainment, which made up 18.2% of sales.

As fellow contributor Stephen Simpson pointed out in early April, domestic beer consumption has been weak since 2003 -- when wine and spirits started to draw more interest. It will also be interesting to see whether Molson Coors (NYSE:TAP) can continue its positive growth numbers when it reports earnings tomorrow.

To regain its growth footing, Anheuser-Busch is innovating and looking internationally. The company expects earnings before special items to grow from $2.77 last year to between $2.78 and $2.85 this year. That's hardly stellar growth, and as Simpson pointed out, owner earnings have compounded at only 3.6% for the past three years.

The large investment made by Warren Buffett's Berkshire Hathaway (NYSE:BRKa) (NYSE:BRKb) has a lot of investors looking at Anheuser-Busch instead of wine at Constellation Brands (NYSE:STZ) or spirits at Diageo (NYSE:DEO). Anheuser-Busch thought so much of the investment, it issued a press release welcoming it.

Berkshire's move may have been triggered by the 10.5% drop in Anheuser-Busch's stock over the past 52 weeks, almost $2 billion in trailing free cash flow, and the modest price of 17 times expected forward earnings.

The latest earnings report wasn't pretty, but the king is still pumping out cash and has the premier name in U.S. beer. With the world to conquer, and fickle consumer tastes to turn back its way, Anheuser-Busch is not suitable for this observer's tastes until there's earnings growth of more than 8% a year or the stock price falls further.

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Fool contributor W.D. Crotty owns stock in Berkshire Hathaway -- and plans to talk to Warren Buffett about the BUD purchase the next time they have lunch (which will be the first time they have lunch). Click here to see The Motley Fool's disclosure policy.