AB InBev Full Year 2025 Earnings Call - Strategy Delivered EPS, Margin and Cash Growth Despite Volume Weakness

Conference Operator: Welcome to AB InBev’s full year 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer, and Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today’s call, please visit AB InBev’s website at www.ab-inbev.com, and click on the Investors tab in the Reports and Results Center page. Today’s webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star, then two. If you should require operator assistance, please press star zero.

Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev’s future results, see Risk Factors in the company’s latest annual report on Form 20-F, filed with the Securities and Exchange Commission on March twelfth, 2025. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information.

It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin.

Michel Doukeris, Chief Executive Officer, AB InBev: Thank you, and welcome, everyone, to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we’ll be happy to answer your questions. Let’s start with the key highlights for the year. In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continued margin expansion, and solid free cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy, and the resilience of our business.

While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonable weather, we continued to invest in our strategic priorities. We remained disciplined in our revenue management choices and delivered EBITDA growth within our outlook. We continued to make progress this year. We strengthened our operating model and increased our portfolio brand power. We also formed new long-term partnerships to extend the reach of our brands and deepen the connection to our consumers. The momentum of our growth priorities continued. Our Mega Brands and premium portfolio grew ahead of our overall business. The growth of our Beyond Beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34%, respectively, and BEES Marketplace GMV increased by 61% to now reach $3.5 billion.

Solid free cash flow generation enabled us to increase the size of our share buyback program, pay an interim dividend, and propose a final dividend that combined represents a 15% increase versus last year, and further strengthen our balance sheet. We end 2025 with improved momentum across many of our key markets, and we enter 2026 well-positioned to engage consumers and accelerate growth. Turning to our operating performance, while our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter, with improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega brands that command a premium price, drove a revenue per hectoliter increase of 4.4% this year, resulting in top-line growth of 2%.

Our productivity initiatives more than offset transactional effects headwinds to drive an EBITDA increase of 4.9%, with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent, profitable growth. Revenue increased in 65% of our markets this year, and we delivered EBITDA growth in four of our five operating regions. Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies.... around 70% of our EBITDA is generated in emerging and developing markets that are projected to account for more than 80% of the beer category volume growth through 2029. Now, I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America.

In the U.S., our business continues to build momentum, and we gained share in both beer and spirits in 2025. Our beer performance was led by Michelob ULTRA and Busch Light, which were the top two volume share gainers in the industry. In Beyond Beer, our portfolio growth accelerated. Revenue increases in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026. Beer industry volumes and revenues grew in January, and later this year, we look forward to celebrating the 150-year anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl.

We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers. Budweiser, Michelob ULTRA, and Bud Light were named as three of the top 10 ads, according to the USA Today Ad Meter, with Budweiser taking the top spot for the second year in a row. Now, let’s turn to Middle Americas. In Mexico, our business momentum continued, delivering a mid-single-digit top and bottom line increase, with our above core beer portfolio leading our growth. In Colombia, record high volume and margin expansion drove double-digit EBITDA growth, with revenue increasing across all price segments of our portfolio. In Brazil, our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalizes.

Our premium and super-premium beer brands delivered high teens volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially offset a soft industry, with performance driven by our mega brands and non-alcohol beer. In South Africa, our momentum continued, with market share gains in beer and beyond beer, and disciplined revenue and cost management, driving mid-single-digit top and bottom line growth. Now, moving to APAC. In China, revenue declined by low teens, with our volumes underperforming a more stable industry as we adjusted inventory levels and focus areas to better reflect the channel and geographic shifts. In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth.

Now, I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let’s start with the category. Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprints, supported by favorable demographics, economic growth, and opportunities to increase category penetration. According to IWSR, the beer and beyond beer category is forecast to continue to gain share of alcohol beverage in 2025 and has now gained more than 200 basis points since 2021. In looking ahead, beer is expected to grow volumes globally and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021.

Our marketing effectiveness continues to strengthen, and our Mega Brand and Mega Platform approach were key contributors to the brand power of our portfolio, reaching a record high in 2025. Our Mega Brands led our growth and have increased revenue at a CAGR of 10% since 2021 and now represents 57% of our total revenues. We are the leader in the premium beer segment globally and see significant headroom for category to continue to premiumize. Premium beer is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall. The best example of premium execution in our portfolio is Corona. In 2025, Corona celebrated 100 years since its original launch. In 2026 is off to a fast start, with the brand cheering the golden moments at the Milan-Cortina Winter Olympics.

Since 2018, the volumes of Corona have doubled, and in 2025, volume increased by double digits in 30 markets. The quality, brand power, and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor, and in 2025, was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low carb, low calories, sugar-free, gluten-free, and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category, and momentum continued in 2025.

Led by Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio delivered a 34% revenue increase, and we estimate to gain its share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. In Beyond Beer, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S., which grew revenue in the triple digits and was the number one share gaining brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer, Flying Fish, is now expanding to Europe and the Americas.

Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, go-to-market capabilities, and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands, and liquids contributed 11% of our total revenue. In the U.S., we led the industry innovation with 3 of the top 5 innovations of the year, with Michelob ULTRA Zero and Busch Light Apple, the top 2. In China, we launched a 1-liter can for Budweiser and a Corona full open lead can to bring the iconic lime ritual into the in-home channel.

In South Korea, we launched the country’s first zero beer, with great taste, zero alcohol, zero sugar, zero calories, and zero gluten. In Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let’s now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, this captured $53 billion in gross merchandise value, a 12% increase versus last year. The growth of this marketplace accelerated and delivered $3.5 billion of GMV this year, a 61% increase versus last year. The marketplace on BEES has grown rapidly since we initially started developing the platform in 2021.

We recognized it early that many of our customers could benefit from a one-stop shop for their business, and similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers. The marketplace has grown to $3.5 billion in GMV business from a standing start five years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners. In D2C, our digital platforms continue to enable a one-to-one connection with our consumers in developing new consumption occasions.

In 2025, we continued to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Fernando Tennenbaum, Chief Financial Officer, AB InBev: Thank you, Michel. Good morning. Good afternoon, everyone. I will take a few minutes to discuss the progress we have made on four key areas of focus in optimizing our business: improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices, and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year, with margin expansion across four of our five operating regions. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million.

Underlying EPS was $3.73 per share, a 6% increase versus last year’s in dollars, and a 9.4% increase in constant currency. Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share, but was partially offset by a higher cost of hedging and the FX movements. Next, let’s take a look at free cash flow. In 2024, we made a step change in our free cash flow to $11.3 billion. In 2025, we maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through deleveraging, and maintaining our disciplined resource allocation.

Looking ahead, we are encouraged about the opportunity to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt, and despite a $2.8 billion FX headwind on our net debt from a stronger Euro, we reached a leverage ratio of 2.87 times. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed, with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years, and no financial covenants. As we continue to deleverage, we have increased flexibility in our capital allocation choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025.

We have completed $3.2 billion of share buybacks, and are currently executing a further $6 billion program. For 2025, the board has proposed a final dividend of 1 EUR per share. Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year, with the ambition to continue a progressive dividend over time. Now, turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us: water, agriculture, climate, and packaging. We achieved our water and agriculture goals, and made strong progress against our climate and packaging objectives over the past 8 years.

We are proud of the progress made, and we’ll continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4%-8% on an organic basis, in line with our medium-term outlook. As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net CapEx to be between $3.5 billion-$4 billion. We expect our normalized effective tax rate to be between 26%-28%. With that, I would like to hand it back to Michel for some final comments.

Michel Doukeris, Chief Executive Officer, AB InBev: Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on our performance for the year. It’s fair to say the operating environment in 2025 was dynamic. Despite this backdrop, the disciplined execution of our strategy delivered consistent financial results. EBITDA grew within our outlook. Underlying EPS increased by 6% in U.S. dollars, and we delivered another year of solid free cash flow generation.

...We strengthened our balance sheet and increased our capital allocation flexibility, enabling a progressive increase in our dividend and announcement of a larger share buyback program. While our volume performance was below our expectations in 2025, we are encouraged with the momentum we saw as we exited the fourth quarter. Our volume trend improved in December, and we gained or maintained share in 80% of our markets in the quarter. The combination of our Mega Brands with our unparalleled lineup of Mega Platforms is a powerful opportunity to lead and grow the category. This past weekend, we kicked off an exciting calendar of events with both the Super Bowl and the opening of the Winter Olympics. And then the summer will bring FIFA World Cup in North America.

With 104 games across three countries, each game is an opportunity to bring beer and sports together to create unforgettable moments for fans around the world. We enter 2026 with improving momentum, and we are well positioned to activate the category and engage consumers. With that, I’ll hand it back to the operator for the Q&A.

Conference Operator: Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. Again, if you have a question or comment, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. We do ask that while you pose your question, you pick up your handset to provide optimal sound quality. One moment, please, for your first question. Our first question has come from the line of Edward Mundy with Jefferies. Please proceed with your questions.

Edward Mundy, Analyst, Jefferies: Morning, Michel, Fernando. Afternoon, everyone. 2 questions, please. So, Michel, after you wrote that beer is a passion point for consumers, and a vibrant category globally. And this year, you’re starting off with, you know, beer plays an important role in bringing people together and creating moments of celebration. I’d love to get a bit more context into this nuance, and to what extent can you, as industry leader, help to bring across a more balanced message around the positive attributes of moderate consumption and getting people together? This is my first question. And my follow-up, again, for Michel. You’re sounding a little bit more optimistic about the prospects for 2026. How much of this owes to sort of consistent application and progress with your strategy?

How much of this owes to some very early green shoots that you might be seeing, you know, from a cyclical standpoint?

Michel Doukeris, Chief Executive Officer, AB InBev: Hi, Ed. Good afternoon. Thank you for the question. I think that on the first point, they are actually both right. Beer is a passion point for consumers, but beer always brings people together around moments of celebration and enjoyment. And I often say that we listen to a lot of things that are happening, and everything gets better when people get together and drink a beer, so the world really needs a beer. And this is important as we get people to exchange ideas, to socialize, to enjoy moments, as we saw this weekend with Super Bowl or during the Olympic Winter Games in Milan-Cortina. Everybody was enjoying the sessions and having the opportunity to be together with friends and drink a beer. So I’m extremely optimistic about the role that our product plays and how we can always enable memorable moments for our consumers.

That’s why we invest in the platforms that we invest on our brands, and we keep pushing the category forward with innovation. In terms of the tone for 2026, let’s say, I think that 2025 was definitely a very complicated year, with many dynamics impacting different markets, industry, and consumer goods in general, right? Beer was not insulated from what happened last year. As we saw, most of the impact for beer came on the second half of the year. As we phased the year towards the end of the year, we saw momentum re-accelerating, especially in December. This momentum is carrying on, now, early in January, in majority of the markets. We have a very good year in terms of opportunities to activate and land our innovations.

I think that if you look forward during the summer, the World Cup always presents a unique opportunity for us. The fact that it’s gonna happen in the Americas, 104 games, fans across the world, is gonna be great. In connection with our strategy, of course, despite of everything that happened last year, you’ve seen the numbers. We continue to invest on our strategy, always focusing on the long term. Our growth accelerators and growth drivers, like balanced choices, premiumization, non-alcohol beer, beyond beer, and BEES Marketplace, are all working as per plan, and therefore, the more the mix contribution of these initiatives and the more solid the execution behind our three pillars of the strategy becomes, the more optimism, of course, we build and continue to deliver our mid-term outlook. That’s why it’s unchanged for 2026. Thank you for the question.

Sanjeet Aujla, Analyst, UBS: Great. Thank you.

Conference Operator: Thank you. Our next question has come from the line of Rob Ottenstein with Evercore ISI. Please proceed with your questions.

Rob Ottenstein, Analyst, Evercore ISI: Great, thank you very much. Michel, you’ve done a terrific job turning around the U.S. market, and it really looks like it’s in the best position to grow in many, many years. Can you first maybe kind of give us a sense of the key elements of that turnaround and what you’ve learned from that? And then, you know, perhaps even more importantly, you know, can you talk about other major markets around the world where you can apply those learnings, those strategies, tactics to, you know, put the markets on a, on a better trajectory, and maybe specify particular actions along that front that, you know, perhaps you started in 2025 or plan to start in 2026?

So we can get a sense of how you can take what you’ve learned and the momentum in the U.S. and move it around the world. Thank you.

Michel Doukeris, Chief Executive Officer, AB InBev: Hi, good morning, Robert. Thank you for the question. So to start with, I think that the team is doing a great job in the U.S., so they are working really hard on things that we agreed, and those things are turning the results around. I think that we, we have been in a long journey in the U.S. since 2008. We got a business that had structural disadvantages because the portfolio was concentrated in segments that were not growing. You remember that since 2017, when I arrived in the U.S., there was this idea of rebalancing our portfolio for growth, and the idea that, of course, this rebalance will not happen overnight. So we continue to be very focused on this strategy, investing in the right segmentation, in the right brands, innovating in the segments where we had low or no participation.

The biggest learning, I think, for everybody in the U.S., including myself, is the power of consistency. The U.S. is a market that moves on the long horizon. It doesn’t move overnight. Investment, that’s why we continue to heavy up our investments in the U.S., and hard work. I’m very glad to see the team working very hard to execute this strategy and start harvesting some of the efforts that they are making over the last 3, 5 years in this market. We are very focused, we are very consistent, we are investing, and we are working hard in getting this strategy to benefit our business and our wholesalers and our customers in the U.S. When you think about other markets, you know that we have a very large footprint, so every day is a different day. It’s never boring.

But if I would choose only one market at this moment, where we are very focused in turning around, is China. So China went from big accommodation of the industry first, re-accommodating. This industry played different by region, as you know, so the east part of China, suffered much more than the inland. The on-trade channels declined much more than the off-trade, and because our business had a very large footprint in the east and in the on-trade, we had to reorganize ourselves. So it took last year a huge effort to keep the business healthy, especially inventories, cash flow for our wholesalers, while we start to reorganize, towards off-trade and more inland distribution as well. I think the recipe for the China business is the same. It starts with right focus and moving at the speed that we need, which was not the case before.

Execute with consistency. We have a great portfolio in China. Invest on the right channels, which we are doing now, and making sure that the team is working as hard and with the sense of urgency that we need. And I’m glad to see that quarter four, share was stable, but Budweiser was in better place. And now in 2026, we need to continue to work on this direction, so we can reignite growth there. Thank you for the question.

Conference Operator: Thank you. Our next question has come from the line of Sanjeet Aujla with UBS. Please proceed with your questions.

Sanjeet Aujla, Analyst, UBS: Hey, Michel, Fernando. Two from me, please. I’d like to follow up on China there, please, and maybe just a little bit more of an update on your commercial execution. How far or how much progress do you think you’ve made in terms of penetrating the off-trade channel? Are you now gaining share within that channel? And just tied to that, what are you seeing in the on-trade channel? Any signs of some of the anti-extravagance measures in your key provinces starting to ease at all? That’s my first question on China. And secondly, just on Brazil. It’s been a tough year in Brazil from a category standpoint. You spoke about December returning to growth. Has that also continued into January?

Just your the competitive dynamics in the market, you know, I think you alluded to some share gains in Q4. Be great to dig deeper into that. Thank you.

Michel Doukeris, Chief Executive Officer, AB InBev: Hey, Sanjit. Good afternoon. Thank you for the questions. So I think that in China, the two questions. First, the off trade in China is changing very quickly. So the biggest acceleration of all is this O2O channel, but it’s a very sophisticated O2O channel because it’s very dynamic, it serves different channels from the O2O, and this was a channel that we used to lead in China. We were lagging behind now, and we are accelerating big time, gaining share of this channel. And then there is the large off-premise, which we had to adjust distribution, pack assortment, price, and promotion. And this is evolving, but there is a lot of room there for us to improve. The on trade is not improving, but I think that the good news is that it’s not getting worse either.

So I saw a relative stabilization on the industry last year in China, which is a good signal. The industry was, let’s call, minus 1%. I think that this opens an opportunity for this year to have a more positive outlook for the industry. Chinese New Year moved, right? So it’s a little bit later, should help as well. Another two, three weeks of Chinese New Year, loading and sales to consumers within 2026. So let’s see. It’s early to say. I was there in January. I liked what I saw in terms of industry consumption and our execution, but it’s too early to call. In terms of Brazil, I think that we, we discussed it during the calls last year. There were actually three things playing into the dynamics of Brazil.

One was part of the consumers under stress in disposable income because of the high inflation. There was a very abnormal weather, so we call them seasonal weather. But was really cold and rainy through a big portion of the middle of the year in Brazil. And then, as we kept running our revenue management agenda, there were like relative price gaps in Brazil, hanging there for over a year. I think that during the year, and especially at the end of the year, the weather improved big time, and that was the biggest change in the dynamics in the market. But also, I think that the gaps in terms of relativity, start to close, and then the power of our brands and the level of our execution start to speak louder, and we ended the year with very good momentum.

As we look at the beginning of the year, weather remains normal. Normal is good for us, and our brands continue to have very strong demand, so the beginning of the year is being so far positive. Thank you for the question.

Sanjeet Aujla, Analyst, UBS: Thank you very much.

Conference Operator: Thank you. Our next question has come from the line of Trevor Stirling with Bernstein. Please proceed with your question.

Edward Mundy, Analyst, Jefferies0: Hi, Michel and Fernando. One question for me, but probably a longer one. But I’d appreciate you’re not going to give guidance on margins. But if I look at 2025, despite the problems in volumes in many regions, we still delivered 100 bips of margin expansion. As I look forward to 2026, you know, as Michel has commented, the outlook for volumes is looking better than it has for probably quite a few years in terms of both the momentum as you exit 2025 and the FIFA World Cup coming. That’s looking positive. COGS outlook to me looks similar to 2026, and, you know, there’s moving parts in different countries and Midwest premium, but probably similar, but albeit probably a little bit more pressure in the first half than the second half because of, because of currency hedges.

A&P, you’re probably going to spend more because of all the activation, but you, knowing you guys, will be disciplined spend. Price mix looks solid. That looks like a pretty good outlook for margins for 2026 as well. Am I reading things the wrong way?

Michel Doukeris, Chief Executive Officer, AB InBev: Hi, Trevor. So, very comprehensive analysis. I think what you are saying and what we saw happening in 2025 is not anyhow different than what we’ve been discussing for a while. When we look at our business, when we look structurally at our business, we continue to see opportunities to drive further margin expansion. And as you said very well, kind of, every quarter, every year has its unique dynamics. But on a year where you see your cost dynamics, more of a normal year, like 2025 was more of a normal year, and 2026, and hopefully going forward, we have to see more normal years.

By driving efficiency, by making sure that we continue to invest behind our brands, which command a premium, with all these components, we continue to see further opportunities to expand margins. Okay, so, and then when you talk about the cost of goods sold, you are right because you have the effects curves, kind of, given what happened last year, we always had one year later. You know that there is gonna be a little bit more pressure on the first half than on the second half. In terms of investment, this year is somehow different because we have the World Cup, so, we have some more concentration of investments of sales and marketing in the second and third quarter. But overall, kind of, business is healthy.

We are excited with the opportunities, and we’ll continue to invest behind it. But, maybe even giving more high-level view, the fundamental drivers of our margin, at the end of the day, are the iconic mega brands, the unique global footprint, the meaningful leadership positions that we have, this very efficient operating model that we keep looking for further opportunities and the financial discipline and ownership culture. So I still believe we have room to further improve on that.

Edward Mundy, Analyst, Jefferies0: Brilliant. Thank you very much, Fernando.

Conference Operator: Thank you. Our next question comes from the line of Andrea Pisachi. Please proceed with your questions.

Andrea Pisachi, Analyst: Yes, thank you, Michel and Fernando. I also have two, please, and so sorry about my voice, which is a bit low. First one is on Beyond Beer in the U.S., please. Now, you referenced your capabilities en route to market advantage that clearly give you a right to win in Beyond Beer. So focusing on the U.S., where your prepared cocktails are growing very strongly, and you’ve also launched Form Energy this year, again, leveraging your competitive advantages. So the question is, if you could share some thoughts maybe on what you think your Beyond Beer business could look like in the U.S. three, five years from now, what the long-term or medium-term innovation pipeline looks like. Are you planning to bring new brands to market? Are you open to more M&A, like the Beatbox deal?

Ultimately, how large do you think—what’s the ambition? How large could Beyond Beer be in, say, 5 years’ time in the U.S.? The second question actually is also on the U.S., a bit more specific on margins. Going to Trevor’s point, I guess. COGS inflation in the U.S. increased a bit in Q4, and I think it will increase a bit further this year. In light of that, can you share something on your revenue management strategy in the U.S. this year? And what are the levers do you have to protect, to help margins in the U.S. this year? Thank you.

Michel Doukeris, Chief Executive Officer, AB InBev: Hi, Andrea. No issues with the voice. I think we are both on the same, the same page here, so mine is a little bit under the weather as well. Thank you for the questions. U.S. Beyond Beer. So this is something that we’ve been discussing as well since 2017, as we start to rebalance our portfolio and invest in segments that we under index. And definitely, this ready to drink beverages that source from other alcohol beverage and other occasions, they are a great opportunity for our business in the U.S., and we’ve been investing and building capabilities and brands in this segment. So today, this represents a little bit less than 3% of our business in the U.S., but it is growing very fast.

If you look at the brands that we are building, these brands today are ranking top 10, top 20 in the spirits industry in general, in the U.S. Cutwater, specifically, is ranking at the top of the fastest-growing brands in the industry for last year and the fastest one for quarter four. I think that the headroom for growth is huge because they source from outside of the beer arena, and they are very incremental to our business. They are brands that we built from scratch, therefore, they have still a lot of headroom for growth. As you said, we continue to complement this portfolio with Beatbox, for example, which is a different proposition for different occasions, for different consumer cohorts. Our portfolio is getting stronger, but we still have a lot of headroom to grow in this area.

Connecting this with the second point, they are also margin incremental. So as this mix continues to grow, as the mix of Michelob ULTRA continues to grow, this is all incremental to our margins. So we are managing our margins not only from the cost productivity standpoint, but also from mix and revenue, as you said. And in terms of revenue, you all know we price in line with inflation. I think that COGS and the cost of goods sold will continue to fluctuate. That’s why we hedge, so we can have a more long-term perspective, and we’ll continue to invest to accelerate the momentum of our business in the U.S. So we, we are moving in the right direction.

There’s still a lot that we need to continue to do, but so far, we are happy with the evolution, and we’ll continue to execute in the way that we are executing so far.

Andrea Pisachi, Analyst: Thank you.

Conference Operator: Thank you. Our next question has come from the line of Mitch Collett with Deutsche Bank. Please proceed with your questions. Mitch, could you please check if you’re self-muted?

Mitch Collett, Analyst, Deutsche Bank: ... Sorry, can you hear me now?

Conference Operator: We can hear you. Thank you.

Mitch Collett, Analyst, Deutsche Bank: Okay, apologies. So Michel, Fernando, I was just going to ask about your thoughts on phasing in 2026. Fernando, I think you’ve just given some of the components, but transactional effects, I guess, is more helpful in the second half. You’ve obviously got some phasing around your marketing and sales spend, and some pretty uneven comps. So can you maybe just sort of tie that together and give us some thoughts on how we should think about phasing across 2026? And then my follow-up is on CapEx, which is still well below depreciation, and I think your guidance suggests that it will remain well below in 2026. I know you’ve talked before about how you’re using technology and AI and other tools to, to keep up CapEx at a low level.

Can you just comment on how you’re doing that and how sustainable that level of CapEx is going forward? Thank you.

Michel Doukeris, Chief Executive Officer, AB InBev: Hi, Mitch. So on the first question on phasing. So phasing, I think, I think, on the last question, we, we went over very well on that, but, it’s given what happened to the effects last year and kind of, knowing that we had one year out, you know that last year, you, you had kind of, you, you are going to have a bigger challenge in the first half of the year, especially, in markets like, Brazil and Mexico, where currency was really depreciated at the beginning of last year. And then you have kind of easier comps towards the second half of the year on cost of goods sold and transaction. So that is something definitely fair to say.

And of course, if you look at our financial filings, like the 20-F, you look some of our exposures, you can get a good guess on how these things will behave kind of in the year of 2026. On sales and marketing, this is going to be somehow of a different year because since you have this World Cup, which is a massive event in a lot of our markets, more towards Q2 and Q3, so one would expect some sales and marketing concentration. What is important to bear in mind is that even though kind of there are different dynamics in the year, we are going to manage the business to make sure we invest in the long term and create a long-term value, not necessarily trying to cater to one quarter or another.

But one would expect more concentration of sales and market investments in the second and the third quarter this year, specifically. In terms of CapEx, it’s not different than what we’ve been, we’ve been talking about. By looking at further efficiency opportunities, by looking on the role on technology, by kind of looking at every single different investment in our business, we are confident that we can kind of deliver the CapEx within the outlook for this year, and still do everything that we need to do, we still have CapEx growth CapEx within this kind of envelope, anything that we need to support the business. So I’m very comfortable with this level of CapEx. Thank you.

Mitch Collett, Analyst, Deutsche Bank: Got it. Thank you, Fernando.

Conference Operator: Thank you. Our next question comes from the line of Gen Cross with BNP Paribas. Please proceed with your questions.

Gen Cross, Analyst, BNP Paribas: Thank you. Good morning, and good afternoon, everyone. Just one question from me, actually. It’s actually on BEES Marketplace. It looks like you’ve added over $1 billion in marketplace GMV in 2022. And interestingly, it looks like it’s pretty much all driven by the third-party part of the business. I think, Michel, you mentioned looking at opportunities to scale and further increase profitability in marketplace. So I just wonder if you could give us some thoughts on the potential to scale marketplace further, particularly as the higher margin, third-party part of the business becomes a bigger part of the mix. Thank you.

Michel Doukeris, Chief Executive Officer, AB InBev: Hi again. Good afternoon. Thank you for the question. So marketplace is a growth opportunity for us, as I’ve been highlighting over the last couple of years, and it’s incremental to the beer business that we have. So it’s a new revenue stream, and it’s adjacent because actually we built the technology product to serve better our customers. At the same time, we could increase this addressable market for our business by solving two pain points. One pain point is our customers. They were underserved by most of the CPGs because they are small, fragmented, in distant areas. And on the other side, the CPGs need growth. They need to reach more customers, and the fact that we built this digital channel enables them to seamlessly reach a much broader and much more important base of customers.

We always knew that the model would work, so we start testing and building the 1P. The 1P was using the capabilities that we had, the route to market, the trucks, the sales reps. But as we built the product and enhanced the technology, we always knew that the biggest opportunity is actually what we call 3P, which is touches, right? So the app is downloaded by the bar owner. The bar owner sees an assortment that’s much bigger than only the beer assortment or the products that we sell. They place the orders. The orders are then redirected to the different suppliers, and the suppliers take care of the delivery of these orders.

We, of course, in the middle, we are the product delivery and the marketplace for them to sell, to promote, to follow through with their sales team, because the suite of products that this has is beyond only the app. We can also digitize our partners. And this is the part that is scaling fast and the most, and is also the one that’s the most profitable. The simple way to understand the opportunity is that on average, on these retailers, beer accounts for 34%-40% of what they sell. Therefore, there is a 1.5-2 times addressable revenues that today we do not participate without the marketplace, and we can participate.

As you know, I think you were with us in Mexico, we are in some cases, even increasing this addressable market because we are taking, for example, technology products like minutes for people to buy and operate their phones or paying their bills. So there is many incremental opportunities that can be built on top of that. Credit, we have partners today selling credit to these points of sales. So all of that builds on top of what the marketplace will directly build. So we are in early stage. It is scaling up at the pace that we want to scale up, and it’s becoming the business that we thought that could become. So very happy with the development, but a long way to go still. Thank you for the question.

Sarah Simon, Analyst, Morgan Stanley: Thank you.

Conference Operator: Thank you. Our next question has come from the line of Sarah Simon with Morgan Stanley. Please proceed with your questions.

Sarah Simon, Analyst, Morgan Stanley: Yes, hi, I have two questions. First one was on zero again. Your growth is extraordinarily high compared to peers. What do you think you’re doing that they’re not? And then the second one would be on RTDs. Your RTD business, obviously, largely concentrated in the U.S. How are you thinking about that in the context of other markets and exporting it? Thanks.

Michel Doukeris, Chief Executive Officer, AB InBev: Hey, good afternoon, Sarah. Thank you for the questions. I think I got both of them. If I didn’t, please, help me here at the end. So the non-alcohol beer, I think that, we’ve been talking about that. We invested a lot in the technology, so making sure that we have superior products, and this investment was done in 2020, 2021, 2022. Many breakthroughs there. The liquids are fantastic. It’s really great taste beer, without alcohol. Products that range from what we shared with you today in South Korea, that is 0 calorie and 0 gluten and 0 sugar, great taste, to the fantastic Michelob ULTRA Zero in the U.S., that has only 29 calories, but it tastes delicious. So we invested first on the product and technology. Then we start to roll out this on our winning brands.

So we have great brands across the globe, and every time that’s put together a non-alcohol version of these brands, of course, consumers try, and they choose the strong brands that we have. And then I think that the last point, we decided to invest and walk the talk. So just think about Olympic Games, a mega platform that we have globally, that we sponsor with both Corona Cero and Michelob ULTRA Zero. So we got to get great products. We lighted up the brands and innovation, and then we are investing behind that. And when we do all of together with our execution, which is superior execution, we can gain share quickly as we are gaining. We can expand categories, reach more consumers, and get the growth that we are getting with the Zero.

So consumers are there, we are there for them, and we are gaining share in an accelerated way in this segment. In terms of RTD, actually, if you look at the numbers, RTD for us is bigger outside the U.S. than it is in the U.S. It’s 3% of our global business, around between 2 and 3 in the U.S. The most meaningful expansion that we are doing in this Beyond Beer space started last year, and we are rolling out this year, is with Flying Fish, which is this, beer liquid, but it’s very different than beer. It’s flavored. It has a very different demographics that we reach with the product. It competes a lot outside of the beer space because of the taste profile. Brings a lot of new consumers to the category because they are flavor seekers.

They like sweeter liquids. They don’t like too much the bitter. And then this is now going to 10 different countries, and in every country, we have a nice story to tell so far, because this is fulfilling what the plans were and what we want to achieve. And then we also have Cutwater, which we are building in a very diligent way in the U.S., but we already started to expand to Canada, and there are some other markets coming in the lineup. And we have today a global portfolio, let’s say, for Beyond Beer, that caters each of the segments within the Beyond Beer. So NÜTRL, Brutal Fruit, and BEATS are also getting expanded globally to different countries. So there’s more to come there. The opportunity is very big outside the U.S. and outside Africa, and we are just scratching the surface so far. So more to do.

Thank you for the question.

Sarah Simon, Analyst, Morgan Stanley: Great. Thanks.

Conference Operator: Thank you. This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michel Doukeris for closing remarks.

Michel Doukeris, Chief Executive Officer, AB InBev: Hey, thank you. Thank you everyone for the time today, for the ongoing partnership and support to the business. I hope you are all well. Get some time to drink a beer. Cheers!

Conference Operator: Thank you. This does conclude today’s earnings conference call and webcast. Please disconnect your lines at this time, and have a wonderful day.