Gen Cross

Gen Cross highlighted the significant growth in BEES Marketplace GMV, particularly from the third-party business, and asked about the potential for further scaling and increasing profitability, especially as the higher-margin third-party component becomes a larger mix.

Answer

CEO Michel Doukeris described BEES Marketplace as an incremental growth opportunity and a new, adjacent revenue stream. He explained that the 3P model, where the app facilitates orders for third-party suppliers who handle delivery, is scaling fastest and is the most profitable. He emphasized the huge headroom for growth by addressing underserved customers and expanding the addressable market beyond beer, including technology products and credit, with the business still in early stages.

Gen Cross asked about the BEES Marketplace, noting its significant growth in GMV, largely driven by the third-party business. She sought insights into the potential for further scaling the marketplace and increasing its profitability, particularly as the higher-margin third-party component becomes a larger part of the overall mix.

Answer

CEO Michel Doukeris described the BEES Marketplace as a growth opportunity and an incremental, adjacent revenue stream that solves pain points for both underserved customers and CPG partners seeking broader reach. He explained that while the 1P model utilized existing capabilities, the 3P (third-party) model, where AB InBev acts as a product delivery and marketplace platform for other suppliers, is the biggest opportunity and most profitable. He noted that beer typically accounts for 34-40% of retailers' sales, indicating a 1.5-2x addressable revenue opportunity, with potential for further expansion into areas like technology products and credit. He expressed satisfaction with its scaling and development, despite being in early stages.

Gen Cross asked for details on how the company achieved a mid-single-digit organic SG&A decline in South and Middle America, and questioned if recurring net finance costs would remain below the $1 billion quarterly mark.

Answer

CFO Fernando Tennenbaum attributed the SG&A reduction to 'ongoing optimization' efforts that are part of the company's daily operations. Regarding finance costs, he confirmed they are benefiting from deleveraging but declined to provide specific forward guidance, while highlighting the positive impact of improved free cash flow on both debt and interest income.

Gen Cross asked if the positive U.S. sales-to-retailer (STR) growth seen in Q4 is now sustainable, given the commentary about an 'inflection point.' She also inquired about the drivers of improved consumer momentum in Mexico in Q4 and if that has continued.

Answer

CEO Michel Doukeris responded that while the company's own U.S. brand performance is strong, it's too early to call industry volume growth sustainable due to factors like weather and economic pressures. For Mexico, he attributed the Q4 momentum to the normalization of consumer spending after election-related fluctuations, a trend that has largely continued into the new year despite some weather impacts in the north.

Gen Cross from Exane BNP Paribas inquired about the primary reasons for consumer moderation in alcohol consumption and asked whether the recent impairment charge on US brands reflects a weaker long-term category outlook.

Answer

Interim CEO & Director Nik Jhangiani clarified that while saving money is a 'large reason' for moderation, it's not always number one and is coupled with consumers seeking more choice and drinking on fewer occasions. He stated the impairment charge was driven by near-term brand-specific pressures and does not alter Diageo's strong long-term belief in the US spirits market.