Laurence Whyatt

Laurence Whyatt inquired whether the consumer improvement observed in Mexico's exit rate was also evident in Brazil and Colombia. He also asked if AB InBev still considers a net debt to EBITDA ratio below 2x to be value destructive and what actions would be taken if that metric were approached.

Answer

CEO Michel Doukeris noted that while Mexico showed improvement with normalized pricing and better weather, Brazil's industry remained heavily impacted by unseasonable weather, though AB InBev's share bounced back. Colombia, however, continued to see volume growth and improving share of alcohol beverages with more moderate inflation. CFO Fernando Tennenbaum reiterated that the optimal capital structure is around 2x net debt to EBITDA, but with less urgency once below this level, allowing for more flexibility. He emphasized that organic growth remains the number one priority.

Laurene Whyatt asked for an update on consumer improvement in Brazil and Colombia, similar to the positive exit rate observed in Mexico. She also questioned if AB InBev still considers a net debt to EBITDA ratio below 2x to be value destructive and what actions would be taken if that metric were approached.

Answer

Michel Doukeris, Chief Executive Officer, explained that Mexico's improvement was due to normalized pricing and better weather. In Brazil, the industry remains heavily impacted by unseasonable weather, though AB InBev's share rebounded due to portfolio strength. Colombia, however, continues to show volume growth and improving share of alcohol beverages with more moderate inflationary pressures. Fernando Tennenbaum, Chief Financial Officer, reiterated that the optimal capital structure is around 2x net debt to EBITDA, but with less urgency once below this level, allowing for more flexibility. He emphasized that organic growth remains the number one priority.

Laurence Whyatt from Barclays asked about the potential to reinvigorate the Bud and Bud Light brands in the U.S. and questioned why European volumes were only flat despite favorable conditions and share gains, probing the region's long-term volume growth potential.

Answer

CEO Michel Doukeris explained the focus remains on rebalancing the portfolio toward consumer trends, highlighting the significant growth headroom for Michelob Ultra and Busch Light. He acknowledged work is needed on other brands like Bud Light and Budweiser but emphasized prioritizing capital allocation. For Europe, he noted that flat volume is an improvement over recent trends and that beer is gaining share of throat in key markets.

Laurence Whyatt of Barclays asked about the stalled per capita alcohol consumption trend in the U.S. post-pandemic, questioning if there were structural reasons for it and why U.S. consumption is lower than in some Western European nations.

Answer

CEO Michel Doukeris acknowledged the cyclical nature of consumption trends but emphasized that the U.S. alcohol industry is growing in value, with beer currently gaining share. He noted that direct comparisons between the entire U.S. and individual European countries are complex due to significant regional differences within the U.S. but pointed to strong premiumization trends as a key market dynamic.

Laurence Whyatt from Barclays asked about the drivers of Don Julio Reposado's strength and the growth outlook for other variants, and sought clarification on the 'upper quartile' performance metric, questioning a potential shift in focus to TSR.

Answer

Interim CEO & Director Nik Jhangiani attributed Don Julio Reposado's success to its accessibility and cocktail versatility, and expressed confidence in growth across the entire brand franchise. He clarified that aiming for 'upper quartile' performance refers to a holistic algorithm of top-line growth, operating leverage, and cash conversion, with Total Shareholder Return (TSR) being the ultimate outcome, not a change in focus.