Ambev Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2026

Key Takeaways

  • Positive Sentiment: Q2 momentum strengthened: volumes increased 1.4% year over year, beer volumes grew mid-single digits, net revenue rose 6%, normalized EBITDA increased 9%, and normalized EPS jumped 24%.
  • Positive Sentiment: Ambev gained beer market share in Brazil for the fourth consecutive quarter, with premium volumes up in the mid-20s, balanced choices doubling, and no-alcohol beer growing in the 30s. Brazil beer revenue and EBITDA grew 9% and 13%, respectively, with 110 basis points of margin expansion.
  • Positive Sentiment: The company reported strong cash generation and shareholder returns, including BRL 7.9 billion of first-half operating cash flow, approximately 95% completion of its share-buyback program, and BRL 5.9 billion of announced buybacks and interest-on-capital distributions on a pre-tax basis.
  • Neutral Sentiment: BEES Marketplace GMV grew approximately 60% in Q2 and the first half, while gross margin expanded 6.7 percentage points to 22%, highlighting the digital ecosystem’s growing role in distribution, assortment, and monetization.
  • Negative Sentiment: Brazil non-alcoholic beverage volumes declined 4.4%, with roughly 30% of the decline tied to exiting a lower-return fast-food channel that will continue to weigh on year-over-year comparisons. Bolivia also experienced a double-digit volume decline from temporary unrest, and its currency devaluation is expected to create future negative translation effects.
AI Generated. May Contain Errors.
Earnings Conference Call
Ambev Q2 2026
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's 2026 second quarter conference call. Today with us, we have Mr. Carlos Lisboa, Ambev's CEO, and Mr. Guilherme Fleury, CFO and Investor Relations Officer. As a reminder, this conference presentation is available for download on our website, ri.ambev.com.br, as well as through the webcast link. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After Ambev's remarks are completed, there will be a Q&A session during which we kindly ask that each participating sell side analyst ask only one question. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996.

Operator

Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to the future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the % changes that will be discussed during today's call are both organic and normalized in nature, and unless otherwise stated, % change refer to comparison with 2025's second quarter results. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities.

Operator

As normalized figures are non-GAAP measures, the company disclosed the consolidated profit, EPS, operating profit, and EBITDA on a fully reported basis in the earnings release. I will turn the conference over to Mr. Carlos Lisboa. Mr. Lisboa, you may begin your conference.

Speaker 1

Good afternoon, everyone, and thank you for joining our second quarter earnings call. Across our footprint, football is part of our culture, one of the strongest passion points that bring people together. Beer has a unique role in creating such special moments. I want to congratulate all the national teams from our markets that represented their countries in the FIFA World Cup. I also want to recognize our teams for their outstanding execution across Ambev's footprint. Moments like these are also where our company stands out. The World Cup is one of the toughest execution tests in our industry. The challenge goes beyond activating a campaign. It is about turning a tournament into a semester-long platform, activating a portfolio rather than a single brand, and connecting consumers and customers across countries, channels, and millions of points of sale while building engagement that lasts beyond the final whistle.

Speaker 1

Across our markets, our brands were among those most associated with the event. We did not just take part of the World Cup, we helped shape the category through it. While the World Cup has come to an end, our own game has only reached halftime. Ambev's performance continued to strengthen in the second quarter, with its quality and shape improving versus Q1. Volumes provided a much stronger contribution, growing 1.4% year-over-year, with beer up mid-single digits. Disciplined revenue management and resource allocation supported net revenue growth of 6% and normalized EBITDA growth of 9%, even as we stepped up investment behind our brands. As a highlight, our normalized EPS grew 24%. Looking at the movie rather than the picture, the first half provides a broader view. Total volumes grew 0.7%, with beer volumes growing well ahead of the total.

Speaker 1

Net revenue grew 7%, normalized EBITDA increased 10%, implying 1.3 times operational leverage, and normalized EPS also grew 10%. Operating cash flow reached BRL 8 billion, one of Ambev's highest first-half levels. As we enter the second half, we are building a business with stronger foundations and designed to deliver compound profitable growth over time. Behind this progress is our three-pillar growth strategy. Starting with pillar 1, lead and grow the category. This quarter, we advanced on both dimensions. On lead, we strengthened both brand equity and market share across our 5 largest markets. On growth, share gains and improving industry conditions supported beer volume growth in markets that represent over 80% of our volumes. Mainstream continued to improve sequentially, with volumes only slightly below last year. We continue to lead the high-growth segments with a broad and complementary portfolio. Premium remain a key growth engine, growing nearly 20%.

Speaker 1

Balanced choices grew more than 60%. No alcohol beer grew around 20%, and flavor beer and RTDs maintain momentum. Michelob ULTRA shows how we scale a relevant consumer proposition across markets. It more than tripled in Brazil and Argentina during the quarter, grew over 50% across our footprint, and is now present in nearly all our markets, connecting with consumers seeking a more active and balanced lifestyle. This takes us to pillar 2, digitize and monetize our ecosystem. Our digital ecosystem has become a key lever for category development. In an increasingly dynamic environment, a broader portfolio creates greater complexity. BEES enable us to manage that complexity with greater precision, strengthening the core while accelerating the new engines of category growth. It is not just a technical backbone, but an execution powerhouse that creates efficiencies and improves how we operate every day.

Speaker 1

We read demand faster and more accurately, help customers increase sell-out through better recommendations, and allocate resources to the highest return opportunities. This strengthens our performance while helping our partners grow, as reflected in the continued improvement in our NPS. Ambev BEES Marketplace GMV grew around 60% in both the second quarter and the first half. In the first half, gross margin expanded 6.7 percentage points year-over-year, reaching 22%. In Brazil, marketplace GMV doubled in the first half, with 3P as the main driver. Under pillar 3, optimize our business. This pillar creates the flexibility to deliver on both of our capital allocation priorities, investing behind opportunities that drive long-term growth while consistently returning excess cash to shareholders. In the quarter, we stepped up investments behind our brands while expanding normalized EBITDA margin by 80 basis points.

Speaker 1

That discipline, together with solid cash generation, allowed us to advance our share buyback program and announce an additional IOC distribution this quarter. Together, the three pillars reinforce one another, creating a flywheel that strengthens the company and supports sustainable, profitable growth. Before moving to our key markets, let me highlight the breadth of our performance. In both the second quarter and the first half, beer volumes grew or remained broadly stable in seven of our 10 largest markets, while net revenue and EBITDA grew across all business units, showcasing that our progress was not dependent on any single market or growth lever. Starting with Brazil beer. Continued commercial momentum supported another solid quarter. The beer industry continued to improve sequentially.

Speaker 1

According to Nielsen, sell-out improved from a high single-digit decline in the second half of 2025 and mid-single digit decline in the first quarter to a slight decline in Q2. Nielsen's measurement calendar ended around June 20, capturing only the early part of the World Cup period. Extending the analysis through month-end and across our broader coverage, we estimate that the industry was slightly positive in the quarter. The World Cup created incremental demand across channels and regions. Nevertheless, it was offset by adverse weather conditions. Average temperatures remained below last year and well below 2024. On a two-year comparison, our industry modeling indicates that adverse weather accounts for the full industry volume gap versus 2024. Even so, our consumer tracking shows sequential improvement in category equity and participation, reinforcing our confidence in the category's resilience in a dynamic consumer and macroeconomic environment. Through that, our business continued to outperform.

Speaker 1

Market share expanded year-over-year for the fourth consecutive quarter, consolidating the commercial momentum of our business in Brazil. We estimate that our share increased across mainstream, premium, balanced choices, and beyond beer. Brand equity continued to improve while price relativity remained broadly stable versus last year. This quarter marked one full year since we regained leadership in premium, with our share of the segment reaching an all-time high. Premium grew in the mid-20s and reached approximately 25% of our beer volumes. This performance reflects our new premium architecture, with each brand anchored to distinct consumer need states. Original for authenticity and simplicity. Stella Artois for quiet luxury. Corona for the outdoors and natural living. Michelob ULTRA for an active and balanced lifestyle.

Speaker 1

The recent announcement of Spaten Pro takes this architecture into a new space, combining premium credentials with zero alcohol and 10 grams of protein to expand balanced choices into new occasions. Balanced choices volumes double versus last year, while no alcohol grew in the 30s. Mainstream was broadly stable, delivering a significant improvement from a mid-single-digit decline in the first quarter. Together, improving industry conditions and market share progression supported 5% beer volume growth. Serving this portfolio across more than one million points of sale requires precision at scale. Our digital ecosystem provides that capability. Through BEES, we improved assortment, placed the right SKUs in each outlet, and activated our World Cup platform nationwide. Beer distribution grew more than 6%, with returnable bottles up over 4% and premium over 20%.

Speaker 1

On the consumer side, Zé Delivery GMV grew 16% versus last year, while orders more than double on the Brazilian national team match days. Zé also give us a real-time view of where the category is heading. Premium already represent 35% of beer volumes on the platform, while balanced choices reached approximately 7%, nearly twice the weight in Brazil beer. This combination translated into net revenue growth of 9%, EBITDA growth of 13%, and 110 basis points of margin expansion while we continue to invest behind our brands. In Brazil NAB, sequential improvement, although the job is not done yet. The recovery has taken longer than expected, and volumes declined 4.4% in the quarter. Around 30% of the decline reflected our decision to phase out volumes from a lower return channel. Adjusting for this decision, volume performance improved versus the first quarter.

Speaker 1

By the end of the first half, we had also cycled the toughest comparison base of the year. Market share progressed sequentially, approaching historical levels by the quarter end as price relativity pressures eased. Throughout the period, we continue investing behind our brands to regain momentum while maintaining discipline in revenue management and protecting profitability. As a result, Brazil NAB delivered double-digit EBITDA growth with more than 300 basis points of margin expansion in both the quarter and the first half. Last, we had two distinct realities within this quarter. In Bolivia, temporary social unrest and road blockades disrupted mobility and logistics for much of the period, leading to a double-digit volume decline. The situation has since normalized, and our operations are running normally. Argentina, by contrast, was a highlight.

Speaker 1

Our beer volumes grew low double digits, lapping growth in the same quarter last year, supported mainly by continued market share momentum and improving industry and the national team's World Cup performance. Premium grew high single digit, led by Stella Artois and Corona. Balanced choices reached a mid-single-digit mix of our beer volumes, supported by the launch of Michelob ULTRA and Stella Pure Gold. Mainstream was broadly stable, with Quilmes strengthening brand equity and mainstream share. This is the same category development playbook we are executing in Brazil, scaling premium and developing balanced choices while continuing to strengthen mainstream. In the Dominican Republic, our business delivered mid-single-digit volume growth in the quarter, despite adverse weather conditions in April. The consumption environment remained constructive, supported by a favorable macro backdrop and healthy price relativity versus other alcoholic beverage.

Speaker 1

Beer continued to gain share within alcoholic beverage. Our volumes grew high single digits in the first half. Premium grew more than 40%, led by Corona and Michelob ULTRA, while mainstream grew low single digits, supported by Presidente and The One in the first half. Presidente's brand equity remains strong, reinforcing its leadership and cultural connection with Dominican consumers. Finally, in Canada, we continue to outperform in a dynamic environment. The beer industry declined low single-digit as unfavorable weather and softer consumer demand weighted on performance. Trends, nevertheless, improved from the first quarter, supported by FIFA World Cup occasions. We gained market share in both beer and beyond beer. Within beer, Michelob ULTRA continued to lead the development of balanced choices, while Busch strengthened our mainstream performance. In beyond beer, Mike's and Cutwater remain important growth drivers.

Speaker 1

As a result, Canada delivered low single-digit top-line growth alongside low to mid-single digit EBITDA growth and margin expansion in both the quarter and the first half. With that, I will now turn it over to Fleury for the financial highlights.

Speaker 2

Thank you, Lisboa. Hello and good afternoon, everyone. As we close the first half of the year, our financial performance reflects the mindset that has guided us over the past quarters to create value through disciplined resource allocation, focusing on what we can control. In the first half of 2026, we delivered 9.6% normalized EBITDA growth with margin expansion across all of our business units, as well as 10.1% growth in normalized net income. Stated EBITDA grew 2.5% and stated net income increased by 11.6% in the period. From a cash flow perspective, our first half performance allow us to continue executing our capital allocation priorities of investing in the organic growth of our business, while also returning excess cash to shareholders over time. The first half performance was supported by another quarter of consistent execution of our growth strategy. Let me walk you through the second quarter highlights.

Speaker 2

As we mentioned during our first quarter earnings call, these expenses tend to follow the timing of our meg events calendar, and Q2 reflected that. Distribution expenses also increased in the period, mostly due to volume performance as well as one-off expenses in LAS as part of restructuring initiatives in Argentina. Taken together, these results illustrate how we think about resource allocation. Our cost PMO initiative that started last year is based on a continuous improvement mindset, together with choices to focus on growing return on invested capital, ultimately freeing up resources to reinvest in our strategic priorities and pursue our ambition of delivering consolidated margin expansion over time. On administrative expenses, it is important to remember that the effect of lower volumes in 2025 impacted our bonus accruals in the second half of last year, creating a potentially tougher comparison base going forward. Moving to below EBITDA lines.

Speaker 2

As we mentioned during our first quarter earnings call, these expenses tend to follow the timing of our meg events calendar, and Q2 reflected that. Distribution expenses also increased in the period, mostly due to volume performance as well as one-off expenses in LAS as part of restructuring initiatives in Argentina. Taken together, these results illustrate how we think about resource allocation. Our cost PMO initiative that started last year is based on a continuous improvement mindset, together with choices to focus on growing return on invested capital, ultimately freeing up resources to reinvest in our strategic priorities and pursue our ambition of delivering consolidated margin expansion over time. On administrative expenses, it is important to remember that the effect of lower volumes in 2025 impacted our bonus accruals in the second half of last year, creating a potentially tougher comparison base going forward. Moving to below EBITDA lines.

Speaker 2

Net financial expenses totaled BRL 486 million in the quarter, a 50% reduction versus the same period of last year, mainly explained by two positive non-cash factors in the non-derivative instruments line. First, in Bolivia, following an approximately 40% devaluation of the local currency in late June, we had a positive effect coming from the conversion of hard currency held in the company. These reserves were built to secure liquidity to meet expected foreign currency obligations, including payments to certain suppliers and dividends remittances. Second, a positive effect that came from other markets where local currencies were more stable during the quarter, resulting in lower conversion losses on monetary balances compared to last year. On the Bolivia devaluation, it is worth noting that our consolidated income statement reflects average monthly effects rates as required under the applicable accounting standards.

Speaker 2

Going forward, the local currency devaluation is expected to gradually create a negative translation impact on our financial and operational results. Turning to income taxes, our consolidated effective tax rate in the quarter was 19.9%, compared to 18.4% in the second quarter of 2025, reflecting country mix effects over higher earnings before taxes, partially offset by regular income tax attributes. In the first six months of the year, our ETR was 20.6%, broadly in line with the 20.3% recorded in the first half of 2025. Both normalized and stated net income reached about BRL 3.5 billion, increasing 23.3% and 24.5% respectively versus last year. Normalized and stated earnings per share reached BRL 0.22, representing respectively a 24.2% and 25.4% increase versus last year.

Speaker 2

Turning to cash flow generation, let's go beyond the quarter and look at our performance in the first half of the year. Cash flow from operating activities totaled BRL 7.9 billion, an increase of BRL 3.6 billion, representing over 80% improvement versus the same period of last year. This was mainly driven by higher EBITDA and improved working capital dynamics, with payables reflecting our volume performance. Cash flow used in investing activities totaled BRL 3.3 billion, BRL 1.5 billion higher than in the first half of 2025, primarily reflecting the deconsolidation of assets previously reported as restricted cash in CAC, as disclosed in our first quarter's financial statement, partially offset by lower CapEx investments.

Speaker 2

It is important to note that we continue to invest with discipline in our operations, balancing brewery upgrades, capacity expansion, innovation capabilities, the expansion of our commercial assets base, and our technology infrastructure, all aimed at supporting long-term value creation. Cash flow used in financing activities totaled BRL 5.7 billion, BRL 7.1 billion below last year, mainly explained by our BRL 6.7 billion 2024 dividend payout in early 2025. This cash flow performance support our shareholders' agenda already demonstrated this year through, one, the execution of approximately 95% of our 208 million share buyback program announced in October last year, representing roughly BRL 3.2 billion cash disbursement until July. Two, the BRL 4.2 billion 2025 IOC payment announcements before withholding tax to be fully paid by October 6th.

Speaker 2

Three, the 2026 IOC declarations of BRL 1.8 billion made so far this year before withholding tax to be paid by December. Altogether, such events represent BRL 5.9 billion return to our shareholders on a pre-tax cash basis, as announced until the date of this report. Back to you, Lisboa.

Speaker 1

Thank you, Fleury. Let me close with these three messages. First, our first half performance reinforced our conviction in the category. Beer is big, profitable, and growing in the majority of our markets with healthy fundamentals. Its cultural relevance and versatility allow us to serve a broad range of consumers' need states and occasions, giving the category meaningful room to grow. Second, as category captain, our role is to bridge the gap between beer's potential and actual consumption. We have what it takes to do that. A proven growth formula built around our three pillar strategy and being deployed across our footprint through replicable models. Third, the flywheel is in motion and gaining momentum. We closed the first half with positive volume growth, high single digits net revenue growth, almost double digits normalized EBITDA growth with margin expansion, and double digits normalized EPS growth.

Speaker 1

Solid operating cash flow supported continued shareholder returns. The consistency of this performance gives us confidence as we build on this progress in the second half. Before I finish, I want to thank our teams and business partners across all markets for their ownership, resilience, and commitment, and for continuing to dream big to create a future with more cheers. Thank you very much for joining us today. With that, let me hand it over to the operator.

Operator

We will now begin the Q&A session. To ask a question, we kindly ask sell-side analysts to click on the Raise Hand button at the bottom of the screen. To remove a question from the queue or after your question has been addressed, please click Lower Hand button. We kindly reinforce our request that each participant ask only one single question. Our first question comes from Nadine Sarwat with Bernstein. You can open your microphone.

Speaker 3

Hello, everybody. Thank you for taking my question. I'd like to zoom in on Brazil NAB, and on the -4.4% volume growth. Thank you for confirming that 30% of that decline was from the channel phase out. Am I correct in assuming that that channel phase out will continue to be a headwind year-over-year for the next three quarters? Putting that to one side, can you share with us how the underlying soft drinks market did so that we can get a sense of that underperformance that you mentioned? How are you thinking about that segment in the second half of the year? Thank you.

Speaker 1

Hi, Nadine. Lisboa here. Thanks for the question. You already mentioned about the phase out, right? Let me just complement the point with the following. First, the NAB industry in the first semester of this year was positive. We couldn't leverage that much because the recovery for us took longer than expected because we were focused on correcting the commercial course. I mean, price relativity, market share performance, volume performance, without compromising the health of the P&L of our business unit. Okay? I'm glad that we closed Q2 very in line with our expectations. Took longer, now we are very close because we corrected the price relativity without compromising what we deliver in terms of net revenue per hectolitre performance in the quarter. Two, the market share got pretty in line with historical levels by the end of the quarter. Right?

Speaker 1

Three, as a consequence, we saw our volumes also improving within this period. Right? When we look forward, I think it's always good to have in mind that last year we had two different years within the year. Right? Which means that we just cycled through the most tough comparison base for us volume wise and share wise. Right? Which means that now moving forward, we're going to have a way better context to navigate with the recovery on top, the recovery of the balance that I just mentioned to you. Right? In terms of health, I won't go into any sort of guidance about the industry moving forward. Given what I just mentioned to you, we should expect a way better situation for us on the NAB business in the second half of this year.

Speaker 2

Nadine, Fleury here. If I can just complement Lisboa. I also heard you asking about how that adjustment, the 30%, will continue on the year. On that one, allow me to make two comments. That started or that is part of the resource allocation that we've been doing with Lisboa, thinking about profitability channels, so on and so forth, and that is related to a specific fast food channel that we've exited. Therefore, that will continue to lap throughout this year. Okay?

Speaker 3

Perfect. Thank you very much.

Speaker 1

Thank you.

Operator

Our next question comes from Thiago Duarte with BTG. Your microphone is open.

Speaker 4

Hello. Thank you very much. Hello, Lisboa, Fleury, and everybody. My question is now moving to Beer, Brazil, and it is really trying to clean up the figures a little bit, considering the World Cup. You already mentioned the additional impact that the World Cup had in sales and marketing as you try to activate the brands and everything. If you could also extrapolate a little bit of that analysis into your top line for Brazil Beer, both in terms of what you think the volume contribution was and also in terms on whether the event may have had an impact in terms of your revenue per hectoliter or average pricing for the quarter. That would be my question. Thank you.

Speaker 1

Hello, Thiago. Nice to talk to you again. Let me answer your question starting from the overall assessment of the event, the World Cup. A positive is always important to emphasize that and broadly in line with our expectations. For us, it was a six-month platform activation across portfolio, channels, regions, countries. Very different from one single brand campaign. Broad impact in line with what we were expecting across the footprint. Not only Brazil, but Brazil, Argentina, Panama, Paraguay, Canada, pretty much all of them bringing pretty interesting results, not only in volume, industry recovery, but also in terms of brand equity for our portfolio. Specifically about Brazil, what we estimated in terms of impact was around 0.5 to 1 percentage point in industry growth for the quarter, which is also in line with what we stated during our first quarter announcement.

Speaker 1

It was very interesting for us because we could activate, I'm going to use Brazil as an example. Not only for our core brands, but we did so for pretty much all segments in our portfolio, from core to premium, with the introduction and acceleration of Michelob. We did so as well with the Balanced Choice portfolio, and even with the Beyond Beer, we activated Flying Fish. It was very interesting for us to manage the portfolio during the tournament. In terms of overall volume performance for the quarter, we estimate that the industry was slightly positive, as I mentioned during the intro. On top of that, we had a broad-based share gain that pretty much explained the overall volume performance of the company.

Speaker 1

When we look at net revenue per hectoliter, it's always good to have in mind that the first quarter result was a combination of a strong carryover on top of a prior year without any sort of carryover. On top of that, the initial implementation of calendar, and the mix. The combination of the three components deliver a very solid net revenue per hectoliter performance. We were expecting somehow a dilution of our carryover through the quarter two, and we kept the discipline on the rate side. As a consequence, we delivered for the semester a net revenue per hectoliter that increased around 6%, which is 50% pretty much above inflation, with a good combination of rate in line with inflation and a mix contribution on top of that.

Speaker 1

I always like to emphasize as well, Thiago, the mission of the net revenue strategy for us, which is on one fold, protect profitability. However, on the other fold, also protect the accessibility of our consumers to the category. That's exactly the type of strategy we're going to keep in place for the residual part of the year.

Speaker 4

Thank you. Just one clarification from the statement you just made, Lisboa. You said you were already expecting some dilution from the net revenue per hectoliter into Q2, and I'm assuming that's because of the World Cup.

Speaker 1

No. It's because of the carryover dilution from quarter one to quarter two and due to the comp base against 2025. Keep in mind that in the second quarter last year is when we kick off our net revenue agenda in the year. That's why we also saw a temporary impact in market share that we recover in Q3. That's the reason why we were expecting, not due to the World Cup.

Speaker 4

Perfect. It's because you're looking on a year-over-year basis.

Speaker 1

Exactly.

Speaker 4

I was referring on a Q-over-Q basis.

Speaker 1

Yeah.

Speaker 4

That's clear. Thank you so much.

Speaker 1

Thank you very much.

Operator

Our next question comes from Carlos Laboy with HSBC. You can open your microphone.

Speaker 5

Yes. Hello, everyone. Lisboa, I keep coming back to kind of a different variant of the same question as previous quarters. It seems that your brand strength indicators and market share indicators for Brahma and Skol in their respective regions of strength only, that they've been moving in the right direction, that the gaps you were trying to close have closed. Can you give us an update on that? Is the first question. The second question related to that is, do your premium and innovation efforts accrue a benefit to the quality image of your mainstream brands? In other words, how do you know that what you're doing with Corona and the Michelob ULTRA push that we just saw and the quality image of those brands is creating sort of a halo maybe over your mainstream category or not? Thank you.

Speaker 1

Hey, Laboy. Nice to talk to you. A pretty interesting angle that you are bringing again to our discussion here. I'm passionate about this topic because one big dream that we have at Ambev, Laboy, is exactly about reimagining the beer category. What the beer category can be. By doing so, in the end, our role, our mission is to bridge this future category image and the actual consumption, the actual portfolio that we have. The entire architecture in the end that we are building here has this role for us. When you mention the premium, for sure the premium enhances the image of the category. By doing so, obviously you're going to see a halo effect in all segments.

Speaker 1

Whenever I do the same with the core, and somehow we challenge the status quo with the core, we also see a halo effect in all the segments. This is the beauty about it. Everything that we are doing with balanced choices for sure brings new attributes for the beer category that make consumers see our category differently, better, stronger. That's the way we perpetuate the relevance of the beer category, not only Brazil, but across our footprint, and we prepare the category to land in the future with the right attributes. This is a very interesting question, right? This is also related to the point when we bring the first pillar of our strategy, connecting, lead and grow, because we want to take this role, be the category captain in our markets. Okay? Now connecting to Skol.

Speaker 1

I already mentioned this to you in our previous sessions. One of the key challenges that we have is to develop these new partitions of the category without compromising the core. We want to add on top. We want to keep the foundation solid, healthy, and build on top. That's the way we're going to bring more consumers to the category. We're going to jump into more drinking occasions, right? We avoid cannibalization. That's the game we are playing here, and that's why it's so important to keep core healthy. Okay? When I reflect about the core performance was volume wise in the quarter was broadly stable, which is good. Good improvement versus last quarter, right? The performance is a consequence of our three brands performing a pretty interesting way, right? Among the three, Skol, after several quarters stable in equity, delivered the first quarter with equity improvement.

Speaker 1

It's a pretty interesting sign, right? It's initial, but it's good to see, right? Within the mainstream segment, all three core brands gain share, right? Including Skol, right. Within Zé Delivery, I always consider Zé Delivery our foot in the future. What are we going to see tomorrow in Brazil happening, right? Skol was the brand, core brand growing fastest, right, which is very interesting, where we introduced Skol Zero Zero line extension from the mother brand. The line extension achieved 20% of no alcohol beer mix, which is also very interesting, right? All together, right, what I really like about the core performance, the mainstream performance, is something that we rarely discuss about, Laboy, because we always put emphasis on consumers trading up from core to premium. From 2019 today, right, the value segment in Brazil reduced by half in an industry standpoint.

Speaker 1

That volume, right, was captured by the core. Another very interesting point for us to consider in our conversations moving forward, and another big reason why it is so important to have more than one core brand, right, playing this game. Brazil is very different regionally speaking, right? As a consequence, our brands' performance are also very different across the country, right? The complementary of our mainstream portfolio today is a very important competitive advantage for Ambev. Thank you for the question.

Speaker 5

Thank you.

Operator

Our next question comes from Lucas Ferreira with J.P. Morgan. You can open your microphone, sir.

Speaker 6

Hi, guys. If I may, a question, a follow-up question on the net revenue per hectoliter and how to think about that line going to the second half. Lisboa, you mentioned a few factors, right, explaining that strong performance in the first half. When we look at the second half, especially when you compare year-over-year, is it fair to say that the delta year versus year should be larger in your mainstream portfolio? If not mistaken, this is where you guys had a more sort of troubles last year on the mainstream. This year, like you've been mentioning, sort of things are back on track on both of brand equities in the mainstream. My question is how this mix affect. Should we see a higher delta year-over-year in the mainstream?

Speaker 6

That obviously pushes your average prices down. Is it fair to say? Or any sort of a price actions expected for the second half? Should we still be aiming this sort of inflation plus scenario for second half? That's the question I have. Thank you.

Speaker 1

Hey, Lucas. Thanks for the question as well. Let me clarify the following. Actually, the main issue we had last year in the second half was not the mainstream performance, was more the industry impact against 2024. Bear in mind that in 2024, there was a weather phenomenon that impacted Brazil, El Niño, and created distortion in weather temperatures. Not a coincidence, but a consequence of that, well, 2024 was the peak of the industry in Brazil, volume wise. When we had the weather change, especially in the second half of last year, is when the industry gap performance was created. The mainstream segment has, for obvious reasons, and we discuss a lot about that. Due to the relevance, in some specific occasions, like the on-premise, there's a huge correlation with the industry performance.

Speaker 1

This is exactly what explains the mainstream performance from our portfolio in the second half of last year. Everything that we mentioned, myself and Flory, about second quarter and first half should be complemented with this information, because we just cycled through the toughest comparison we had against 2025, volume wise. Now we are entering in a different kind of scenario. Based on the information that we have available from different weather forecasts institutes, there is no expectation whatsoever for even more adverse temperatures moving forward comparing to 2025. This is an important consideration to keep in mind. On top of that, we don't have any more of that fluctuation share wise. We kept our share level since Q3 last year pretty much stable. By the way, with some improvements. That share level performance is supported by a very solid share performance across all segments.

Speaker 1

That should be somehow the shape we should expect from Ambev moving forward. That's why we are so confident about our portfolio momentum. We stated that today, we have the most complete portfolio that the company has ever had, because this is making a huge difference combining with the execution capacity and the digital capabilities that this company has developed along the previous years. I think that's all I have to say about your point.

Speaker 6

Thank you very much, Lisboa.

Speaker 1

Thank you.

Operator

Our next question comes from Ben Theurer with Barclays. You can open your microphone, sir.

Speaker 7

Yeah, good morning, Lisboa, Fleury. Thank you very much for taking my question. I wanted to follow up a little bit on the volume ex-FIFA World Cup implications. Clearly, you've just laid out within your commentary what were the issues in the second half of last year affecting, obviously, the volume on a year-over-year basis. As you look at the second half in terms of particularly beer in Brazil, volume cadence, just try to help us bridge maybe what we should expect given it's a relatively easy comp, but obviously the World Cup's behind us. How do you think about the performance of volume into the second half? Then obviously moving into next year also with El Niño coming again, how much of a potential tailwind that could be? Thank you.

Speaker 1

I cannot provide you any industry volume guidance. What I can say is the following. Comparisons versus 2025. We are just cycling through a period when the industry declined mid to low single digit last year against 2024, to a semester when the industry declined high single digit against 2024. I think that's the first part of the answer. Those drivers that historically impact positively the industry, played the same role in the first half and should play a similar role in the second half. Namely, LDA population growth, employment, and aggregate income. Okay? We do see, which is a concerning sign, household debt levels continue to be very elevated. Which is a point of attention for us.

Speaker 1

This is when we usually see our category resilience, because in the end, beer for Brazilians is a very accessible entertainment. This is very important for us, especially in this kind of scenario. Weather. Weather is a very difficult and tricky aspect to predict. I'm not a weather expert here. As I said, current external forecasts do not indicate any average temperature more adverse than last year. Regarding El Niño. What I did, Ben, is the following. I was not here in 2024. We and the team, we revisit all the consequences that we lived and the country faced during the year. There are very interesting learnings for us. The first priority should always be around our people. Our experience in 2024 reinforced the importance of protecting them and supporting partners and communities.

Speaker 1

That will be probably extreme weather changes across the country, different impacts. It's super important for us to be ready and be part of the solution, and protect as well our operations. Second, learning. Potential impact on costs. Extreme weather conditions may also affect agriculture, commodities, logistics prices, input costs. We are working closely with farmers and suppliers in order to be prepared to face that scenario. On the demand side, 2024 illustrated that warmer temperatures can influence industry demand. That's exactly what I mentioned before. However, these effects are unpredictable. I'm not an expert. We cannot rely on that. The only thing we can do is control what we can control and be prepared, be ready for a wide range of climate scenarios. Maybe, if possible, continue to build even more resilient business moving forward.

Speaker 7

Perfect. Thank you very much.

Speaker 2

Ben, just one comment here just to reinforce what Lisboa said. If you go beyond the quarter, it's important to remember that we are very confident about what the industry can go. If I look into external drivers for Brazil and most of our emerging markets, population growth, rising income per capita, they should play favorably going forward. Also, per capita consumption. What is on our side, as Lisboa said, what we can control and what we're working on, we believe that beer is very connected to socialization, and we are working to expand the boundaries of our category going forward. We are confident on what are the demographics and what goes in external, and what we can do to expand the category going forward.

Speaker 7

Perfect. Thanks, Flávio.

Operator

Okay, this concludes the Q&A session. I would like to invite Mr. Carlos Lisboa to proceed with his closing remarks. Please go ahead, sir.

Speaker 1

Before we close, let me share a personal reflection. This was my sixth quarter leading Ambev, and the environment, as we just discussed, has rarely stood still. I believe great companies are defined by what they do and deliver in periods like this. They usually sharpen their choices, strengthen capabilities, and turn challenges into opportunities. I feel privileged to lead Ambev and to work alongside people whose talent and ownership make that possible. There is always way more to do, but I believe Ambev is stronger today than when I began the journey as CEO. We are entering the second half confident in our strategy, energized by our momentum, and ready to capture the opportunities ahead, and determined to keep building an even better company in the future. Thank you for joining us today.

Operator

This concludes today's presentation. You may disconnect and have a nice day.

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