* Q3 core profit $3.977 bln vs $4.075 bln analysts' forecast
* U.S. margins squeezed by higher marketing, distribution, commodity costs
* Budweiser sales to U.S. retailers fell 7 pct in Q3
* Price hikes in Brazil, increased market share in Germany
* Shares among weakest performers in STOXX food/beverage index
By Robert-Jan Bartunek
BRUSSELS, Oct 31 (Reuters) - Anheuser-Busch InBev, the world's largest brewer, said profits were below market estimates as falling U.S. sales of Budweiser and higher distribution and commodity costs squeezed margins in the United States.
The brewer, which also makes Stella Artois and Beck's, said on Wednesday beer sales to U.S. retailers in the third quarter fell 0.9 percent in the quarter, led by a 7 percent decline for Budweiser.
In North America, where it generates around 42 percent of its revenue, core profit was $1.821 billion, below a Reuters consensus of $1.924 billion.
The company said selling and marketing expenses were up 12.8 percent in North America, which has only recently begun to recovery from a devastating drought in its major wheat-growing states.
Although AB InBev has seen higher-priced brands - such as 6 percent strength Bud Light Platinum and Bud Light Lime-A-Rita - grab market share, sharply increased marketing and distribution costs have depressed U.S. margins by more than two percentage points.
"The pressure on the Budweiser brand is something that has been a constant for the past years, the question is how they can optimise their brands portfolio so their overall market share can go back up," said analyst Wim Hoste at KBC Securities.
Group core profit in the third quarter rose 10.6 percent on a like-for-like basis to $3.977 billion, below the $4.075 billion consensus forecast in a Reuters poll of nine analysts.
AB InBev shares, which have risen some 40 percent this year, were down 0.7 percent at 1153 GMT, while the STOXX 600 European food and beverage index was broadly flat.
In Brazil, where it has some two-thirds of the market, the group profited from temporary price hikes, taking advantage of tax hikes.
For the whole year, the company now expects a high-single digit increase in revenues per hectolitre in Brazil, an increase from its previous guidance for revenues per hectolitre to increase in line with inflation.
Overall, the brewer kept its guidance for revenue per hectolitre to increase ahead of inflation on a constant geographical basis.
In Western Europe, profits increased 9.7 percent on a like-for-like basis even as volumes declined, and the group gained market share in Germany with its Hasseroeder and Beck's brands.
Dutch peer Heineken, which reported its quarterly earnings last week, said volumes in Western Europe declined, caused by a challenging economic environment in Portugal and cautious spending elsewhere.
SABMiller said earlier in October that it managed to grow volumes in Europe in the six months to the end of September, buoyed by price reductions and growth of lower priced beers.