Anheuser-Busch InBev SA/NV Q1 2025 Earnings Call Transcript

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May 8, 2025
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Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Thank you and welcome everyone to our first quarter twenty twenty five 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 this quarter. After that, we'll be happy to answer your questions. Let's start with the key highlights.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

The global momentum of our business continued with the consistent execution of our strategy, delivering another quarter of reliable growth. EBITDA grew by 7.9% at the top end of our outlook range with continued margin expansion. In The US, our portfolio is building momentum and has reached an inflection point. And we are increasing investments in our brands to fill this momentum. Our no alcohol beer portfolio continue to outperform globally, increasing revenues by 34.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

This marketplace continue to scale, increasing GMV by 53% versus last year to reach 645,000,000 US dollars. And the ongoing optimization of our business drove a 7% increase in underlying US dollar EPS with 20% growth in constant current terms. Turning to our operating performance. Our overall volume performance was impacted by calendar related factors, such as cycling the leap year and the later timing of Easter, resulting in a volume decline of 2.2%. We estimate this technical calendar shift, it's accounted for a majority of our volume decline this quarter.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Despite these technical factors impacting volume, our revenue increased by 1.5% as the strength of our brands portfolio and ongoing premiumization drove a revenue per hectoliter increase of 3.7%. Our diversified geographic footprint enables us to deliver consistent results and has us well placed to drive long term value creation. Revenue increased in approximately 50% of our markets, and double digit bottom line growth in The Middle Americas, South America, Africa, and Europe drove overall EBITDA at the top end of our outlook. Now I'll take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America. In The US, our portfolio is building momentum and has reached an inflection point, and we are increasing investments in our brands to fill growth.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

We gained volume market share of both the beer industry and spirits based ready to drink category. In beer, Michelob Ultra and Busch Light were the top two volume share gainers in the industry for the second quarter in a row. And in spirits based RTDs, our portfolio grew volumes by strong double digits led by Cutwater and Neutral. While our portfolio continued to gain share, adverse weather in the later time of Easter impacted the overall industry performance in the first quarter. I thought it would be helpful to bring some data to the conversation so that we can look at it together.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

According to Surcana, offering sales to consumer volumes declined by 4.7% and dollar sales by 2.9% versus the historical range of around one to 2% in volumes and flattish dollar sales. When we disaggregate the industry growth on a week by week basis, our analysis indicates that the majority of the underperformance this quarter was driven by adverse weather and the later time of Easter. When we look to April, we are encouraged that the industry has improved with better weather and the Easter shift contributing to volumes aligning more closely with the historical trends. The summer season is an important period for the beer industry, and we look forward to building on the momentum of our portfolio and activating the category through our mega platforms. Now moving to Middle Americas.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

In Mexico, the underlying industry momentum continued with our business delivering mid single digit revenue growth and double digit EBITDA growth. Volumes declined by low single digits in line with the industry, which was impacted by calendar related factors. In Colombia, record high volumes and margin expansion drove double digit EBITDA growth. In South America, our business in Brazil delivered record high volumes for both beer and non beer. Total volumes increased by 1.4% with continued margin expansion, driving double digit bottom line growth.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

In Europe, continued premiumization of our portfolio and further margin recovery drove double digit EBITDA growth. Our premium and super premium brands contributed 60% of our revenue this quarter, with performance led by Corona and Stella Artois. In South Africa, the underlying momentum of our business continued, gaining share of both beer and Beyond beer. Revenue and EBITDA grew by low single digits with our performance driven by our premium and super premium brands, which grew volumes by low teens. In China, the industry improved sequentially.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

However, we underperformed primarily driven by softness in our key regions and the own trade channel. We remain confident in in our strategy, and we are focused on strengthening our execution by increasing discipline and excellence in our road to market, increasing investments in our mega brands, accelerating our expansion in the in home channel, and scaling up key innovations such as Harvey Zero Sugar. Now let's look at the key highlights of our three strategic pillars, starting with leading and growing the category. We have evolved our portfolio management approach to focus our investments in our mega brands to drive efficient, profitable growth. We have around 50 mega brands globally, typically five per market.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And these brands continue to lead our growth with net revenue increasing by 4.4%. Our global mega brand, Corona, continued to drive premiumization across our markets, growing revenue by 11.2% outside of Mexico. Twenty Twenty Five marks the one hundred year anniversary since Corona's launch, and we just kicked off the celebration with an event on Copacabana Beach with over 2,000,000 fans in attendance. We are looking forward to execute a strong lineup of activations around the world throughout the entire year in recognition of the heritage, premiumness, and quality of the brand. This quarter, Corona volumes grew by double digits in over 30 markets globally.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

In its home market of Mexico, Corona is the number one brand, and volumes grew by mid single digits. The brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at 20% premium to the nearest competitor. And to crown its one hundred year anniversary, Corona was again named the most valuable beer brand in the world in 2025. Through the consistent execution of our category expansion levers, we are increasing category participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with no and no alcohol, low carb, zero sugar, and gluten free options, and expanding our premium and beyond beer portfolios.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

As a result, on a rolling twelve month basis, participation of legal drinking age consumers with our portfolio increased by 60 basis points across our key markets. The equivalent of adding 6,000,000 new consumers to our ecosystem. In non alcohol beer, our portfolio momentum continued to accelerate with volumes growing by 34% led by the triple digit growth of corona fero. While no alcohol beer is current, a relatively small portion of our global volume, we are leaders in more than 50% of our key non alcohol markets and estimate we gained its share in 75% of them. With 65% of the volume coming from new consumers and new occasions, we believe non alcohol beer is a key opportunity to develop the category and drive incremental volume growth.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the first quarter, this captured $11,600,000,000 in GMV, a 10% increase versus last year with 32,000,000 orders transacted through the platform. This marketplace continue to scale with GMV increasing by 63% versus last year to reach $645,000,000. In DTC, our digital platforms are enabling a one to one connection with our consumers and the development of new consumption occasions. Our digital platforms generated 19,200,000 orders with revenue increasing by 12% to reach a hundred $17,000,000.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Thank you, Michelle.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Good morning. Good afternoon, everyone. I'll take a few minutes to discuss the progress we have made in optimizing our businesses. Our EBITDA margins improved by 218 basis points this quarter with expansion in four of our five operating regions. We know that each year will be different, but we are confident that combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Moving on to EPS. We delivered underlying EPS of 81¢ per share, a 7.1% increase in US dollars and a 20.2% increase in constant currency versus last year. Organic EBITDA growth accounted for a 16¢ per share increase with translation effects in 9¢ per share headwind. Lower net interest expense and the optimization of other below EBIT items, such as cost of hedging and effects losses, drove the balance of our EPS growth. Let me take a moment to talk about our operations.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Our business is local. We procure, produce, distribute, and sell locally. In fact, more than 98% of the volumes we sell are locally produced. If we look specifically at The US as an example, we have 18 breweries, over 700 American farmers, and over 7,000 local suppliers, with 99% of our volumes locally produced. As a result, we have limited direct exposure to tariffs.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Our results in the first quarter, the resilience of the beer category, the strength of our mega brands, and the continued momentum of our businesses, all reinforce our confidence in our ability to deliver on our 2025 outlook of four to 8% EBITDA growth. With that, I would like to hand it back to Michelle for some final comments before we start our q and a session.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Thanks, Fernando. Before opening for q and a, I would like to take a moment to recap on the quarter and look ahead at the opportunities our brands have to activate the category this year. We are encouraged by our first quarter results, and we delivered the data growth at the top end of our outlook. Underlying PS increased by high single digits in US dollars and by 20% in constant currency, driven by organic growth and the ongoing optimization of our business. And as Fernando just mentioned, our first quarter results position us well to deliver on our outlook for the year.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Looking ahead to the summer and the rest of the year, we are uniquely positioned to activate the category. The combination of our mega brands with the key global platforms that consumers love and that bring people together is a powerful opportunity to lead and grow the category. From the NBA to celebrating a hundred years of corona around the world, to the FIFA Club World Cup, to the buildup of the Winter Olympics, and music platforms like Tomorrowland and Lollapalooza. We will be focused on connecting with consumers and bringing to life our purpose of creating a future with more cheers. With that, I'll hand it back to the operator for the q and a.

Operator

Thank you. We'll now be conducting a question and answer session. If you'd like to remove yourself from the queue, please press 2. Once again, that's star one to be placed into question queue. And we ask you to please ask one question, one follow-up then return to the queue.

Operator

Our first question today is coming from Rob Ottenstein from Evercore ISI. Your line is now live.

Robert Ottenstein
Senior Managing Director & Partner at EvercoreISI

Great. Thank you very much, and and congratulations on a a strong quarter. So I was wondering if, Michelle, if you could discuss your U. S. Strategy and maybe put it in the context of the overall company.

Robert Ottenstein
Senior Managing Director & Partner at EvercoreISI

So kind of first, it looks like you've gained share now for the second or third quarter in a row. What's driving that, and and does that look sustainable? Second, can you give us any color on your productivity programs that you've put in place? And will they build over the year so that you can get to more flat EBITDA? And then kind of tying it all together, you noted in the press release that you continue to increase investment in The U. S. Why does that make sense in in what looks like a mature and declining market given the other opportunities that you have around the world to, invest? Thank you very much.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hi, Robert. Good morning, and thanks for the question. The need is the one that is couple of components that I'll try to cover all of them. I think that first, the US is one of our key markets. It represents over 20% of the business that we have, and we always talk about this as a mature market, very big profitable, very big headroom for growth for us as our portfolio reach an inflection point.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And I think that this covers the part of the market share gain. We talked about this on quarter four last year, and we saw this momentum building. And as a matter of fact, if you look to the latest weeks, the momentum continues to build as our balanced choices portfolio with Michelob Ultra, Michelob Ultra Zero, and Busch Light as the number two brand continues to gain momentum. And the innovation pipeline that we've been launching to this summer will further support that. And in the RTD, the choices we made behind neutral and cut water, they continue to build momentum and accelerate with strong double digits.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

In terms of productivity, this is always on for us. So we don't we made the decision of not coming in launching new productivity initiatives, but we are working very steady on improving productivity quarter after quarter. And this is kicking in into our results, the c g and a. You can see that we continue to improve. And in terms of investments, think that is is very logical.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

One, as the portfolio is that this inflection point, we are feeling the growth. And as I said before, there is a lot of headroom for growth for our portfolio. Second, we are in the business for the long term. Right? So three years ago, we said we would get into this multi year investment growth marketing that would fill the growth of our brands.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And that's not a one year program. It's a multiyear program. And we have massive upside as these brands that are growing continue to gain scale and more reach and penetration with consumers. So it only makes sense to continue to support the growing part of the portfolio and the sustaining part of the portfolio. Momentum is good for our team now in The US.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Summer, we'll have a lot of activation. So from FIFA, Clubs World Cup, to the finals of the NBA that are on fire now, to them, the innovation that we have in the pipeline, and then that's going to connect with NFL and later in the year with Olympics. So it's a it's a very good lineup for the year in The US. We are encouraged by the results we've seen share. Industry in April, as I shared here in the call, much more normal.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And we know that summer is gonna be intense and good for the industry because last year was subdued. Thanks for the question.

Operator

Thank you. Next question today is coming from Sanjit Aljo from UBS. Your line is now live.

Sanjeet Aujla
Sanjeet Aujla
Managing Director at UBS Group

Hey, Michelle, Fernando. A couple from me from me, please. Firstly, on China, it seems like the beer industry is, sequentially less negative. You're clearly still underperforming, but can you give us a sense of where your channel mix is today? You've had a reset presumably in the on trade channel.

Sanjeet Aujla
Sanjeet Aujla
Managing Director at UBS Group

Is the off trade now a bigger part of your mix, or is the on trade still bigger? And then just taking a step back, you know, clearly, you've had some, big macro challenges in a couple of markets over the last twelve months. But how are you thinking about your ability to get back to positive volume growth going into q two and the second half of the year at the group level? Thank you.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hey, Sanjit. Good morning. Thanks for the question. First on China, I think that you are right. The industry has been improving sequentially.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And I think that the more we go towards summer back end of the year, the more we see, normalized industry. Channel wise remains a weaker on trade with a good off trade. And, of course, the more you cycle the on trade, the more is gonna be a less negative impact. And then the more you cycle it, the more the strength of this off trade will add to the to the industry overall. We're still facing a less positive impact on the footprint that we have because the Center West part of the the market in China is still performing better than the Eastern part.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

But, of course, this will also cycle as we go through the summer. And we have a lot to do in China ourselves because, we continue to believe that our business can perform better than what is performing now despite of a negative footprint impact. And we are increasing the execution focus with more discipline on our route to market and overall execution. We increased investments behind our mega brands, especially Budweiser and Harvey. And preference power is moving the right direction.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

STRs on these brands moving in the right direction, but more to do. We are accelerating the expansion in the off trade, massive opportunity there. And as we focus more on our execution on the off premise, we're gonna get better results. And then, of course, innovation scheme China, Harvey Zero Sugar is scaling up very fast, and I think we're gonna have a a great summer with Harvey and with this innovation. When you think macro, look at the quarter one volume performance.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

If you take the leap year out, this is north of 1%. If you think about Easter shift, this can be anywhere from point three to point five. So the underlying volume momentum looks good. And as we head into quarter two and the rest of the year, I think that we will see volume performance improving meaningfully.

Sanjeet Aujla
Sanjeet Aujla
Managing Director at UBS Group

Right. Thank you.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Thank you. Thanks for the question.

Operator

Thank you. Next question today is coming from Simon Hales from Citi. Your line is now live.

Simon Hales
Simon Hales
Managing Director at Citi

Thank you. Hi, Michelle. Hi, Fernando. So a couple for me as well then, please. Michelle, I see one of your big competitors today has just lowered their full year guidance after a tough quarter.

Simon Hales
Simon Hales
Managing Director at Citi

Appreciate your performance was certainly very different in Q1, and there's probably a number of specific factors that are impacting their business for the full year. But I wonder how you're viewing just the broader consumer environment now as we look forward into sort of the rest of 2025 given the increased macro uncertainty we've seen over the last sort of couple of months now, your thinking on that has perhaps evolved since you last updated us with the Q4s in February. And then maybe just following on from that and specifically going back to The U. S, I wonder if you could just talk a little bit more about the momentum you've seen around some of your new launches like Michelob UltraZero in Q1, how we should think about that as we head into the more important summer months? And any other key innovations you're excited about for The US business specifically in q two and q three?

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hi, Simon. Good morning. Thanks for the question. And I got, like, couple of questions within this this one, and I'll take them, one by one here, and maybe Fernando wants to to comment as well on the outlook. But overall, we didn't change our outlook.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Our outlook remains the same, and I think that we are encouraged by the quarter one, delivery. So '4 to eight is our outlook for the year with what we know now. Macro. And when you think about consumer, which is the the the portion on your question that I can address in more details, I think that we are actively monitoring the consumer environment. And I always like to make this differentiation between consumer sentiment and consumer behavior.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

While lots was already sad about the consumer sentiment, and we kind of see the same across the globe. It's almost like the same sentiment that you have in elections here. It goes a little bit down because there is a lot of news coming each and every day. Consumer is more cautious. For us, it's very important to see and to monitor consumer behavior as well.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And on the consumer behavior part, what do we see is that beer is more resilient than some other categories. And, of course, it's a everyday affordable category. We've been activating the category on the key moments. And what we see is participation holding on very well. And as I said, our participation, our brands grew and grew the equivalent of 6,000,000 consumers, within the last quarter.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So beer remains as a category resilient, and the underlying demand for our brands is very positive. We are growing participation. And part of that, I think you are right to compliment the question like this is a is a good question on this sense, comes from innovation. So non alcohol is being an important driver for us with growth coming on the portfolio north of 30%. Corona Zero globally, triple digits, and Michelob Ultra Zero in The US as the number one innovation in the category this year.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So we are north of point 12, I think, in share in the last few weeks, which is great. We are the number one player in The US this year. Michelob UltraZero just started now media because the first quarter was distribution. So we expect to see some acceleration now. UltraZero is now the number five brand in Zero in The US, and we think that we soon will go up on this ranking.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And the other innovation that, the team is very excited. I'm very excited to see in The US is this in and out with Bush Light Apple. If you didn't see yet on the Instagram, Twitter, so people are traveling through the country, queuing inside the stores, volume is flowing very quickly out of the shelves, and Bush like Apple will for sure be one thing that people talk about during the summer. So watch for that because it's gonna be big.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

And, Simon, Fernando here. If I could add, you ask on the on the Outlook. So the Outlook, I think Michelle covered very well the top line. On on our costs, two two comments here. The first one is that, you know, you you have hedges in place.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

So you have very v good visibility in our cost of goods sold. And, it's always a one year delay. So you know that, last year, we had, kind of, the devaluation of emerging markets happened to us the second half of the year, which means that, first quarter is probably the easiest comp. And then later on, you start adding some pressure onto that. But then again, it's expected there is no no using here.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

On the translation side is the opposite effect. More pressure in the first half, and then in the second quarter, probably have easier comps because of the evaluation happening in the second half of last year, mostly Mexican pesos in Brazilian real. And then always important to highlight that we talked about it, during during the initial remarks, but it's always important to remark that even our very local nature of the business, very little impact, if any, from from tariffs. So that kind of combines combining the top line, we follow this kind of a cost comments, leave us to to kind of maintain the same outlook we had since the beginning of the year. Thank you.

Simon Hales
Simon Hales
Managing Director at Citi

That's great. Thanks so much.

Operator

Thank you. Our next question today is coming from Edward Mundy from Jefferies. Your line is now live.

Edward Mundy
Managing Director - Beverages Research at Jefferies LLC

Morning, Michelle. Morning, Fernando. So two questions, please. Just in your, wording around the priority to lead and grow the category, there's a bit of a nuance in your wording from occasions development to balanced choices, in one of your bullets. Could you perhaps provide a bit of context into this nuance?

Edward Mundy
Managing Director - Beverages Research at Jefferies LLC

And does this sort of reflect any change in your strategy, perhaps a bit more focus, a bit more resource behind some of these new growth streams? And then second of all, just a question around perhaps Fernando about driving leverage through the P and L. There's been a pretty decent drop through from EBITDA to dollar EPS despite the FX headwind in the first quarter, you know, lower depreciation, lower financial charges. Could you perhaps talk about the sustainability, of this overall shape into the p and l?

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Okay, Edith. Let let me start, Fernando, here from from your question. I I feel that, we've been talking about it, but some of these things, there is a a little bit of delayed effect. We've been working on optimizing our business. One of the KPIs that you can see is CapEx, and CapEx is coming down.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

But, first, CapEx coming down, and you see that happening on cash flow. And there is a little bit of a delayed effect when you see that coming through depreciation. So that's one of the components of the leverage throughout the p and l. And the second one, which is kind of a function of our efforts on the leveraging. As you deleverage, you have less debt.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

As you have less debt, you have less interest, less interest. And if less interest, then that flows through the EPS as well. So to to to to maybe add to your question, as some of these benefits of, lower CapEx, this unit should come to depreciation. And as we continue to make progress on our leverage, it's going to generate more cash flow. You should see see this kind of, operational leverage happening going forward.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Now we'll turn to Michelle for for the your first question.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hey, Ed. Michelle here. Thanks for the question. And good catch. So we are not less focused on the occasions, but we did this fine tuning because as we interact with consumers and as our innovation pipeline comes to play on the actions that we are putting place in the market, we have been seeing a massive interaction on these balanced choices that we have, which today are big business for us over $5,000,000,000, and occasions for consumers.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Let me just cover this a little bit more. So non alcohol is one that we've been talking, and is becoming very obvious because 60% are either new consumers coming into the category or the same current beer consumer having beer in more occasions because now the non alcohol opens up, this opportunity to them. But this goes beyond only the non alcohol because we see these barriers for consumers to interact with beer. And when we solve for these barriers, they actually prefer our balanced choices rather than other alcoholic beverage. And this, in some markets, is gluten free.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

In some markets, is zero sugar. For some consumers, is the low alcohol organic proposition. And one very broad barrier that we broke for a while already is the carbs and calories. That's why Michelob Ultra goes so well in The US. So this balanced choices that we have is over $5,000,000,000 today, is growing high single digits, net revenue, is being very positive for innovation everywhere.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And we are betting a lot as one of our main platforms to continue to grow the category as we remove barriers for consumers, and we meet them on this healthier lifestyle, balanced choices, ideas that they have as they make their decisions every day. So from non alcohol to low alcohol to low sugar, no gluten, low carbs, low calories. It's very fertile. We are very advanced. It's already a very big business for us, and we are investing big here to grow more occasions and to grow the category and our brands with consumers on the needs that they are attacking and tackling.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And we are providing them a portfolio that is important for them on the needs that they have for their consumption occasions. Thank you.

Edward Mundy
Managing Director - Beverages Research at Jefferies LLC

Great. Thank you.

Operator

Thank you. Next question today is coming from Sarah Simon from Morgan Stanley. Your line is now live.

Sarah Simon
Sarah Simon
Analyst at Morgan Stanley

Yes. Thanks for taking my questions. I've got two. First one was on Mexico. A lot of consumer companies have been talking about Mexico being worse.

Sarah Simon
Sarah Simon
Analyst at Morgan Stanley

You haven't really flagged that up other than the calendar effect. I wonder if you could talk about, how you're seeing the market there. And the second question was, a rather boring one for Fernando. Can you just help us with scope? Because I was expecting sort of positive contribution in Europe from San Miguel in terms of volume, but we had a negative.

Sarah Simon
Sarah Simon
Analyst at Morgan Stanley

And obviously, that goes through the the segment. So just if you could help on on that, please. Thanks.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Okay. So, Sarah, let me let me take the first one, and then Max will take the second one. On the on on the on the scope, there are a few things here. Some are kind of, between financial line and EBITDA, some some to do with the hedges, and I think Sean can go into more detail with you. But to to answer and some yell, since it's just starting, it's more a little bit of a phasing.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

You should expect some some difference, on on other factors. But these are kind of the main one is this financial one, which they carry cost on some commodities and then, on some gal phasing.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

On the industry in Mexico and consumer sentiment, I think that I will start with the point, I raised it on the previous question, which is there is consumer sentiment and consumer behavior. So the behavior, purchase, penetration, everything looks very normal in Mexico. Consumers are interacting well with the category and the underlying trends remain very positive. Of course, in the quarter one, when you look at the Mexico volumes in the industry, there was the last one trading day and there was Easter, which is very relevant for the Mexican market. The same weather pattern that we saw here in The US was somehow extended to Mexico, so there was some impact on weather as well.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

But if you discount for that, the underlying trend was very good. And as a matter of fact, I think that we will see this shift on Easter from quarter one to quarter two, adding some good momentum to Mexico. So I think that we we continue to monitor consumer environment, category, moving well, underlying demand for our brands, very strong in Mexico. And at this point, there is no much more that we we are concerned with the mix. So we continue to activate the brands, work hard each and every day to earn the the business that we have there.

Sarah Simon
Sarah Simon
Analyst at Morgan Stanley

Great. Thanks a lot.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Thank you.

Operator

Thank you. Next question today is coming from Chris Pitcher from Redburn Atlantic. Your line is now live.

Chris Pitcher
Partner at Redburn Atlantic

Hi. Good morning. Thank you. Couple of sorry. Good afternoon.

Chris Pitcher
Partner at Redburn Atlantic

A couple of questions for for me. One follow-up. On China, you're talking about the the importance to, focus on the off trade and build premium there. I mean, that's a very different proposition to building Budweiser, etcetera, in the nightclub channel. Have you got the resources on the ground?

Chris Pitcher
Partner at Redburn Atlantic

I mean, clearly, you can borrow experiences from other markets. I just want to understand how easy it is to transfer volume into that channel. And then secondly, we don't often talk about the underlying business in Argentina, but it certainly sounds like things are starting to improve and potentially it could you know, inflation keeps falling. You could start to have a a better backdrop there. I mean and how healthy is the Argentinian business?

Chris Pitcher
Partner at Redburn Atlantic

You've done a good job to protect dollar profitability given everything. Is is that a market we should be getting more encouraged about in in the coming quarters, years? Thanks.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hey, Chris. Good morning. Thanks for the question. So first on China. In China, we will continue to have a very good business in their own trade.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Our brands are very strong, and their own trade will rebound with time as consumer confidence gets recovered. So that business is a good business. We continue to support and we will rebound over time. The growth in the off trade is something that we actually see in your markets as the markets mature. Consumers tend to have more occasions, more in home occasions, and the off trade grows.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

I think that in China, it's just that there's many other things is happening very fast. And the number one asset that we need to have to have the off trade consumption and volume is really strong brands. And when you think about Corona, Budweiser, Blue Girl, Harvey Ice, they are all very strong brands. But there is, of course, some tweaks on the Salesforce, on the route to market, and this is where the team is working now. So we need now to see how the year will play second quarter, third quarter, to see where our volumes will start to to rebound and the rate of success and speed in which we can capture this opportunity on the off trade.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

But the most important asset, strong brands, we have it in China. In Argentina, that's a good point. We talked about that last year a lot. Was a very abnormal disruption for the industry in Argentina that was unrelated to the category itself, but much more based on the macros. Macro is improving in Argentina.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And as a consequence, sequentially, the industry is getting better. And I think that we'll see further improvement through the year. The business itself, very good cash flow, brands very strong, market share remains, positive. And I think that now is a matter of giving time to the macroeconomics to improve, consumer purchase power to return, and we'll see gradually an improvement on volume. And as you said, because margins are in the right place, profitability is in the right place, brands remain strong, we'll see this flowing through the p and l for sure. Thanks for the question.

Chris Pitcher
Partner at Redburn Atlantic

Thank you.

Operator

Thank you. Next question today is coming from Trevor Sterling from Bernstein. Your line is now live.

Trevor Stirling
Analyst at Bernstein

Hi, Michelle and and Fernando. Just one from my side, please. And putting a bigger pictures picture one. You know, there's been a big huge debate going in The USA about the extent to which younger people drink less algal, participate less in the category, and what that has implications for category growth. But if you think about your big emerging markets, Mexico, about Brazil, about Colombia, do you see any similar trends emerging there maybe amongst the the more elite youth who are perhaps more being more influenced by The US, or, you know, is it business as usual?

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hi, Trevor. Thank you for the question. And as you know, in our business, there is never a day when business is just business as usual. So it's fast, good, consumer goods. We work very hard to earn the business every day.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And we discussed it in some different occasions, this COVID generation, and the fact that many, many of the behaviors that are naturally evolving when you are 21, 20 two, 20 three years old, for this generation was a little bit later. Right? So from the college that you had to be one year or two years out of your home, or from the dorms to participating in sports events, music events, gatherings with friends. And I think that when we look at that, it's somehow the same everywhere, but is recovery and moving, everywhere as well. Because behaviors, they normalize a lot as we look at the 24, 20 five cohorts.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And then there are idiosyncratic issues that are different in each and every market. So in some markets, very fast penetration of non alcohol beer. In some other markets, you see economic disruptions like we just spoke about in China or in Argentina. But overall, participation is okay across the globe, is smaller on this younger cohorts, but normalizing as you go from '21 to '24 to '27. We see on the other side, the same thing.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So participation is stronger on the older cohorts because people are just, like, living longer, going out more often, spending more money. So there is puts and takes on the participation, but there is a big normalization on the core of the category from 24 to 35 looks very normal. And we, of course, we are monitoring this very carefully. We are working on our balanced choices portfolio because it resonates very well with consumers from zero sugar to gluten free to low carb to non alcohol. So we are offering a proposition that caters for every different taste and moment. Thank you.

Trevor Stirling
Analyst at Bernstein

Thank

Operator

Thank you. Next question is coming from Jim Cross from BNP Paribas. Your line is now live.

Gen Cross
Director at Exane BNP Paribas

Hi, Michelle. Hi, Fernando. Thank you for the questions. Just a couple on costs from me. So SG and A looks like it declined by, you know, roughly mid single digit organically in both South America and Middle America regions in Q1.

Gen Cross
Director at Exane BNP Paribas

Obviously, you got organic revenue growth in both of those regions. So I'm just wondering if there's any color you could share in how you've managed to achieve a decent reduction in your SG and A expenses in those two regions. And the second one is kind of going back to actually an earlier question on finance costs, which saw quite meaningful reduction year on year, and recurring net finance costs being below about below the $1,000,000,000 mark in the past couple of quarters now. And as you've commented on Fernando, debt levels continue to come down. Do you expect to stay below the billion dollar mark per quarter going forward? Thank you.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Hi, again. So, so on the first piece of the question, s c g and a, it's it's the ongoing optimization. I think, we have this kind of ongoing effort. As Michelle mentioned, it's not that we announced, that we're gonna do an effort or this or that. But on a recurring basis, we always look at our cost basis and see how we can further optimize.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

So this is kind of a part of our day to day. On the second question on finance costs, it's a function of same same kind of a rational ongoing optimization. And as you kind of reduce your leverage, you can start having kind of this benefit to for lower interest expense kind of it's a kind of a a kind of a it just keep getting momentum on that. So we continue to work on that. We don't provide any guidance, kind of, on on kind of, what is our next quarter finance expenses.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

We just provide the the guidance on our on some of our accruals. But, definitely, we mentioned that on the fourth quarter last year, on the full year. The step change on the free cash flow helps. It helps because you have less debt and helps because you have more cash, which also an interest on it. But, definitely, the two topics that you mentioned, it's part of the pillar three of our strategy, optimize our business.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Thank you.

Gen Cross
Director at Exane BNP Paribas

Thank you.

Operator

You. Next question is coming from Olivier Nikolay from Goldman Sachs. Your line is now live.

Olivier Nicolaï
Olivier Nicolaï
Analyst at Goldman Sachs

Hi, good morning. Michel, Fernando, Sean. Just two questions, please. Just a follow-up on The U. S, First of all.

Olivier Nicolaï
Olivier Nicolaï
Analyst at Goldman Sachs

You have a very detailed database in The U. S. By consumer, by postcode. You flagged that April is effectively better, thanks to the weather and then the Easter timing. But do you see any consumer demographics or any specific states where you are seeing any sign of consumer weakness there concerning the overall lower consumer confidence since the beginning of the year?

Olivier Nicolaï
Olivier Nicolaï
Analyst at Goldman Sachs

That's the first question. Then secondly, you had a very strong margin improvement in Q1 that was driven by gross margin being up strongly. Could you give us perhaps a bit more details on the driver behind this increase and if you think that will continue at this pace for the rest of the year? You.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

Hi, Olivia. Let me start, by by your second question on the margin improvement. I think the margin improvement, the gross margin improvement, as I said, the hedge kind of, we have very good visibility in our costs. And given the dynamics of effects and commodities last year, which has a delayed effect on us, first quarter is the one that you have more of a tailwind. As you navigate throughout the year, probably, you're gonna have some more pressures on the cost of goods sold.

Fernando Tennenbaum
Fernando Tennenbaum
CFO at Anheuser-Busch InBev

It's starting already in q two, but more pronounced in half two of the year. But having said that, we have our outlook, the four to eight, kind of a nothing changes here. We think kind of a while, you should have a little bit more pressure on the transactional cost of goods sold. If you look from a translation standpoint, that should be quite the opposite kind of. You should have a harder comps in the first half of the year and easier comps in the second half of the year. And on your first question, Michelle.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hi, Olivia. Michelle here. So on The US, I think that we we included this page on the webcast because I thought it would be very helpful for us to look at this together, is public data from Surcana that shows better industry in April. The industry in January was rather more normal, and the weather patterns being cold weather and precipitation being the main factors for this tough industry that we saw during the quarter one.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

That was the main explains majority of what we saw in terms of deviation from normal. If you think about consumer, what we see is participation, normal. Our brands are gaining participation on The US, which is very positive for us at the beginning of the year. And we have a portfolio that covers all price points. So during the course of last year, there were several questions about inflation, where consumers were going, and what we were seeing other categories.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And I emphasized this idea that we have Stella, premium brands, Michelob Ultra, premium core plus, mainstream brands, and a very strong value portfolio. It's not a surprise for us that Busch Light is the number two brand now for two, three quarters in a row. So our portfolio is well positioned to cover the current environment because we offer an expand that goes from strong value brands to premium brands, and we cover nationwide all channels and regions. So I think that is weather impacting the quarter one. Let's see now the quarter two.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

We are positioned with a good portfolio, and we see that this portfolio is gaining participation in The US. Thank you.

Olivier Nicolaï
Olivier Nicolaï
Analyst at Goldman Sachs

Thank you very much.

Operator

Thank you. Our final question today is coming from Mitch Collett from Deutsche Bank. Your line is now live. Hello, Mitch. Perhaps your phone is on mute.

Mitch Collett
Mitch Collett
Director at Deutsche Bank

Hi, Michelle. Hi, Fernando. Just a quick question on Beyond Beer, which accelerated to, I think, 16% growth this quarter from low single digits in 2024. What what drove that acceleration, and can you sustain it? And and you're clearly a beneficiary of the growth in the ready to drink cocktails in The US.

Mitch Collett
Mitch Collett
Director at Deutsche Bank

I'm sure that's a contributor. But where else are you excited about the opportunity and beyond beer? Thank you.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hi, Mitch. Thank you for the question. So I will start by stating something that three years ago when we discussed our strategy and the opportunities for growth as we aim to lead and grow the category. I mentioned this beyond beer space and this interesting intersection between hard liquor, wine, and beer that was very incremental for beer. So we know, like, two thirds of the volume there adds to the beer category.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

The capabilities that we have because people want convenience, and they want small packs, cans, and we as breweries are well positioned for that. And we said that we would go after this opportunity and use this as a driver for our growth. And this is what we are doing. Right? So on the strategy, a clear view on where to play.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

And on the how to win, we discussed it many times brands because people want to buy brands here. They don't want generic liquids, and they like brands that are new to the world. That's why Neutral does so well. That's why Cutwater does so well or flying fish. And we had to reorganize our portfolio here because we had too many offers.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So you are familiar with this idea that we streamlined our portfolio globally by 30% in terms of SKUs. Now we have clearly five global brands on this space, Flying Fish, Beats, Cutwater, Neutral, and Brutal Fruit. We are rolling these brands to more countries. But in each country where these brands were born and we operate, they are gaining momentum. That's the case for cut water in The US, for nutrient in US, for flying fish in Africa, so on and so forth.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So because we first streamlined the portfolio, we had a very clear view that this is a growing segment and that we can win big globally. Now we are in full execution mode. And because of that, volumes are accelerating, top line is accelerating, The rollouts, they open a huge opportunity for us to be more markets because consumers want this proposition across the globe. And the brands that we have now, they fit for each of the needs that the consumers have there for more light and refreshing to more complex and full taste. So from neutral to cut water and everything in between, we can cover with these five brands.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

So it's an exciting space. It's a growing opportunity, and we think that we are well positioned, to continue to to drive the growth of this segment with our portfolio and to be, of course, increasing our volumes and penetration with our brands, as these propositions, they resonate somehow globally. Thank you.

Mitch Collett
Mitch Collett
Director at Deutsche Bank

Sorry.

Operator

Thank you. We reached the end of our question and answer session. I'd to turn the floor back over for any further or closing comments.

Michel Doukeris
Michel Doukeris
Chief Executive Officer at Anheuser-Busch InBev

Hey. Thank you. Thank you, everybody. Thanks for your time today for the ongoing partnership and support for our business. Stay safe and well, and we'll talk soon. Thank you.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Analysts
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Key Takeaways

  • EBITDA grew by 7.9% at the top end of guidance with 218 bps margin expansion, driving a 7% rise in underlying EPS in USD (20% in constant currency).
  • In the US, the beer portfolio hit an inflection point with share gains led by Michelob Ultra and Busch Light, and spirits‐based RTDs grew strong double digits despite weather and Easter timing headwinds.
  • The non‐alcohol beer portfolio accelerated with revenues up 34%, led by triple‐digit growth of Corona Zero, and gained share in 75% of its key markets.
  • Digital channels continue to scale, capturing $11.6 bn in global GMV (+10%) and $645 m in marketplace GMV (+63%), while DTC orders reached 19.2 m with revenue up 12% to $117 m.
  • Ongoing business optimization reduced CapEx and interest costs, bolstering free cash flow and supporting confidence in delivering the full‐year outlook of 4–8% EBITDA growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Anheuser-Busch InBev SA/NV Q1 2025
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