AB InBev Stock

Welcome to AB InBev's Second Quarter 2026 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab and the Reports and Results center page. Today's webcast will be available for on-demand playback later today. [Operator Instructions]

Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in these forward-looking statements.

For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 3, 2026. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information.

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

Thank you, and welcome, everyone, to our second quarter 2026 earnings call. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions.

Let's start with the key highlights. The momentum of our business continued in the second quarter. While the consumer environment remains dynamic, the consistent execution of our strategy and investment in our mega brands and mega platforms enabled us to deliver solid top and bottom line performance. Beer volumes increased by 1.1% with market share growth globally and record high second quarter volumes in Mexico, Colombia, Ecuador, amongst others. Revenue increased by 5.6% with solid revenue per hectoliter of 4.2%, driven by positive mix and our proactive revenue management agenda to keep pace with rising inflation and input costs.

Underlying EPS increased by 23.4% to reach $1.21. Free cash flow in the first half of the year increased by $2.5 billion to reach $3.9 billion. Our performance was driven by our growth drivers with continued momentum across our mega brands, non-alcoholic beer and Beyond Beer. This marketplace continued to scale with GMV increasing by 50% to reach $1.2 billion. Overall, this quarter demonstrated continued volume momentum, market share gains and solid cash flow generation, reinforcing our confidence in the resilience of our strategy.

Turning to our operating performance. Total volumes increased by 0.9% in the second quarter with solid revenue per hectoliter growth driven by our revenue management capabilities and positive mix. EBITDA increased by 5.8% with flattish margins as disciplined cost management enabled increased sales and marketing investments and offset transactional FX headwinds.

Our geographic footprint and global scale enable us to deliver consistent results through different operating environments. Our footprint is both well diversified and balanced with around 70% of our EBITDA generated in emerging and developing markets. We are well positioned to capture future industry growth with a mix of currencies.

Now let's review our key regional highlights, starting with North America. In the U.S., our portfolio momentum continued with share gains in both beer and Beyond Beer. Our beer performance was led by Michelob Ultra, Busch Light and Busch Light Apple, which were the top 3 volume share gainers in the industry. Our Beyond Beer portfolio delivered revenue growth in the mid-70s, led by Cutwater, which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the second quarter.

Now let's turn to Middle Americas. In Mexico, we continued to strengthen our portfolio architecture and expand our total addressable market by offering consumers more choices across more occasions. We grew revenue in premium, mainstream non-alcohol beer and Beyond Beer, driving mid-single-digit top and high single-digit bottom line growth with market share gain.

In Colombia, record high second quarter volumes drove double-digit top and bottom line growth with our portfolio estimated to have gained share of total alcohol. In Brazil, market share gain and an improved industry drove beer volume growth and a double-digit bottom line increase. Our premium and super premium beer brands led our performance and delivered mid-20s volume growth in strengthening our leadership position in the segment.

In Europe, volumes grew by low single digits as market share gains, innovation and continued premiumization drove a low single-digit top line increase. In South Africa, disciplined revenue management and margin expansion drove mid-single-digit top and bottom line growth. Premium and super premium beer led our performance, delivering high 20s volume growth.

Now moving to APAC. In China, revenue declined by 8.8% as we underperformed a soft industry, which was impacted by adverse weather and continued softness in the on-premise channel. While overall volumes remained under pressure, we continue to invest in our mega brands and innovation and strengthening our portfolio brand power. Our market share trend improved sequentially, supported by a return to growth in our super premium and core plus brands. There is more work to do, and we are investing to improve our execution, expand our in-home channel presence and increase our participation in the growing segments of the industry.

Let's now turn to our strategic pillars, starting with lead and grow the category. Relevant brands are essential to our strategy as we drive organic growth. Through consistent investment and continued improvement in our marketing capabilities, we are strengthening our connection with consumers and increasing the brand power of our portfolio. This progress was recognized at this year Cannes Lions Festival, where we were named the 2026 Creative Marketer of the Year, the only company history to receive this award 3 times.

The strength of our portfolio is reflected in the latest Kantar BrandZ ranking. Eight of our brands are within the top 10 most valuable brands in the world, with Corona ranked #1 for the third year in a row. Our mega brands continue to drive profitable growth across our markets with net revenue increasing by 6.2%. Corona drove premiumization with revenue growth of 17% outside of Mexico and double-digit volume increase in 37 markets.

The combination of our mega brands and platforms is a powerful opportunity to connect with consumers through moments of celebration. Following successful activations in the first half of the year, we have a strong lineup for the second half and into 2027. Through our mega platforms, we are placing beer and our brands at the center of culturally relevant moments for consumers, including the Winter Olympics, Rolland Garros, the FIFA World Cup and Wimbledon. By deploying our leading digital capabilities and strong execution by our teams, our brands were the most talked about during these events, achieving billions of impressions and earning the #1 share of digital engagements.

The FIFA World Cup is a once every 4 years opportunity to build the long-term brand equity of our portfolio of consumers. Across the tournament, beer was central to the moments of celebration, connection and share the experiences that make the event so iconic. In line with our strategy to expand availability of balanced choices, we leveraged the FIFA World Cup to roll out Michelob Ultra across the Americas, building on its momentum in the U.S., where Ultra was again the #1 volume share gainer. In the second quarter, 40% of Ultra's volume growth came from outside the U.S.

We continue to execute our category expansion levers to expand choice, occasions and participation in the category by offering superior core brands, innovating balanced choices and expanding our premium and Beyond Beer portfolios. In non-alcohol beer, our portfolio outperformed the industry and delivered a 27% revenue increase, led by Corona Cero and Michelob Ultra Zero. With an estimated 60% of the volume coming from new occasions and new consumers, non-alcohol beer is an opportunity to develop the category and drive incremental volume growth.

In the second quarter, we brought Bush Light Apple back to the U.S. by popular demand. Since its launch in April, the brand became the #2 volume share gainer in the total industry in quarter 2. Ahead of Wimbledon, we launched Strawberries and Green flavored Stellar Plus. The innovation contributed to a 4 percentage point increase in Stella's share of total alcohol beverage at the tournament. In Beyond Beer, we expanded the portfolio variety of Cutwater, supporting the brand's performance in the U.S.

Geographic expansion of our Beyond Beer brands is a meaningful growth opportunity. In the first half of the year, we expanded the availability of flying fish in 8 markets and are encouraged by the early results we see across Europe and the Americas.

Let's turn to our second strategic pillar, digitize and monetize our ecosystem. In the second quarter, this captured $15 billion in gross merchandising value, a 16% increase versus last year. On an annualized basis, we have more than 25 billion AI-driven touch points across our ecosystem, creating opportunities to improve customer service, revenue management and support the execution of our commercial agenda. This marketplace continued to scale with GMV from third-party products increasing by 50% versus last year to reach $1.2 billion.

Our digital D2C business is growing and enabling us to monetize our ecosystem. Our digital platforms served 13 million consumers and generated $165 million in revenue. As we digitize and monetize this ecosystem, we are commercializing third-party products on our D2C platforms and now have a growing D2C marketplace with annualized GMV of $200 million.

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

Thank you, Michel. I'll take a few minutes to discuss the progress we have made on four areas in optimizing our business, superior profitability, compounding dollar EPS growth, improved free cash flow and capital allocation flexibility. Through disciplined resource allocation and overhead management, we were able to offset transactional FX headwinds to maintain our superior margins while increasing sales and marketing investments.

Over the last 12 months, we have invested $7.9 billion in sales and marketing, and we increased our investments organically by 9% in the first half of this year to fuel the growth of our business. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time.

Moving on to EPS. Top line growth and effective cost management drove constant currency EPS of 12.9%. With translational FX tailwinds, dollar EPS increased by 23.4% to reach $1.21 per share. As we focus on optimizing our business, in the first half of the year, we increased our free cash flow by $2.5 billion, driven by EBITDA growth and working capital improvements. This increase in cash generation enabled further capital allocation flexibility while strengthening our balance sheet. We increased our dividend, executed share repurchases and pursued selective value-accretive M&A while continuing to deleverage.

Our net debt-to-EBITDA ratio reached 2.86x, a 0.4x improvement year-over-year. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 12 years and no financial covenants. Our results in the first half of the year, the resilience of our strategy and the momentum of our business all reinforce our confidence in our ability to deliver on our 2026 outlook of 4% to 8% EBITDA growth.

With that, I'll hand it back to Michel for some final comments.

Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap the second quarter of the year and the opportunity we have ahead of us. Our performance this quarter reflects the resilience of our strategy and our ability to deliver reliable compounding growth through different operating environments. Our top line grew 5.6% with beer volume growth of 1.1% and net revenue per hectoliter growth of 4.2%.

We increased sales and marketing investments in our brands by 9% organically. Underlying EPS grew by 23.4% in the second quarter and by 22.1% in the first half. Free cash flow increased by $2.5 billion to reach $3.9 billion at the half year. And net debt to EBITDA improved by 0.4x year-over-year, reaching 2.86x, strengthening our balance sheet and increasing our capital allocation flexibility. Together, these results reinforce our confidence in our ability to deliver compounding growth and long-term value creation for our shareholders.

With that, I'll hand it back to the operator for the Q&A.

[Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies.

So my first question is for Michel. So you've been executing your growth strategy for about 5 years now, and we're seeing both pretty healthy revenue per hectoliter growth and return to positive volume growth. How do you assess where ABI is in that journey today? And as you see the growth contribution from the mega brands, premiumization, non-alcohol, Beyond Beer all coming through, does this give you greater confidence in the durability and consistency of growth from here? That's my first question.

And my follow-up is for Fernando. Over the last couple of years, there's been a big focus on deleveraging and strengthening the balance sheet. And as you think about the next few years, will this increased capital allocation flexibility be aimed at accelerating organic growth and bolt-ons? Or do you think there's scope for progressively higher cash returns to shareholders in the fullness of time?

Ed, thanks for the question. As you stated, I'll take the first one here and leave the second to Fernando. I think that you are right that over the last 5 years and especially when you look at this year, we have been successfully, I would say, resetting the business. because we had a lot of debt. We had growth constraints in many areas across the globe. And as we organized our portfolio and this architecture that we have today is much more flexible because we have growth not only in beer but in different segments in beer from core, premium, non-alcohol. We added to that Beyond Beer, which is growing globally in a very healthy way. And we put together capabilities around revenue management, organic growth, innovation and digital that prepared the company to the moment that we are seeing now in 2026, where we see volume growth solid revenue per hectoliter growth coming both from revenue management and from mix management. Worth to remember that mix for us gets into the revenue per hectoliter. We don't add the mix to volume. Volume is purely hectoliter base. And we will continue to optimize the business. We've been seeing a strong earnings per share growth in the first half of the year, 22% with this 23% in the second quarter. So continuation of the strategy execution, but moving from a moment where we were resetting the business, reducing that, organizing the capabilities to growth to a moment that we see more the reignition of the volume growth and the acceleration of our strategy and growth levers as we move forward. Thank you for the question.

Ed, this is Fernando here. So you asked about cash flow allocation flexibility. First of all, it's fair to say that it is a good cash flow. And it's kind of Michel touched probably in the first two items of our strategy. The third item is optimize our business. And as we keep delivering kind of this sort of results and we keep growing the business while maintaining CapEx within our outlook, containing these levels, the consequence of that is that you do generate more cash. And as you continue to evolve the business and continue to generate more cash, you create more optionality. If you look at what we've done this year so far, this year, while kind of if you see from a dividend standpoint, so dividend was up.

We were able to invest behind the organic growth of the business. So you see more sales and marketing investments to support the growth. You see that while we are doing that, we also did some selective M&A. We did the MCT and the BBox M&A. And we did all that while also improving the strengthening the balance sheet, so we reduced the leverage. So when you combine all of that, what I can tell you is that the goal of us is always to create value and this optionality increase your -- the way that you can create value. So our Capital allocation is dynamic, as we said. But at any given moment in time, the goal is always to create value. And with more cash flow, these tasks become easier because we have more optionality.

Our next question comes from the line of Mitch Collett with Deutsche Bank.

I've also got two questions. My first one is for Michel. So you said, Michel, that in -- from the World Cup, you expected, I think, 20 to 30 basis points of full year volume benefit. Now that the World Cup is behind us, is that roughly what you saw? And can you comment on how you think your World Cup activations may benefit your brands and your business longer term?

And then my second question, I think, is for Fernando. I think you said on the 1Q call that you expect a more balanced year from an organic EBITDA growth perspective. Is that still what you would expect given the relevant puts and takes from both 1H and 2H as you see them now?

Mitch, thanks for the question. I'll take the first one here and leave the second to Fernando. Yes, we talked about this lift from the FIFA, which for us on average is around 0.25 in the range that you said, 0.20 to 0.30. And I think that this is going to be the number that we will end up reaching this year. Of course, we still have the second half of the year, so we can calculate the exactly lift of the months of June and July, but I think that's going to be within the range.

More important, as you mentioned, I think that the benefits of the activation and everything that we have done and seen from the World Cup will extend far beyond the year. And we really executed a global campaign was fantastic. We had for the Americas, Michelob Ultra to the rest of the world, Budweiser. On our local markets, many of our brands -- local brands supported the local teams and one, which I think that's going to be the most impactful part of the FIFA for us was the rollout of Michelob Ultra across Americas. So before FIFA, you could find Michelob Ultra in Canada, U.S., Mexico, some other Caribbean and Central America markets. But now you extend this all the way through Brazil, Argentina, Paraguay and the brand as we launched it, introduced it is performing very well.

To give you a number, which I think is very relevant, despite of the fact of the size that Ultra has in the U.S. and this #1 share gain in the U.S., which brings a lot of growth to the brand, 40% of what the brand grew on the second quarter came from markets outside of the U.S. So this balanced choice idea is very relevant within our strategy. Michelob Ultra plays a central role on that and the rollout of the brand, very strategic across Americas during FIFA will be one of the best outcomes of this investment that we've made for FIFA.

On top of that, I think that we saw consumers having a lot of fun really celebrating the moment of FIFA throughout the 3 countries here, but also globally. I think that the participation was fantastic. The sales on the concessionaries were above and beyond the expectations. We could have had more, let's say, if the U.S. could have gone further in the competition, if the Brazilian team had performed better, equally to Mexico, Colombia. Nevertheless, the funds enjoyed until the last minute, the audience was great, the investment that we made was great. And now we are turning the page to the second half of the year, where we also have a lot of activities and plenty of exciting moments to be together with consumers. Thank you.

And Mitch, Fernando here. You are asking if it still holds true that there should be a more evenly distributed year in terms of growth for. Yes, still hold true. We knew kind of a lot of the puts and takes since the beginning of the year, and we're being very proactive in the revenue and cost management to better balance half 1 and half 2. The only caveat, and we said that before, is that sales and marketing should be more skewed towards Q2 and Q3, especially given the World Cup. But overall, we expect a balance of year and within our outlook of 4% to 8%.

Our next questions come from the line of Rob Ottenstein with Evercore ISI.

Michel, I was wondering if we can drill down on the U S market. A lots of puts and takes, right? There's the weather, higher gasoline prices, holiday timing, FIFA. But can you -- when you kind of cut through it all, how do you assess the strength of the U.S. beer market in Q2 versus Q1 versus last year? Anything that comes out? And then more importantly, how do you look at your business, maybe kind of give a scorecard to how you're doing in the market, which is certainly better than it has been in the past, but give yourself kind of a scorecard. And what are you doing now to ensure continued and building momentum on the top line and the bottom line into the second half of the year and into 2027?

Thank you, Robert. And it's always good to put the U.S. in context, right? So very relevant market for us. It represents around 10% to 15% of our business globally. And of course, house of brands, brands such as Michelob Ultra that I just spoke about that we are rolling out through Americas. So it's an innovation to the other markets, but it's an innovation that is over 20 years in the making in the U.S. and continues to grow.

I think that is super relevant, the way that you put the question because there is many puts and takes on the quarter 2. I think it starts with Easter, then we all know because we live here that the weather is being and continue to be a challenge in the U.S., while we continue to transition from the La Nina to the El Nino.

Then at the back end of the quarter, you had both FIFA, but also 4th of July that this quarter flipped to the quarter 3 versus where it was last year on the quarter 2. And we see that the quarter 1 started with a good mood for consumers and a stabilization that further deteriorated a little bit on the quarter 2 because of inflation that accelerated gas prices and everything that we are seeing around the country. That's the part that we cannot control, the calendar, the economy. We can just adapt. And I think that the architecture of our portfolio today is way better than what used to be. That was the main mission for the team here since 2017 was rebalance the portfolio. And I'm happy to see today that we are gaining share in beer.

We are gaining share in Beyond Beer. We were the fastest growing company in spirits because of the performance of cut water and also the fastest-growing brands in the non-alcoholic space. So I think that the mission of rebalancing the portfolio and getting this portfolio architecture to be more flexible to where consumers are dining is working, and we are winning with consumers across all segments and especially on the segments that are growing the fastest.

I'll leave this scorecard for Brandon to you guys to give because I know that you are way better than me on that. And the main thing that we are doing is we are continuing to invest behind our brands, so they continue to be relevant for consumers across relevant occasions. I think that FIFA was an incredible display of that. We are making this portfolio architecture both more flexible and more competitive. That's why we are gaining share across the segments. And we continue to invest on our capabilities being revenue management capabilities, execution capabilities, digital capabilities and especially the capabilities around marketing that get us closer to consumers. Thank you.

Our next questions come from the line of Olivier Nicolai with Goldman Sachs.

First, going back to Slide 27, if I may, on the free cash flow, which was very strong in H1. Should we assume you will be able to keep most of these net working capital benefits in the second part of the year? And are you kind of on track to get towards $13 billion of cash flow this year, which will be, I believe, a record for the company? And then secondly, perhaps for the U.S. and for Michel, you're currently leading the spirits RTD segment. How do you assess the risk of increased competition from spirits companies as they scale up production and distribution and potentially try to become more aggressive on price? And to some extent, what kind of real competitive advantage does brands like Cutwater and Nutrl have to fend off new competitors coming from spirits producer? And then lastly, that's a question, promise, but thank you for flagging the mix components within your revenue criteria.

Olivier, Fernando here. So thanks for your question. So we've been working a lot on Pillar 3 of our strategy to optimize our business. And the good cash flow that we saw in H1 was a consequence of that. But in a nutshell, if you think about it, since we are growing a -- and we are driving efficiency across all the lines. We are -- we had more EBIT, good or good nominal growth. And our cash flow -- our EBITDA -- sorry, our CapEx outlook is the same BRL 3.5 billion to BRL 4 billion from last year. We look at all the lines, of course, you could expect that this growth is something that one would expect. And we don't give kind of a specific guidance on quarter-on-quarter or don't give a specific guidance on cash flow. But if you add all the pieces of our outlook, you could expect us to continue to make improvements in our cash flow year-over-year.

Olivier, on the second question, I've been answering this question in different shapes and forms around the RTDs, the momentum that we have, not only in the U.S. but globally and the, let's say, increased competition in the segment in the U.S., maybe in some other countries as well as we keep rolling out our global portfolio and gaining space in this area. But to be very straightforward on your question, I think that we are the competition, slightly different here. So while in beer, we've been dealing across all markets with competitors, which we always welcome to the industry because they make us better, more innovative and stronger in execution.

In the spirit side, we are the competition. And we are winning with consumers because we are providing a superior proposition, not only Cutwater, but with Nutrl. Now we just acquired a great company, BeatBox that's going to bring more to this arena. We are leveraging our brand-building capability. It was worth to say that this brand was in existence 6, 7 years ago and is moving towards becoming a $1 billion brand and is the fastest-growing brand in the spirits industry in the U.S., now a top 6 or 7 overall in size brand in the spirits industry and leading with very strong execution. So competition is out there. In this case, we are the competition.

Our next questions come from the line of Chris Carey with Wells Fargo.

My first question is on China. Clearly, trends took a bit of a step back here in Q2 relative to Q1. Can you just give us a sense of industry performance this quarter versus last quarter and your own performance relative to industry growth rates, maybe sprinkle in some on-premise and off-premise commentary and how weather may have negatively impacted you in the quarter itself?

And then from a pricing standpoint in China, I think this was the first positive revenue per hectoliter since the beginning of last year in China. Is that just a product of -- product or channel mix? Or is there something else that was driving a bit of a step change relative to some of those investments you've been making into demand building in the region? So I think in general, it's a question about understanding how the country is evolving and perhaps a bit of a question on your ability to have some visibility into the market in the coming quarters.

Chris, thanks for the question. I will step back for a second to address the question, and then I will get straight to the point that you mentioned there. But we are, of course, not happy with our performance in China. And as I said on the remarks, there is more work to do, and we are working very hard on that. When you think about the dynamic of the market and it's being extremely dynamic in China, the quarter 1 was a more encouraging quarter. We saw an industry that was coming from a better performance at the back end of last year. The timing of the Chinese New Year was very good for the industry. And overall, because we have data for the quarter 1, the industry was almost stable, and we had an improved performance. So we had a slightly better result on the quarter 1, not ideal yet, but better.

As we entered quarter 2, we saw a deterioration on the industry. So April was already below quarter 1. We have all the data for May, and May was very weak. It was like 7-plus percent negative. And when you look at what happened, most of this is attributed to the continuation of a consumer environment that is constrained, but a way worse weather. And this extended through June, where we do not have yet all the data, but the data that we have, for example, for off-trade points out for a June that was worse than May. So all in all, I think that the industry in the quarter 2, as we come to see the numbers consolidated will be a high single-digit negative industry.

In this context, our market share continue to improve. It's not positive yet. We saw good numbers on the nightlife, for example, where it was more stable than industry and we gained share. We saw positive performance on our super premium and core plus segments, which is encouraging because we are investing there and innovating. But of course, there is way more that we need to continue to do, and we are prioritizing investing on our brands. So power for our brands grew on the second quarter. We are investing in capabilities so we can service better the off-trade channel, both the O2O and the physical outlets. And we need to look now to the second half of the year to continue to do better on what we can control, which is our execution and market share and see how the industry will evolve. But the biggest negative highlight on the quarter 2 was for sure, the industry. Nevertheless, as I said, we're not happy, and there is more work that we need to do. Thanks for the question.

Our next questions come from the line of Sanjeet Aujla with UBS.

I'd like to dig into Middle Americas in a little bit more detail, probably the standout performer this quarter. In particular, outside of Mexico, we've seen a nice inflection in markets like Colombia, Peru, Ecuador. How much of that do you attribute to the World Cup? Or is there a more underlying inflection in the consumer environment or the broader category? Or is it something you guys are doing differently there?

Sanjeet, thanks for the question. And you are right, Middle Americas had an outstanding performance in the quarter 2, very strong execution by the team there. Growth was broad-based when you think countries, but also across different segments. So growth came from core beer, premium beer, Beyond Beer, non-alcohol performed very well. And I think that you have maybe 2 realities in Middle Americas is a very large zone. I think that in Mexico, we see resilient consumer environment, but it's not one that is supporting the growth. The growth is really coming from the execution, the innovation and the market share performance in which, of course, across the whole region.

FIFA was supportive even more in Mexico because Mexico hosts a bunch of games, and there was a lot of excitement there. I think it's worth to remember that last year, we talked a lot about the weather, right? So we don't like to talk too much about this, but the La Nina El Nino transition is be impactful for last year and this year. And I think that last year, the middle Americas was on the opposite side. The Middle Americas was more exposed to the Pacific, the region that had the worst weather last year. This year, one could say that the Atlantic side of the Americas is where the weather is being worse for us. So it's benefiting a little bit of this weather component of last year.

And when you get the other countries below Mexico, they are all very stable in terms of the economic environment, inflation, disposable income is growing. And as we always say, these emerging markets will represent 70% of the industry growth to the future. And you see this coming through because the participation is healthy. The per capita is moving in the right direction. And as we continue to execute and invest in innovation, we are getting closer to consumers, winning with consumers in more occasions. And this portfolio architecture is really working well for us, combined with the capabilities that we've been investing on such as digital, brand building, revenue management. So they are all coming together in a very strong way in Middle Americas. Thanks for the question.

Our next questions come from the line of Chris Pitcher with Rothschild & Co Redburn.

I've got one follow-up question, then a separate one. On the ready-to-drink discussion in the United States, you talked about the competitive threat. What about the supply side? The triple-digit growth on Cutwater is very impressive. How are you keeping up with that? Are there any constraints either from supply or distribution that maybe you could be growing even faster? And then secondly, forgive me, my phone line dropped off. So if this was covered, please help me. But in terms of BEES marketplace, can you just help us understand how that incremental contribution to GMV benefits your EBITDA? Because obviously, you had a sizable $400 million uplift in the period. If you could share some of the economics, that would be very helpful.

Chris, in terms of supply for ready-to-drink, we shared these couple of in a couple of occasions, and I'm happy to share with you. We invested a lot on our capabilities. And this, again, we've been working on this for 5, 6 years in a row now. So we are not constrained on capacity. We have flexibility enough to supply. And of course, we have a huge headroom for growth in distribution and in rate of sales without constraints on the supply side. And as we grow as needed, we have enough resources. Fernando was talking about the cash flow generation to make sure that we are investing in line with our expansion ambitions and needs. So on the supply side, we are good. What we need to do is really continue to connect with consumers deliver the superiority on the product and execute so we can sell more, right? So the idea here is we are the competitors, we are gaining share, and we will continue to invest to continue to grow our presence in this segment.

And BEES continues to scale up. I think that we are supporting this growth with the right investment. As you know, I repeated this many times that the marketplace is profitable for us since day 1 was one of the conditions in which we decided to build the marketplace is incremental for us on the EBITDA side. I said that today is equivalent to a top 20 country in terms of size, in terms of EBITDA, but it is one of the top 10 contributors for EBITDA growth and is quickly escalating, let's say, its ability to grow and contribute more on the outlook. But we are just at the beginning. So the growth rate, 50% is still a good one, but we think that we can do even more. We can accelerate more the growth of the marketplace. We have a pipeline of customers and countries that is very strong, so that supports the growth for the years to come. And now it's about execution. And this execution comes with very good incrementality to our financials.

Our next questions come from the line of Laurence Whyatt with Barclays.

A couple for me as well, please. As you think about the Brazilian market and a few years before the pandemic, it was one of the very strong growth markets. And perhaps we've seen a little bit of modest growth over the past few years, I mean, notwithstanding your result today, which was very strong. But I'm just wondering, over the past few sort of months, quarters, is there anything that's changed in the Brazilian market that makes you question whether your long-term expectation of volume growth could be challenged in any way? Are there any issues or anything you can foresee that might change that assumption? And then secondly, perhaps a bit more shorter term, just looking at the Colombian market, you had a very strong performance there in this quarter and recently. Is there anything that's specifically taking place in Colombia that you want to call out to suggest that, that could be more sustainable level of growth?

Laurence, on Brazil, I think that you have a quarter-by-quarter picture, and we all know that there are different dynamics that impact each and every quarter. If you open a little bit the aperture for the lens -- the industry before and after COVID has been performing very well. So it's gaining share of alcohol beverage. Beer is increasing share on alcohol beverage there. We had a very strong growth in this period of '21, '22, '23.

And as I said before, last year, we know that we had like a challenge on the weather condition that started in June, extended through October, beginning of November. We haven't seen yet this year positive effect from the weather. So I said the Atlantic region of the Americas is really suffering and is colder than usual, is more wedding region than usual. The Pacific side is the opposite. It's been very good this year. And I think that the industry in Brazil is moving on a good direction, of course, given the current economic scenario and where consumers are pretty resilient.

On the other hand, our portfolio in Brazil is growing from strength to strength. We recovered our leadership in premium, and now we are accelerating the growth of our premium brands. We made a very decisive move in the non-alcohol, and this is growing in relevance for us there, gaining share. We are in the early stage of the Beyond Beer, but we have very good numbers coming out of Brutal Fruit, beet and flying fish. And I think that we are building the awareness of these brands, building the penetration and the headroom for these brands to grow there is huge, and our distribution is very effective. Our marketing capabilities are good. And I'm positive on the outlook to Brazil. Of course, on the part that we control, very positive.

When you look at the comps on the weather that at one point will get better. That's going to be supportive for the industry there. And we keep an eye on the economic indicators this year. We have elections on the second half which can be a positive for the overall economy there as well. So positive good momentum. The team is doing a good work, balancing well volume and share gains with profitability.

And in terms of Colombia, Colombia has been performing well for a while for us. We've been unlocking this opportunity that I keep saying about the future growth for the industry coming from emerging markets. So Colombia is part of that. The economy in Colombia took a little bit more time than some other markets to change from a constrained economy to one that was more supportive. You remember, there is a lot of imports coming to Colombia. Because of the FX, there was a lot of inflation. The inflation took long to accommodate. But you see the last 12 months in Colombia in terms of disposable income, inflation, consumption, they've been all supportive, and we are doing our part there with the portfolio, with the investments so we can capture this growth. And we are also in Colombia gaining share of total alcohol, which is very good for the category. And because we lead, we are benefiting a lot from that. So health market, great execution, a lot of potential for the future, not only in Colombia, but across the Americas because all these markets have population growth, economic growth, those are all fundamental strengths for the category and important drivers for volume growth in the future. Thank you.

Our next questions come from the line of Robert Voss with ABN AMRO Auto.

Sorry to come back on China and weather. The volumes were almost down 10%. Is it in any way possible to say what growth could have been under the assumption of a more neutral impact from the weather? Is that a few points on growth or is it far less? Any indication there would be helpful.

And then my second question is on non-beer volumes in Brazil, maybe not your core business, but they were down 4.4% in the quarter despite an easier comparison base than what you showed in the first quarter. Is there anything to mention there why the volumes were still down quite significantly in the quarter?

Robert, thanks for the questions. I think that the China answer is like since the market share improved sequentially, the result would still be like the quarter 1, but slightly better if it was not for the weather impact. Not positive yet. That's why we have to do more, and we have a lot of work to do, but would be similar to quarter 1, slightly better because of the share improvement.

And in Brazil in non-alcohol, I think that we've been 2 or 3 quarters under pressure on the share side, a little bit of price relativity gap. So competition investing heavily in prices, and we've been balancing our agenda on our own strategy to make sure that we have costs under control, price revenue management to the costs that are coming because the hedge last only for max 12 months. And we see that these relativities start to close. We see that the share performance start to improve. And now we need to see the volume coming back, which is -- we don't disclose any expectations for the second half of the year, but the expectations in this case are as we continue to do our work, industry improves, we want to see volume growth in the non-alcohol portfolio as well in Brazil. But a little bit of relativity, a little bit of the industry that was not that good in the first half of the year for soft drinks in Brazil.

Our final questions will come from the line of Trevor Stirling with Bernstein.

Michel, my first question for yourself. There's a lot of very good things in the quarter. If you had to pick out one area, country, brand and activation, which really overdelivered in your view, which one would you pick out? And I guess the disappointing one is probably China. So I'm not going to ask you that question. And then Fernando, coming back to this question about the phasing of EBITDA growth across the year, one thing you didn't mention was the transactional FX hedges and how those changed from being negative in the first half being positive in the second half. And is that still relevant in terms of as we look at the phasing of the EBITDA growth across the year?

Trevor, let me get your last question, and then Michel will address the first one. So on transaction effects, it still holds true. We know that we had some headwinds, mostly in Mexico and Brazil in the first half comparing to the second half. So this is true. On the other hand, probably something that has evolved a little bit is you have -- you saw a little bit more pressure in terms of energy, which sometimes is unhedged and logistic expenses, which are rising on H2 a little bit. On the other hand, you have the revenue management agenda. So the statement that should be balanced between H1 and H2 still holds true. Probably what changes slightly is that you see some of these unhedged energies becoming a little bit higher, which is going to impact more the second half. But you have the FX, which was more of a headwind in the first half being more supportive in the second half. So puts and takes, the balance A1 and A2 still holds.

On the first question, Trevor. Thanks for the question. I would just like to go back to your first question here, and thank you for the opportunity to talk a little bit more about this. If you think about regions, fair to say that Middle Americas was very strong. And we saw growth broad-based across the region, incredible execution as we saw in the North America and South America, but the results of this execution when you put all together, weather, economy, what we have done, it stands out in Middle Americas.

If I'll take one point, I will be repeating this because, again, I think that our strategy is where we put our energy to execute and the results are a consequence of the work that we are doing. We have a very intentional movement on improving the architecture and the functionality of our portfolio. So the fact that we used this big platform, the FIFA to roll out Michelob Ultra across Americas, this is the one thing that I think that's going to have a lasting a positive impact for us because this need for our consumers is somehow universal, the balanced choices and having the opportunity to socialize and to enjoy our products with products that have a modern formulation, the case of Michelob Ultra, lower calories, lower carbs. This brand performs very well across all the markets where we introduce.

You know that's a core plus. So it creates a very positive effect on our mix. In all these markets that are very large markets for us, the opportunity to have a brand that trades up and has a lot of incrementality, both for the category and for the mix is very important and it's perhaps the most intentional move that we have done in terms of execution on the quarter 2. And if we continue to execute our strategy, and we have still lots to do, lots of things that we can improve, then we will continue to see the results that we saw this quarter in the first half of the year, such as the growth that we saw in EPS, 23% on the quarter, 22% in the first half of the year, the improvement on the cash flow. So back in 2025, '24, we are talking about the step change and the sustainability of this step change. And now you see on the quarter 1, $2.5 billion growth on the cash flow. So the consequences, they come after great execution. Our execution is good. It's still way more that we can do, but we are moving on the right direction. So thanks for the question.

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

Thank you. Thank you, everyone, for your time today, for the ongoing partnership, support for the business. I hope that you all stay well. And since we are approaching Friday, take some time to drink a beer. Cheers.

Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines at this time, and have a wonderful day.

Welcome to AB InBev's First Quarter 2026 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab in the Reports and Results center page. Today's webcast will be available for on-demand playback later today.

[Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in these forward-looking statements.

For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 3, 2026. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin.

Thank you, and welcome, everyone, to our first quarter 2026 earnings call. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with the key highlights. The global momentum of our business continued to start the year. The consistent execution of our consumer-centric strategy drove solid top and bottom-line performance.

Beer volumes increased by 1.2% with record high first quarter volumes in Mexico, Colombia, Brazil, South Africa, and Peru, among others. Revenue increased by 5.8% with disciplined revenue management and positive mix from premiumization and Beyond Beer. Underlying EPS increased by 20.8% to reach $0.97, an all-time high first quarter EPS for our business. Our momentum was driven by our mega brands, non-alcohol beer and Beyond Beer.

In the U.S., our sales-to-retailer volumes grew, and we were the #1 share gainer in total alcohol as we continue to gain share in both beer and spirits. We increased our portfolio brand power driven by increased marketing investments and estimate that we gained or maintained share in 75% of our markets. BEES Marketplace continues to scale with GMV increasing by 55% to reach more than $1 billion in quarterly GMV. In summary, our business delivered another quarter of reliable compounding growth.

We are winning in key markets and growth segments, and we are confident in the resilience of our strategy and ability to deliver consistent results. Turning to our operating performance. Total volumes increased by 0.8% and EBITDA increased by 5.3% with flattish margins as disciplined revenue and cost management enabled increased sales and marketing investments and offset transactional FX headwinds.

The strength of our diversified geographic footprint has continued to enable us to deliver consistent results through different operating environments. Our footprint is both well diversified and balanced. With 70% of our EBITDA generated in emerging and developing markets, we are well positioned to capture future industry growth with a mix of currencies. 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 U.S., our business continues to build momentum with STR volume growth driven by share gains in both beer and Beyond Beer and an improved industry. Michelob ULTRA and Busch Light continue to lead our beer performance and were top 2 volume share gainers. Our Beyond Beer portfolio delivered revenue growth in the high 60s, led by Cutwater, which grew revenue in the triple digits and was the #1 share gaining brand in total spirits industry in the first quarter of 2026.

Now let's turn to Middle Americas. In Mexico, record high volumes drove high single-digit top and mid-single-digit bottom line growth as we continue to outperform the industry. In Colombia, record high volumes drove double-digit top and bottom-line growth. In Brazil, market share gain and an improved industry drove record high beer volumes and double-digit bottom-line growth. Our premium and super premium beer brands led our performance and delivered low 20s volume growth, strengthening our leadership position in the segment.

In Europe, volumes grew by low single digits as market share gains and premiumization offset a soft industry to deliver both top and bottom-line growth. In South Africa, our momentum continued with record high volumes driving mid-single-digit top line growth. Our performance was driven by our premium and super premium beer brands, which grew volumes by mid-20s. Now moving to APAC.

In China, our volume trend improved as we increased investments to rebuild momentum. Volumes declined by 1.5%, estimated to have underperformed a slightly growing industry. While we have seen some initial signs of improving performance, we still have work to do to strengthen our execution, expand our in-home channel presence and increase our participation in the growing segments of the industry. Now I would like to give you an update on the industry and the beer category and progress we have made in executing our strategy. First, I will start with the industry and the beer category.

According to IWSR, the beer category gained 60 basis points in share of alcohol beverage in 2025 and an additional 10 basis points when including the fast-growing Beyond Beer category. Combined, beer and Beyond Beer have now gained more than 300 basis points of share since 2019. The number of consumers participating in the alcohol category remained stable year-over-year, and with our data, we estimate that beer participation has also remained broadly stable.

Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth and opportunities to increase the category participation. Turning now to the first pillar of our strategy, lead and grow the category. Our mega brands continue to outperform with net revenue increasing by 8.2%.

Corona continued to drive premiumization across our markets, growing revenue by 16% outside of Mexico and growing volumes by double digits in 32 markets. The combination of our leading mega brands and platforms is a powerful opportunity to lead and grow the category. In quarter 1, we shared golden moments with consumers at the Winter Olympics, and we are ready to celebrate the shared passion of beer and football during the FIFA World Cup.

The consistent execution of our category expansion levers are driving momentum across our key initiatives as we continue to offer superior core brands, innovate in balanced choices and expand our premium and Beyond Beer portfolios. Led by the growth of Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio outperformed the industry and delivered a 27% revenue increase.

With an estimated 60% of volume coming from new occasions and new consumers, we believe non-alcohol beer is a key opportunity to develop the category and drive incremental volume growth. Let's turn now to our second strategic pillar, digitize and monetize our ecosystem. The customer behavior and purchase trends captured by BEES enable us to leverage AI capabilities to execute our commercial strategy. On an annualized basis, we have over 20 billion AI-driven touch points.

Each one is an opportunity to use AI to provide superior service, progress our revenue management agenda and supply leading brands and innovations. In the first quarter, this captured $14.6 billion in gross merchandising value, a 15% increase versus last year. This marketplace continues to scale with GMV from sales of third-party products, increasing by 55% versus last year to reach $1.1 billion. Our D2C business continues to grow and is enabling us to monetize our ecosystem.

Our digital platforms served 12 million consumers and generated $139 million in revenue. As we continue to digitize and monetize our ecosystem, we have started to commercialize third-party products on our D2C platforms. While we are in the early stage of exploring this opportunity, we now have a growing D2C marketplace with annualized GMV of $160 million. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. Hello, everyone. I'll take a few minutes to discuss the progress we have made on 4 key areas in optimizing our business, superior profitability, compounding dollar EPS growth, capital allocation flexibility and the sustainability and resilience of our supply chain. Through disciplined resource allocation and overhead management, we were able to offset transactional FX headwinds to maintain our superior margins while increasing our sales and marketing investments to accelerate momentum.

While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. Top line growth, effective cost management and translational FX tailwinds drove underlying EPS of $0.97 per share, a 20.8% increase in dollars.

EBITDA growth accounted for a $0.11 per share increase, partially offset by below-the-line items. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years and no financial covenants. In recognition of our consistent financial performance and the strength of our balance sheet, Moody's recently upgraded our credit rating from A3 to A2.

As we continue to strengthen the sustainability and resilience of our supply chain, we remain focused on improving operational efficiency in the following key areas: agriculture, water and energy, and emissions. Please refer to our website for further details of our goals. Our results in the first quarter, the strength of the beer category and the continued momentum of our business, all reinforce our confidence in our ability to deliver on our 2026 outlook of 4% to 8% EBITDA growth. With that, I'll hand it back to Michel for some final comments.

Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on the quarter, the momentum of our business and the opportunities we have ahead of us. Our momentum continued to start the year, and we delivered solid top and bottom-line results. Our performance this quarter is another proof point of the resilience of our strategy and our ability to deliver reliable growth through different operating environments.

The combination of our diversified geographic footprint, global scale and superior local execution, disciplined revenue and cost management, consistent investment in our leading mega brands and platforms, best-in-class digital capabilities and momentum behind our initiatives and innovation in growing segments position us well to deliver compounding growth and superior value creation for our shareholders. With that, I'll hand it back to the operator for the Q&A.

[Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies.

So my first question is about the future momentum of the portfolio. It looks like you're now at a tipping point where the core is stable and the growth in the portfolio now scaled, well-integrated into the playbook and have got pretty decent momentum. How are you thinking about the portfolio from here, Michel? And then my follow-up question is on your revenue per hectoliter of 4.5% in the first quarter. Are you able to split out in broader terms what is from mix versus traditional revenue growth management levers like pricing?

Thanks for the questions. I will start with the portfolio momentum. And I think if you step back for a second and you put things in context beyond the quarter only, we are very well positioned to continue to deliver compounding growth and value creation. And this starts, of course, with our strategy. We talked a lot about this over the last 4 years. We built a strategy that both is resilient, but it's also one that we can adapt for different occasions. I always say like beer works in different occasions.

And this strategy is based on the footprint we have on the growth areas that we identified for the business and the investment choices that we made, so we could accelerate growth and create options in these areas. And of course, most of the options that we created was focusing on improving our portfolio.

You see this coming strongly in the U.S., where we are rebalancing our portfolio towards growing segments, but we are also using this at a global level, investing on the right brands and investing on the right areas where we think that both the brands that we have and innovation can meet consumer demand and accelerate the growth for both for the category and for our business.

And I think that as we keep building on that, today, we have over 40% of our revenues when you think about premium balanced choices and Beyond Beer that is growing at double-digit revenues. And we think that this is the main driver behind our momentum. And of course, the more we feed and the more fuel we give to this momentum, the more we can continue to accelerate this in the future.

And when you think about the revenue, it sounds like those 2 things are combined, right, because stronger brands and a stronger portfolio allow us to keep building on the revenue management agenda that we have. And if you look at the quarter 1, for example, mix was a very important component on our revenue per hectoliter growth, give or take inflation 3% to 3.5%. And what is built on top of that is the impact of the growing segments and growing brands, adding a component that's very structural for our revenue per hectoliter as we move forward, which is mix. Thank you for the question.

Our next questions come from the line of Rob Ottenstein with Evercore.

So Michel, you've really delivered terrific results for a couple of years now, strong start to '26. You've held, gained share in most markets. As you mentioned, you're getting strong price mix. You're showing some volume growth. And importantly, pretty much every quarter, almost every quarter, you've hit your medium-term algorithm.

And you answered part of this in the prior question in terms of improving the portfolio. But in addition to that, can you talk about maybe 1 or 2, 3 other things that you're doing differently today than maybe 5 years ago that is allowing for such strong and consistent results? And do you believe this is sustainable going forward?

Thank you, Robert. So I like the question because we always say that every quarter will be different, right? So we have different dynamics impacting the quarter and quarter 1 happen to be one on the positive side, and we are very encouraged by the way that we started the year with solid top and bottom-line performance. But it's also reassuring that over the last 4 years, we have been seeing different operating environment. Nevertheless, the strategy remains solid. and the execution is gaining momentum.

And this momentum can be perceived on the portfolio momentum, on the total revenue momentum, on the growth bets that we have, the choices that we made and how these choices now are playing out. And I think that this long-term point of view is one of the big changes that we have made because we could not do what we are aiming to do, which is our organic-led growth strategy to work on a given quarter only and needs to be to the long term.

So one of the things that I think we are all very proud is the choices we made and the investments that we have been making to the long term, investments in portfolio, investments in digital capabilities, investments on the brands that we choose to support and grow, which are the mega brands.

I also think that execution has been enabled by both a very strong culture and the way that the team is focused on growing the business and the additional benefits of our digital capabilities. So today, the fact that we wired the whole system and that data is driving a lot of the decisions we make, but also supporting the decision-making in the front line is a very important component of our growth algorithm and the way we do business today.

And last, I think I talked a little bit about this, but the team has been working very hard in doing everything that we do with a high level of efficiency, which is traditional into the company, the operational efficiencies, but also commercial efficiencies. So the work that we do is making the money that we invest work very hard for us and the brands are growing forward.

We are gaining share on the key markets that we operate and the choices we made to invest for the future portfolio are gaining momentum and paying off. So very thankful to the team, all the work that they are doing. They're working hard to learn this every day and one more quarter that we delivered on our outlook, and we are very encouraged to see what the summer is going to bring, especially with FIFA around the corner. That's going to be an interesting moment in the year. Thank you for the question.

Our next questions come from the line of Olivier Nicolai with Goldman Sachs.

Two questions, please, both related to the U.S. First, I mean, momentum in the U.S. has clearly improved year-to-date. Could you give us perhaps a bit your sentiment on the current consumer demand in light of higher gas prices over the last month? And also, is it fair to assume that STWs are going to be well ahead of STRs in Q2 as you probably build up some inventories for the FIFA World Cup coming up in June?

And then secondly, it's been only a couple of months since you got the BeatBox now part of the portfolio. But what -- can you give us a bit more details on what does that brand brings to your existing portfolio of spirits RTDs? And if you would expect the same growth trajectory that you had on NUTRL and Cutwater without cannibalizing those?

Olivier, thanks for the questions. I'll try to answer all of them. I got like, I think, 3 or 4 questions in one shot here. Let's see how we do on that. The first one, I think that the overall consumer sentiment is well known by everybody in the industry and in the consumer sector. I think we had a tough year last year for consumers as inflation was still building and people are trying to build back their disposable income.

At the beginning of the year, it's fair to say that was more benign, let's say, in the quarter 1 and of course, everything that's going on now with energy costs and potential inflation implications will have somehow a delayed impact. So we are seeing some costs going up today, but we know that it takes anywhere from 3 to 6 months for this to really hit on consumers. So at this point, I would say that things are manageable for everybody, for consumers and for the companies.

But we know that as we build towards the end of the year, depending on the direction that we see for inflation, these things will start to compound again and will be once again a factor for both consumers to manage and for the CPGs to manage. Fair to say that if you look at the last 4, 5 years, we've been managing one difference each and every year or each and every quarter.

On the question on STWs and STRs, if you look for the -- over time or during the full year, they always tend to converge. And this has been true for the last many, many years and will not be different this year. The difference on what you said, if I got correctly your question, is that we should expect on the quarter 2 an inversion on that. And this never happens because of the summer. We often sell more during the summer than what we can ship.

So the conversion that you see on STRs and STWs historically is more towards the back end of the year, not towards the summer, right? So I think that we will continue to see some mismatch as we go for quarter 2 and then quarter 3. And then for quarter 3 to quarter 4 is when things tend to converge. And on the ready-to-drink, I think that we have a great portfolio globally. We have global brands that we are growing in the local market and scaling up globally.

Just think, for example, at the expansion that we are doing now with Flying Fish. So Flying Fish from Africa traveled to Europe to South America and is growing today in many different markets. This is true for Cutwater that we are starting to expand as well. And BeatBox will add to this portfolio and it's very complementary. So it's not cannibalistic to any of the other brands that we have.

And it complements our portfolio, bringing an option that is non-carbonated, more convenient, more flavorful and therefore, suits for some different consumer occasions and consumer profile. So a strong portfolio. Now if you look at the top 10 brands, we have Cutwater, we have NUTRL, we have BeatBox.

If you look at the top 5 brands growing in the U.S., then we also have a strong set there with Cutwater and BeatBox coming. And as you combine the power of what the team built at BeatBox with the AB distribution and focus on the U.S., for sure, we will see some good opportunities come to the table. So thanks for the question.

Our next questions come from the line of Sanjeet Aujla with UBS.

Just following up on the U.S. again, please. It looks like the underlying business in Q1 is growing around 4.7%. How much of that is coming from the Beyond Beer portfolio? Is that portfolio gross margin accretive to the U.S. operations or not? And I guess, finally, as we sit here in 12 months' time, what gives you the confidence that brands like Cutwater can keep growing despite lapping what's going to be a really high base?

Sanjeet, thank you for the question. On the first point, I think that the math is very straightforward. So STRs were positive and the revenue per hectoliter was very good, building on inflation and mix, very similar to the global business, as we said before. And this momentum, if we step back and we remember, many times that I answered this question in our conversations here. So we are on a mission to rebalance our portfolio in the U.S.

Because of the nature of the market, the 3-tier system, this rebalance will never happen overnight, but it's something that we have been building over time. And today, we have over 40%, 45% of our business that is already above core, both mainstream in the U.S. And if you think about the brands that are growing pretty much the same number, they are approaching 50%.

And when you get the pace of this growth versus how we've been stabilizing the other brands that we have in the declining segment, then the product of this is a product that is very encouraging for the quarter, but also to the mid, long term in the U.S. So we have a better portfolio today than what we had a couple of years ago. And when you think about the Beyond Beer contribution on that, this was a bet that we took to the heart back then in 2017. We learned a lot. It didn't happen overnight.

So people like to think about these overnight successes. This is not. This is 10 years in the making. And this portfolio today is very strong. So we have pure-play brands that they enjoy a very special space in consumers' mind. They are building distribution still. All of them have very low distribution, very low household penetration. We are at early stage on the S curve to continue to develop and grow these brands. They all have momentum.

Some of them have accelerated momentum like triple digits, but they are all growing double digits or more. And we think that the headroom to continue to grow these brands is huge because, again, low penetration, low household penetration, low participation in consumers, but very, very strong propositions.

The margins we talked before about that, like on a gross margin percentage speaking, they are smaller than beer because they have higher cost base, smaller volumes today, but they are enjoying operating leverage because, of course, they are growing strongly. Margins are only improving. But on absolute dollars, they are way more profitable, let's say, 20% to 30% more profitable than our premium beers. So very good business for us to be in.

And Cutwater, as you said, at this point, we are concerned with the quality, we are concerned with our message on delivering superior experience ready-to-drink cocktails for consumers, and we are working to supply the demand, which has been very strong to date. So good brand, good place to be in, #1 share gainer in the spirits industry, the fastest-growing brand in that space, so contributing immensely to our momentum in the U.S. Thank you for the question.

Our next questions come from the line of Celine Pannuti with JPMorgan.

My first question would be on FIFA activation. Can you talk about when we should see the step-up in growth for the Q2 and Q3, whether there's anything you can help us in terms of quantification? And likewise, in terms of the step-up in A&P that we should expect in Q2, Q3 on that point, what was the Q1 step-up in SG&A spend on, please?

And my follow-up question would be on the price mix. So you said, Michel, that around 3% or 3.5% inflation and on top of the mix, it feels like inflation and CPI globally is not going to decelerate given what's going to happen or the events unfolding. Would it be fair, therefore, that this kind of growth in price mix is resilient throughout the year?

Thank you for the questions. I'll take 2 or 3 of them here, and then Fernando can add at the end a little bit on the cost side. And first, I think that the FIFA numbers, we have a good history on that. So every 4 years it happens, is visible for everybody. And the numbers that we -- usually globally based on the data that we have suggest that FIFA contributes historically anywhere from 20 bps to 30 bps of the year's volume.

And of course, this depends on the location of the games and the time of the games, and this can vary by country. I think it's natural to think that if you go to Germany or Brazil or Argentina, it's a more relevant event than it is, for example, in some of the Asian countries. But I think like 20 bps to 30 bps globally uplift, and it happens on the months of June and July. So it's a concentrated impact during these months.

And we will see normally this coming through in the quarter 2, quarter 3 as we approach the games. And now we are on the cut down. So we are really ready with the execution. The execution should be hitting the markets as we speak. In some of the markets, we are already advancing a little bit of that. In some of the markets, we are waiting the final stage that we are approaching now to start kicking off the campaigns. And the SG&A is the same.

So this year, on top of being during the summer, which is often a moment that we invest more, we're going to have on top of that the World Cup, and this will somehow spread equally through quarter 2 and quarter 3. Quarter 2, a little bit heavier, of course, because you have the anticipation campaigns and everything that happens. On the price side, very clear, like our policy is to price with inflation. And if inflation accelerates, we will need to then [indiscernible] that and adjust our plans.

To this point, we feel good where we are and with the plans that we have and mix, which is a very important part of our revenue strategy is compounding on these numbers. So if you look at the last quarter 1 was very good, quarter 3 was good as well. And this is a structural benefit on our revenue management. The fact that we are investing on the mega brands, our investment choices on growing segments that are more profitable, such as non-alcohol beer, premium and Beyond Beer, of course, they add to our revenue that should continue to move with inflation.

And Celine, Fernando here. Just to add on Michel's comment, Michel mentioned the SG&A, the advertisement expenses. Every year is unique in a sense. But given our hedging policy, we always have good visibility when we go into the year. So we knew that this year, we're going to have more sales and marketing concentrated around the World Cup.

And we also knew that given the hedging policy and FX movements, we know that from a cost of goods sold standpoint, you have more pressures on the H1, particularly in Mexico and Brazil rather than H2. But given that we know all that when we start the year, we took some proactive measures in both revenue and cost management agenda to better balance the year. What I mean by better balancing the year is H1 versus H2. So on the things that we can control, we try to smooth it out some of the impacts that we already anticipate going to the year.

Our next questions come from the line of Mitch Collett with Deutsche Bank.

My first question, I guess, follows on from that last comment. So how should we think about the phasing of 1H and 2H EBITDA growth given what you just said about the phasing of transactional FX, but also maybe some of the other factors like the Midwest premium and also your sales and marketing investment, which sounds like it's going to be still reasonably concentrated in Q2 and Q3, which is, I think, what you said at the full year call.

And then my second question is on the 5 markets that you call out where you've reached record high first quarter volumes. I appreciate there may be some phasing within that. But it certainly seems very counter to the prevailing narrative of alcohol consumption and beer being under pressure. So are there any commonalities between those markets that you haven't already covered in your answers to the other questions?

Mitch, Fernando here. Let me start with the first one. What I said and maybe it's good to reinforce is that we understand kind of COGS dynamics given our hedging, and we know more or less how they are going to behave. We know that probably the biggest pressure is in half 1, maybe even more a little bit towards Q1, and then they start easing off as the months go by. Knowing that you can already be proactive in your revenue and cost management initiatives to counterbalance some of these effects.

To the same token, we know that as the cost pressures or the cost will start easing up, you know that you're ramping up sales and marketing because of the World Cup. So all in all, we expect kind of a more balanced year when you go all the way to the end, even though the lines, you should see different components between the lines, which are the dynamics that we already knew once we started the year.

Yes. And taking on your second question, Mitch, thanks for the question. So first, I think that we mentioned this because we believe it's an important data point for investors and for all of you guys. And those are meaningful markets like Brazil, Colombia, South Africa, Peru, Mexico, and we have many others that reached an all-time high volume. You are right. So there is a benefit from Easter. So think about anywhere from 30 bps to 50 bps of the growth coming from the shift of Easter in quarter 1 versus quarter 2 last year.

Nevertheless, all these markets grew north of that. So they grew more than the Easter shift. And what is common across these markets is twofold. One, as we keep saying, structurally, the key fundamentals behind the beer category that are demographics, that are economic growth, and the opportunities for the category to have higher participation, they remain in place.

And even though the dynamics of each quarter will always be different, and we have seen everything in the last 4 years, those fundamental dynamics do not change. Second, our strategy is a growth strategy, and we keep working on the key elements of our growth strategy, investing to the long term, and this is obviously paying off as our portfolio gets stronger on the areas that have more growth. So in all these areas, you see strong core brands, maintaining or gaining participation in the category.

You see premium brands growing and improving access to consumers in different occasions. You see our Beyond Beer brands expanding the set of consumers that we bring into our portfolio. And last but not least, the non-alcohol as a new avenue for growth, strong growth across all these markets. So it's a global strategy that has been well executed locally on our markets that has long-term investments and choices that we make.

So we optimize these investments. And while every quarter will have its own dynamics, it's good to see that back end of last year was good. Quarter 1 was solid. And this, I think that helps to neutralize or to put in context what you call different narratives around the category because at the end of the day, beer is big, it is growing, it is gaining share of throat globally.

It's a category that's part of people's life for every moment of celebration for more than 5,000 years and it's not going anywhere, to be honest. If you look towards the summer now, it's going in a very good direction with FIFA being celebrated globally. Thanks for the question.

Our next questions come from the line of Simon Hales with Citi.

My first question was just a quick clarification really on the Q1 volume shipments that we saw. I just wanted just to check that within those numbers, there weren't any shipments ahead of the World Cup into some of your key markets, I mean particularly some of the strength we saw in Latin America, there was nothing, there was no trade loading, I suppose is the underlying question there.

And then secondly, I just wonder if you could just talk a little bit more about the performance of Brazil in the quarter, how the business evolved through the period, how you exited Q1 and particularly given that strength of volume growth in the premium segment, how confident are you in your ability to sustain growth at those sort of levels going forward, given that's quite a competitive sort of category you're involved in there?

Simon, thanks for the questions. So in terms of shipments, the answer is very clear, no. And to make this more clear, we disclosed that, for example, in the U.S., we under-shipped. So we sold more than what we shipped to wholesalers. And the buildup for the World Cup will really happen more towards June than we could have done anything in the quarter 1. So no shipments ahead of time.

This buildup should really be at the back end of quarter 2, not sooner than that. And in terms of Brazil, I always go back to the point in Brazil that is a very competitive market. And we have very strong operations in Brazil, but we've been adjusting our portfolio over the last 4 years. And we are very confident that we have strong brands now being executed in the right way as we rebalance a little bit more having a strong mainstream business, but also strong premium brands.

These brands now are growing and gaining share with accelerated momentum. So the quarter 1 had a little bit of everything because the quarter 1 in Brazil had like an excellent carnival, but then a very wet period at the beginning of January and during March. So it was more really market share gains in the right segment, especially premium and super premium.

And I think that beers, now as we look forward in Brazil, will count with same momentum behind our brands, and we are investing to continue to gain share and solidify our position there in premium. The calendar for Brazil is very supportive for the year. So there is many holidays that are extended holidays in Brazil this year. And at the middle of the year, we're going to have the World Cup.

So let's hope for the best with the Brazilian team, so we can have some good moments of celebration there in Brazil. And we'll continue to work to make this portfolio stronger to maintain the level of execution that we have there, which has been very good in the last couple of quarters. And innovation has been playing a big role in Brazil. So we have some very strong products that we innovated in the last couple of quarters and years that are doing very well.

And we are rolling out Flying Fish now in Brazil, which is a big bet as well and the Beyond Beer that can add plenty of consumers to the portfolio of brands that we have and even more occasions for us to be close to consumers and to moments of celebration there. So we feel good. Of course, we need to continue to monitor the industry while controlling what we can control, which is our own agenda and portfolio in Brazil.

Our next questions come from the line of Richard Withagen with Kepler.

I have a question on Corona. I mean the activation appears to have been very solid around the Olympics. So maybe can you explain a bit what has worked well in execution and what was less solid than you expected? And what takeaways do you have on this to also execute well during the World Cup?

Thank you, Richard. So the Olympics was very important for us as a platform to launch globally and really grow the Corona set of proposition globally. And this so far is working very well for both sides for the Corona brand because we now are present in many countries. Corona Cero is growing globally very well.

And we, just this quarter, now became leaders in value globally, and we took the leadership now in 7 out of the top 14 markets, and we continue to grow the portfolio overall double digits and is working very well with Corona as well as with Michelob ULTRA Zero in the U.S., which is the brand we are using for Olympics in the U.S.

One of the most astonishing statistics from all of that was to see during the Winter Olympics in Italy, Corona and our zero-alcohol both, the regular and zero-alcohol having 60% share of all beverages being sold in the concessionaires around the events. So 60% when we include everything from water to soft drinks to coffee, and that was during the Winter Olympics.

So it's one more proof point that people really enjoy beer, that beer and sports go well together and offering choices to consumers. Regular Corona and zero-alcohol Corona is a winning proposition for everybody out there. When you think about that with the World Cup, I think that it goes back to the point that we are leveraging global scale. So we activated the Olympics globally as we always did with FIFA and we'll do again during the summer now with FIFA.

We want to be on the anticipation of the games. So people can prepare for the Cup for those that will watch the games at home with family and friends. We want to make a huge push on bars because the bars will be the places where people will get together to watch the games. And there is nothing like watching your team around friends and family on a nice bar over a cold one.

So we're going to make a big push to support our partners so they can offer the best experience on the bars. And of course, we'll be working in the local markets from Mexico to the U.S. and Canada to make sure that everybody that's coming to watch the games will have a great experience on the stadiums and make sure that the concessionaires are well equipped to deliver a great experience there on the part that we can control, which is the beer.

So it's great to see the mega platforms working. The key behind that is the scale that we have, the ability to execute globally and the ROI in this has been very good because the brands are executing very well and consumers are giving their vote to the brands that we are using. So thanks for the question.

Our next questions come from the line of Chris Pitcher with Rothschild & Company.

I will talk about South Africa. There's been a lot of focus today on the strength of your portfolio and the mix that's coming through, particularly from revenue management. But in South Africa, it looks like revenue per hectoliter was below the rate of inflation despite, I believe, a stronger performance from Beyond Beer products, which should, in theory, be accretive to mix.

Can you give a bit more detail on why revenue per hectoliter was a bit more subdued in South Africa? And then could I just confirm, India looks like it was up about 30%. It was probably one of your top 3 volume contribution markets. It gets a specific reference from Bud Asia, but not from you guys yet, but it looks like it could well be into a period now where it's contributing to group growth and it looks like it's moved into profit. Could I confirm both of those?

Yes, Chris, thank you for the question. So South Africa, great momentum, all-time high volume for the quarter 1 with beer. Our Beyond Beer portfolio is growing very well. We have our revenue agenda working well around phasing through the year on the pricing and the investments that we've been making, both in terms of sales and marketing. So we are very confident that the agenda will continue to work well there as have been working over the years.

As a matter of fact, our prices are in place, and there is a healthy revenue coming from this pricing there. When you think about India, we comment about that in some of the calls, and I thank you for asking the question because it gives me an opportunity to talk a little bit more about India here, too many countries that we often talk about. So India has been a great story in which the industry has been growing consistently, some ups and downs.

But when you look more and you take the long term, it is an industry that's been growing high-single digits, almost double digits. Quarter 1 happened to be a double-digit industry. It is a place where we have an incredible portfolio of brands. It is today a top 5 market for Budweiser globally and becoming like a top 3 this year, probably. Budweiser has strong growth momentum there. Our share is approaching 20% on the market. It's all organic growth, mostly on the premium and super premium segment.

So the brands are working very well. Our growth was really strong, was above 30%, as you mentioned, and we keep investing to the long term. And as the industry continues to expand, per cap is very low. So the headroom for growth is immense and the strength of our portfolio there is something that we have been building for over 10 years now. So we are really playing the long-term game there. And we are happy with the execution.

That's way more that we can do to improve the industry collectively because it's not a one player game for this industry to unlock there. But on our side, portfolio is strong, momentum is good. Execution is very good, and the team is locked in pursuing our 10-year plan ambition there and transform this in a meaningful market for us [indiscernible].

So good business, good portfolio, profitability improving, but a very long game that we are playing there because per cap is still very low. And as people get wealthier, as the barriers around the industry start to be unlocked, that's huge future growth opportunities for all of us. Thanks for the question.

Our final questions will come from the line of Trevor Stirling with Bernstein.

Just one from my side, please. I'm really struck by the continued very strong growth in BEES, in particular on the platform and the 3P side of the business. And I'm just wondering, maybe one more for Fernando. Is that starting to be a meaningful contributor to your revenue per hectoliter growth in Brazil? Or is it still a little bit too small to move the needle?

Trevor, so yes, it's good growth, kind of the business growing well. It's -- as we said, it's a business that is positive in EBITDA, positive in cash flow, but it is still -- I think all the other components are far more relevant so far as contributors to the net revenue per hectoliter agenda. Michel?

Just maybe to add on your point, Trevor, the growth continues to accelerate on this marketplace. And just to ground the thought around that, the 3P, which is selling through the platform third-party products is where we see most of the growth. And in this case, we are still scratching the surface. We know that the total addressable market is a multiple of what we are capturing today. And of course, this 50%, 60% growth that we have is a way for us to continue to get more of that.

As Fernando said, cash is positive, EBITDA is positive and the margin of the 3P is very big. But today, it is a small component of the overall business, a growing one over time. So it is -- the most mix that we see today is mix from brands that come from premiumization and from Beyond Beer. But as time goes by, this will become a more meaningful contributor on this mixed component of our revenue growth.

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

Thank you, and thank you, everyone, for your time today, for the ongoing partnership and support for our business. I hope that you are doing well. For those in the North preparing for summer and grabbing some beer to cheer. And for everybody else, of course, join us on the excitement for FIFA, that's right around the corner and for a great summer, great games and great moments of celebrations. So cheers.

Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.

Welcome to AB InBev's Full Year 2025 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. [Operator Instructions] Today's webcast will be available for on-demand playback later today.

[Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties.

It is possible that AB InBev's actual results and financial condition may differ, possibly materially from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025.

AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin.

Thank you, and welcome, everyone, to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with the key highlights for the year.

In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continued margin expansion and solid free cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy and the resilience of our business.

While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonal weather, we continue to invest in our strategic priorities. We remain disciplined in our revenue management choices and delivered EBITDA growth within our outlook. We continue to make progress this year. We strengthened our operating model and increased our portfolio brand power.

We also formed new long-term partnerships to extend the reach of our brands and deepen the connection to our consumers. The momentum of our growth priorities continued. Our mega brands and premium portfolio grew ahead of our overall business. The growth of our Beyond Beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34%, respectively. And BEES Marketplace GMV increased by 61% to now reach $3.5 billion.

Solid free cash flow generation enabled us to increase the size of our share buyback program, pay an interim dividend and propose a final dividend that combined represents a 15% increase versus last year and further strengthened our balance sheet. We exit 2025 with improving momentum across many of our key markets, and we entered 2026 well positioned to engage consumers and accelerate growth. Turning to our operating performance.

While our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter with improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega brands that command a premium price drove a revenue per hectoliter increase of 4.4% this year, resulting in top line growth of 2%.

Our productivity initiatives more than offset transactional FX headwinds to drive an EBITDA increase of 4.9% with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent profitable growth. Revenue increased in 65% of our markets this year, and we delivered EBITDA growth in 4 of our 5 operating regions.

Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies. Around 70% of our EBITDA is generated in emerging and developing markets that are projected to account for more than 80% of the beer category volume growth through 2029. Now I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America.

In the U.S., our business continues to build momentum, and we gained share in both beer and spirits in 2025. Our beer performance was led by Michelob Ultra and Busch Light, which were the top 2 volume share gainers in the industry. In Beyond Beer, our portfolio growth accelerated. Revenue increased in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026.

Beer industry volumes and revenues grew in January. And later this year, we look forward to celebrating the 150 years anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl. We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers.

Budweiser, Michelob Ultra and Bud Light were named as 3 of the top 10 ads according to the USA Today Ad Meter with Budweiser taking the top spot for the second year in a row. Now let's turn to Middle Americas. In Mexico, our business momentum continued, delivering a mid-single-digit top and bottom-line increase with our above core beer portfolio leading our growth. In Colombia, record high volumes and margin expansion drove double-digit EBITDA growth with revenue increasing across all price segments of our portfolio.

In Brazil, our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalized. Our premium and super premium beer brands delivered high teens volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially offset the softer industry with performance driven by our mega brands and non-alcohol beer.

In South Africa, our momentum continued with market share gains in beer and Beyond Beer and disciplined revenue and cost management driving mid-single-digit top and bottom-line growth. Now moving to APAC. In China, revenue declined by low teens with our volumes underperforming a more stable industry as we adjusted inventory levels and focus areas to better reflect the channel and geographic shift.

In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth. Now I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let's start with the category.

Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth and opportunities to increase category penetration. According to IWSR, the beer and Beyond Beer category is forecast to continue to gain share of alcohol beverages in 2025 and has now gained more than 200 basis points since 2021.

And looking ahead, beer is expected to grow volumes globally and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021. Our marketing effectiveness continues to strengthen, and our mega brands and mega platform approach were key contributors to the brand power of our portfolio, reaching a record high in 2025.

Our mega brands led our growth and have increased revenue at a CAGR of 10% since 2021 and now represent 57% of our total revenues. We are the leader in the premium beer segment globally and see significant headroom for category to continue to premiumize. Premium beer is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall. And the best example of premium execution in our portfolio is Corona.

In 2025, Corona celebrated 100 years since its original launch and 2026 is off to a fast start with the brand sharing the golden moments at the Milan Cortina Winter Olympics. Since 2018, the volumes of Corona have doubled. And in 2025, volume increased by double digits in 30 markets. The quality, brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor.

And in 2025, was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low carb, low calories, sugar-free, gluten-free and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category and momentum continued in 2025.

Led by Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio delivered a 34% revenue increase, and we estimate to gaining share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth.

In Beyond Beer, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S., which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer Flying Fish is now expanding to Europe and the Americas.

Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, route-to-market capabilities and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands and liquids contributed 11% of our total revenue.

In the U.S., we led the industry innovation with 3 of the top 5 innovations of the year, with Michelob ULTRA Zero and Busch Light Apple, the top 2. In China, we launched a 1-liter can for Budweiser and a Corona full-open lid can to bring the iconic lime ritual into the in-home channel. In South Korea, we launched the country's first 4 Zero beer with great taste, zero alcohol, zero sugar, zero calories and zero gluten.

And in Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, BEES captured $53 billion in gross merchandising value, a 12% increase versus last year. The growth of BEES Marketplace accelerated and delivered $3.5 billion of GMV this year, a 61% increase versus last year.

The Marketplace on BEES has grown rapidly since we initially started developing the platform in 2021. We recognized early that many of our customers could benefit from a one-stop shop for their business and similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers.

The marketplace has grown to $3.5 billion in GMV business from a standing start 5 years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners.

In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and developing new consumption occasions. In 2025, we continue to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. Good morning, good afternoon, everyone. I will take a few minutes to discuss the progress we have made on 4 key areas of focus in optimizing our business, improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year with margin expansion across 4 of our 5 operating regions.

While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million. Underlying EPS was $3.73 per share, a 6% increase versus last year's in dollars and a 9.4% increase in constant currency.

Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share but was partially offset by a higher cost of hedging and FX movements. We maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through deleveraging, and maintaining our disciplined resource allocation.

Looking ahead, we are encouraged about the opportunities to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt. And despite a $2.8 billion FX headwind on our net debt from a stronger euro, we reached a leverage ratio of 2.87x. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs.

We have no bonds maturing in 2026, a weighted average maturity of 13 years and no financial covenants. As we continue to deleverage, we have increased flexibility in our capital allocation choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025. We have completed $3.2 billion of share buybacks and are currently executing a further $6 billion program. For 2025, the Board has proposed a final dividend of EUR 1 per share.

Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year with the ambition to continue a progressive dividend over time. Now turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us, water, agriculture, climate and packaging.

We achieved our water and agriculture goals and made strong progress against our climate and packaging objectives over the past 8 years. We are proud of the progress made, and we'll continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4% and 8% on an organic basis, in line with our medium-term outlook.

As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net CapEx to be between $3.5 billion and $4 billion, and we expect our normalized effective tax rate to be between 26% and 28%. With that, I would like to hand it back to Michel for some final comments.

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

We strengthened our balance sheet and increased our capital allocation flexibility, enabling a progressive increase in our dividend and announcement of a larger share buyback program. While our volume performance was below our potential in 2025, we are encouraged with the momentum we saw as we exited the fourth quarter. Our volume trend improved in December, and we gained or maintained share in 80% of our markets in the quarter.

The combination of our mega brands with an unparalleled lineup of mega platforms is a powerful opportunity to lead and grow the category. This past weekend, we kicked off an exciting calendar of events with both the Super Bowl and the opening of the Winter Olympics. And then the summer will bring FIFA World Cup in North America.

With 104 games across 3 countries, each game is an opportunity to bring beer and sports together to create unforgettable moments for fans around the world. We entered 2026 with improving momentum, and we are well positioned to activate the category and engage consumers. With that, I'll hand it back to the operator for the Q&A.

[Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies.

Two questions, please. So last year, you wrote that beer is a passion point for consumers and a vibrant category globally. And this year, you're starting off with beer plays an important role in bringing people together and creating moments of celebration. I'd love to get a bit more context into this nuance.

And to what extent can you, as industry leader, help to bring across a more balanced message around the positive attributes of moderate consumption and getting people together is my first question. And my follow-up, again, for Michel. You're sounding a little bit more optimistic about the prospects for 2026. How much of this owes to sort of consistent application and progress with your strategy? And how much of this owes to some very early green shoots that you might be seeing from a cyclical standpoint?

Thanks for the question. I think that on the first point, they are actually both right. Beer is a passion point for consumers, but beer always brings people together around moments of celebration and enjoyment. And I often say that we listen to a lot of things that are happening and everything gets better when people get together and drink a beer. So the world really needs a beer.

And this is important as we get people to exchange ideas, to socialize, to enjoy moments as we saw this weekend with Super Bowl or during the Olympic Winter Games in Milan Cortina, everybody was enjoying the sessions and having the opportunity to be together with friends and drink a beer. So I'm extremely optimistic about the role that our product plays and how we can always enable memorable moments for our consumers.

That's why we invest in the platforms that we invest on our brands, and we keep pushing the category forward with innovation. In terms of the tone for 2026, let's say, I think that 2025 was definitely a very complicated year with many dynamics impacting different markets, industry and consumer goods in general, right? And beer was not insulated from what happened last year. As we saw most of the impact for beer came on the second half of the year.

But as we phased the year towards the end of the year, we saw momentum reaccelerating, especially in December. And this momentum is carrying on now early in January in majority of the markets. We have a very good year in terms of opportunities to activate and land our innovations. And I think that if you look forward during the summer, the World Cup always presents a unique opportunity for us and the fact that's going to happen in the Americas, 104 games plus across the world is going to be great.

And in connection with our strategy, of course, despite of everything that happened last year, you've seen the numbers, we continue to invest on our strategy, always focusing on the long term. Our growth accelerators and growth drivers like balanced choices, premiumization, non-alcohol beer, Beyond Beer and BEES marketplace are all working as per plan.

And therefore, the more the mix contribution of these initiatives and the more solid the execution behind our 3 pillars of this strategy becomes, the more optimism, of course, we build and continue to deliver our midterm outlook. That's why it's unchanged for 2026. Thank you for the question.

Our next questions come from the line of Rob Ottenstein with Evercore...

Michel, you've done a terrific job turning around the U.S. market, and it really looks like it's in the best position to grow in many, many years. Can you first maybe kind of give us a sense of the key elements of that turnaround and what you've learned from that?

And then perhaps even more importantly, can you talk about other major markets around the world where you can apply those learnings, those strategies, tactics to put the markets on a better trajectory and maybe specify particular actions along that front that perhaps you started in '25 or plan to start in '26, so we can get a sense of how you can take what you've learned and the momentum in the U.S. and move it around the world.

Thanks for the question. So to start with, I think that the team is doing a great job in the U.S. So they are working really hard on things that we agreed and those things are turning the results around. I think that we have been in a long journey in the U.S. since 2008. We got a business that had structural disadvantage because the portfolio was concentrated in segments that were not growing.

You remember that since 2017, when I arrived in the U.S., there was this idea of rebalancing our portfolio for growth and the idea that, of course, this rebalance will not happen overnight. So we continue to be very focused on this strategy, investing in the right segmentation and in the right brands, innovating in the segments where we had low or no participation. And the biggest learning, I think, for everybody in the U.S., including myself, is the power of consistency.

So the U.S. is a market that moves on the long horizon. It doesn't move overnight. Investments, that's why we continue to heavy up our investments in the U.S. and hard work. And I'm very glad to see the team working very hard to execute this strategy and start harvesting some of the efforts that they are making over the last 3, 5 years in this market. So we are very focused. We are very consistent.

We are investing, and we are working hard in getting this strategy to benefit our business and our wholesalers and our customers in the U.S. When you think about other markets, you know that we have a very large footprint. So every day is a different day. It's never boring. But if I would choose only one market at this moment where we are very focused in turning around is China. So China went from a big accommodation of the industry first re-accommodating.

This industry plays different by region, as you know. So the east part of China suffered much more than the inland. The on-trade channels declined much more than the off-trade. And because our business had a very large footprint in the East and in the on-trade, we had to reorganize ourselves. So we took last year a huge effort to keep the business healthy, especially in inventories, cash flow for our wholesalers, while we start to reorganize towards off-trade and more inland distribution as well.

I think the recipe for the China business is the same. It starts with right focus and moving at the speed that we need, which was not the case before. Execute with consistency. We have a great portfolio in China. invest on the right channels, which we are doing now and making sure that the team is working as hard and with the sense of urgency that we need. And I'm glad to see that quarter 4 share was stable, Budweiser was in a better place. And now in 2026, we need to continue to work on this direction so we can reignite growth there. Thanks for the question.

Our next questions come from the line of Sanjeet Aujla with UBS.

Two from me, please. I'd like to follow up on China there, please. And maybe just a little bit more of an update on your commercial execution. How far or how much progress do you think you've made in terms of penetrating the off-trade channel? Are you now gaining share within that channel? And just tied to that, what are you seeing in the on-trade channel? Any signs of some of the anti-extravaganza measures in your key provinces starting to ease at all? That's my first question on China.

And secondly, just on Brazil, it's been a tough year in Brazil from a category standpoint. You spoke about December returning to growth. Has that also continued into January? And just your -- the competitive dynamics in the market. I think you alluded to some share gains in Q4. It would be great to dig deeper into that.

Thanks for the questions. So I think that in China, the 2 questions. First, the off-trade in China is changing very quickly. So the biggest acceleration of all is this O2O channel, but it's a very sophisticated O2O channel because it's very dynamic. It serves different channels from the O2O. And this was a channel that we used to lead in China. We were lagging behind now, and we are accelerating big time gaining share of this channel.

And then there is the large off-premise, which we had to adjust distribution, pack assortment, price and promotion. And this is evolving, but there is a lot of room there for us to improve. The on-trade is not improving, but I think that the good news is that it's not getting worse either. So I saw relative stabilization on the industry last year in China, which is a good signal. The industry was let's call it, minus 1%. I think that this opens an opportunity for this year to have a more positive outlook for the industry.

Chinese New Year moved, right? So it's a little bit later, should help as well, another 2, 3 weeks of Chinese New Year loading in sales to consumers within 2026. So let's see. It's early to say. I was there in January. I liked what I saw in terms of industry consumption and our execution, but it's too early to call. And in terms of Brazil, I think that we discussed during the calls last year, there were actually 3 things playing into the dynamics of Brazil.

One was part of the consumers under stress in disposable income because of the high inflation. There was a very abnormal weather. So we call them seasonal weather but was really cold and rainy through a big portion of the middle of the year in Brazil. And then as we kept running our revenue management agenda, there were like relative price gaps in Brazil hanging there for over a year. I think that during the year and especially at the end of the year, the weather improved a big time, and that was the biggest change in the dynamics in the market.

But also, I think that the gaps in terms of relative start to close. And then the power of our brands and the level of our execution start to speak louder, and we ended the year with very good momentum. As we look at the beginning of the year, weather remains normal. Normal is good for us. And our brands continue to have very strong demand. So the beginning of the year has been so far positive. Thank you for the questions.

Our next questions come from the line of Trevor Stirling with Bernstein.

One question for me, but probably a longer one. Fernando, I appreciate you're not going to give guidance on margins. But if I look at 2025, despite the problems in volumes in many regions, you still delivered 100 bps of margin expansion. As I look forward to 2026, as Michel has commented, the outlook for volumes is looking better than it has for probably quite a few years in terms of both momentum as you exit 2025 and the FIFA World Cup coming.

So that's looking positive. COGS outlook to me looks similar to 2026, there's moving parts in different countries in Midwest premium, but probably similar, but albeit probably a little bit more pressure in the first half than the second half because of currency hedges. A&P, you're probably going to spend more because of all the activation but knowing you guys will be disciplined spend. Price/mix looks solid. That looks like a pretty good outlook for margins for 2026 as well. Am I reading things the wrong way?

Trevor, so very comprehensive analysis. I think what you are saying and what we saw happening in 2025 is not anyhow different than what we've been discussing for a while. When we look at our business, when we look structurally our business, we continue to see opportunities to drive further margin expansion. And as you said very well, kind of every quarter, every year has its unique dynamics.

But on a year where you see your cost dynamics more of a normal year, like 2025 was more of a normal year and 2026 as well and hopefully, going forward, we have to see more normal years by driving efficiency, by making sure that we continue to invest behind our brands, which command a premium with all these components, we continue to see further opportunities to expand margin, okay?

So -- and then when you talk about the cost of goods sold, you are right because you have the FX curves kind of given what happened last year, we always hedge 1 year later. You know that there is going to be a little bit more pressure on the first half than on the second half. In terms of investment, this year is somehow different because we have the World Cup. So we have some more concentration of investments of sales and marketing in the second and third quarter.

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

Our next questions come from the line of Andrea Pistacchi.

I also have 2, please. And sorry about my voice, which is a bit low. First one is on Beyond Beer in the U.S., please. Now you referenced your capabilities and route-to-market advantage that clearly gives you a right to win in Beyond Beer. So focusing on the U.S., where your prepared cocktails are growing very strongly, and you've also launched Phorm Energy this year, again, leveraging your competitive advantages.

So the question is, if you could share some thoughts maybe on what you think your Beyond Beer business could look like in the U.S. 3, 5 years from now, what the long-term or medium-term innovation pipeline looks like? Are you planning to bring new brands to market? Are you open to more M&A like the BeatBox deal? And ultimately, how large do you think -- what's the ambition?

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

Andrea, no issues with the voice. I think we are both on the same page here. So mine is a little bit under the weather as well. Thank you for the questions. U.S. Beyond Beer. So this is something that we've been discussing as well since 2017 as we start to rebalance our portfolio and invest in segments that we under-index. And definitely, these ready-to-drink beverages that source from other alcohol beverages and other occasions, they are a great opportunity for our business in the U.S., and we've been investing and building capabilities and brands in this segment.

So today, this represents a little bit less than 3% of our business in the U.S., but it is growing very fast. And if you look at the brands that we are building, these brands today are ranking top 10, top 20 in the spirits industry in general in the U.S. and Cutwater specifically is ranking at the top of the fastest-growing brands in the industry for last year and the fastest one for the quarter 4.

So I think that the headroom for growth is huge because they source from outside of the beer arena, and they are very incremental to our business. They are brands that we build from scratch. Therefore, they have still a lot of headroom for growth. As you said, we continue to complement this portfolio with BeatBox, for example, which is a different proposition for different occasions for different consumer cohorts, and our portfolio is getting stronger, but we still have a lot of headroom to grow in this area.

Connecting this with the second point, they are also margin incremental. So as this mix continues to grow, as the mix of Michelob ULTRA continues to grow, this is all incremental to our margins. So we are managing our margins, not only from the cost productivity standpoint, but also from mix and revenue, as you said. And in terms of revenue, you all know we price in line with inflation.

I think that COGS and the cost of goods sold will continue to fluctuate. That's why we hedge so we can have a more long-term perspective. And we'll continue to invest to accelerate the momentum of our business in the U.S. So we are moving in the right direction, still a lot that we need to continue to do. But so far, we are happy with the evolution, and we'll continue to execute in the way that we are executing so far.

Our next questions come from the line of Mitch Collett with Deutsche Bank. Mitch, could you please check if you're self-muted.

Sorry, can you hear me now?

We can hear you.

Okay. Apologies. So Michel, Fernando, I was just going to ask about your thoughts on phasing in 2026. Fernando, I think you've just given some of the components, but transactional FX, I guess, is more helpful in the second half. You've obviously got some phasing around your marketing and sales spend and some pretty uneven comps. So can you maybe just sort of tie that together and give us some thoughts on how we should think about phasing across 2026?

And then my follow-up is on CapEx, which is still well below depreciation. And I think your guidance suggests that it will remain well below in '26. I know you've talked before about how you're using technology and AI and other tools to keep CapEx at a low level. Can you just comment on how you're doing that and how sustainable that level of CapEx is going forward?

Mitch, so on the first question on phasing. So phasing, I think on the last question, we went over very well on that, but it's -- given what happened to the FX last year and kind of knowing that we hedge 1 year out, you know that last year, you had kind of -- you are going to have a bigger challenge in the first half of the year, especially in markets like Brazil and Mexico, where currency was really depreciated at the beginning of last year.

And then you have kind of easier comps towards the second half of the year on cost of goods sold and transaction. So that is something definitely fair to say. And then of course, if you look at our financial filings like the 20-F, you look some of our exposures, you can get a good guess on how these things will behave kind of in the year of 2026. On sales and marketing, this is going to be somehow of a different year because since you have this World Cup, with a massive event in a lot of our markets, more towards Q2 and Q3.

So one would expect some sales and marketing concentration. What is important to bear in mind is that even though kind of there are different dynamics in the year, we are going to manage the business to make sure we invest in the long term and create long-term value, not necessarily trying to cater to one quarter or another. But one would expect more concentration of sales and marketing investments in the second and the third quarter this year specifically.

In terms of CapEx, it's not different than what we've been talking about. By looking at further efficiency opportunities, by looking on the role on technology, by kind of looking at every single different investment in our business, we are confident that we can kind of deliver the CapEx within the outlook for this year and still do everything that we need to do. We still have CapEx -- growth CapEx within this kind of envelope, anything that we need to support the business. So very comfortable with this level of CapEx.

Our next questions come from the line of Gen Cross with BNP Paribas.

Just one question from me actually. It's actually on BEES marketplace. It looks like you've added over $1 billion in marketplace GMV in 2022. And interestingly, it looks like it's pretty much all driven by the 3P part of the business. I think, Michel, you mentioned looking at opportunities to scale and further increase profitability in marketplace. So I just wonder if you could give us some thoughts on the potential to scale marketplace further, particularly as the higher margin 3P part of the business becomes a bigger part of the mix.

Thanks for the question. So marketplace is a growth opportunity for us, as I've been highlighting over the last couple of years. and it's incremental to the beer business that we have. So it's a new revenue stream. And it's adjacent because actually, we built the technology product to serve better our customers. At the same time, we could increase this addressable market for our business by solving 2 pain points. One pain point is our customers.

They were underserved by most of the CPGs because they are small, fragmented in distant areas. And on the other side, the CPGs need growth. They need to reach more customers. And the fact that we built this digital channel enables them to seamlessly reach a much broader and much more important base of customers. We always knew that the model would work. So we start testing and building the 1P. The 1P was using the capabilities that we have, the route to market, the trucks, the sales reps.

But as we built the product and enhanced the technology, we always knew that the biggest opportunity is actually what we call 3P, which is touchless, right? So the app is downloaded by the bar owner. The bar owner sees an assortment that's much bigger than only the beer assortment or the products that we sell. They place the orders. The orders are then redirected to the different suppliers, and the suppliers take care of the delivery of these orders.

And we, of course, in the middle, we are the product delivery and the marketplace for them to sell, to promote, to follow through with their sales team because the suite of products that this has is beyond only the app; we can also digitize our partners. And this is the part that is scaling fast and the most and is also the one that's the most profitable. The simple way to understand the opportunity is that on average on these retailers, beer accounts for 34% to 40% of what they sell.

Therefore, there is a 1.5 to 2x addressable revenues that today we do not participate without the marketplace, and we can participate. And as you know, I think you were with us in Mexico, we are, in some cases, even increasing this addressable market because we are taking, for example, technology products like minutes for people to buy and operate their phones or paying their bills.

So there is many incremental opportunities that can be built on top of that credit. We have partners today selling credit to these points of sales. So all of that builds on top of what the marketplace will directly build. So we are in early stage. It is scaling up at the pace that we want to scale up and it's becoming the business that we thought that could become. So very happy with the development, but a long way to go still. Thank you for the question.

Our next questions come from the line of Sarah Simon with Morgan Stanley.

I have 2 questions. First one was on Zero again. Your growth is extraordinarily high compared to peers. What do you think you're doing that they're not? And then the second one would be on RTDs. Your RTD business is obviously largely concentrated in the U.S. How are you thinking about that in the context of other markets and exporting it?

Thanks for the questions. I think I got both of them. If I didn't, please help me here at the end. So the non-alcohol beer, I think that we've been talking about that. We invested a lot in the technology. So making sure that we have superior products. And this investment was done in 2020, 2021, 2022. Many breakthroughs there. The liquids are fantastic.

It's really great taste beer without alcohol, products that range from what we shared with you today in South Korea that is zero calorie and zero gluten and zero sugar, great taste to the fantastic Michelob ULTRA Zero in the U.S. that has only 29 calories, but it tastes delicious. So we invested first on the product and technology. Then we start to roll out this on our winning brands. So we have great brands across the globe.

And every time that we put together a non-alcohol version of these brands, of course, consumers try and they choose the strong brands that we have. And then I think that the last point, we decided to invest and walk the talk. So just think about Olympic Games, a mega platform that we have globally that we sponsor with both Corona Cero and Michelob ULTRA Zero. So we got to get great product. We lined up the brands and innovation, and then we are investing behind that.

And when we do all of together with our execution, which is superior execution, we can gain share quickly as we are gaining. We can expand categories, reach more consumers and get the growth that we are getting with this. So consumers are there. We are there for them, and we are gaining share in an accelerated way in this segment. In terms of RTD, actually, if you look at the numbers, RTD for us is bigger outside the U.S. than it is in the U.S. It's 3% of our global business, it's around 2 -- between 2% and 3% in the U.S.

The most meaningful expansion that we are doing in this Beyond Beer space started last year, and we are rolling out this year is with Flying Fish, which is this beer liquid, but it's very different than beer. It's flavored. It has very different demographics that we reach with the product. It competes a lot outside of the beer space because of the taste profile, brings a lot of new consumers to the category because they are flavor seekers. They like sweetener liquids. They don't like too much the bitter.

And then this is now going to 10 different countries. And in every country, we have a nice story to tell so far because this is fulfilling what the plans were and what we want to achieve. And then we also have Cutwater, which we are building in a very diligent way in the U.S., but we already started to expand to Canada, and there are some other markets coming in the lineup.

And we have today a global portfolio, let's say, for Beyond beer that caters each of the segments within the Beyond Beer. So NUTRL, Brutal Fruit and Beats are also getting expanded globally to different countries. So there's more to come there. The opportunity is very big outside the U.S. and outside Africa, and we are just scratching the surface so far. So more to do. Thanks for the question.

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

Thank you. Thank you, everyone, for the time today, for the ongoing partnership and support to the business. I hope you are all well, get some time to drink a beer. Cheers.

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

Welcome to AB InBev's Third Quarter 2025 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer.

To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab in the Reports and Results Center page. Today's webcast will be available for on demand playback later today.

[Operator Instructions]

Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements.

For a discussion of some of the risks and important factors that could affect AB InBev's future results, see Risk Factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information.

It is now my pleasure to turn the floor over to Mr. Michel Doukeris.

Sir, you may begin.

Thank you and welcome everyone to our Third Quarter 2025 Earnings Call. It is great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions.

Let's start with the key highlights. In the third quarter, we continue to navigate a dynamic operating environment with headwinds in China and unseasonable weather in the Americas, particularly in Brazil, constraining our results. After a slow start to the quarter in July and August, we saw improved performance in September. We remain focused on the consistent execution of our strategy and adapted where required. We maintained our disciplined revenue management plan and continued to deliver on our productivity initiatives.

Consistent investments in our brands and innovations drove increased portfolio brand power and continued market share gains in key markets. Despite the challenging environment, we delivered another quarter of top and bottom-line growth, margin expansion, and U.S. dollar EPS growth. Our growth platforms of premium beer, non-alcohol beer, and Beyond Beer continue to outperform, and the quarterly GMV of BEES marketplace has reached nearly $1 billion. In the U.S., our portfolio is continuing to build momentum and gain share of the industry, led by Michelob Ultra, which is now the number one brand in the industry by volume year-to-date.

Our solid financial results in the first nine months of the year reinforce our confidence in delivering our outlook for the year, given our deleveraging progress and strong free cash flow generation, the Board has approved a $6 billion share buyback program to be executed within the next 24 months, as well as an interim dividend of EUR 0.15 per share. We also continue to proactively manage our debt portfolio and have announced the redemption of $2 billion of outstanding bonds.

In summary, we are confident in the resilience of our strategy and ability to deliver consistent results. We are investing to provide superior value to our consumers, and we are winning in key markets and growth segments. We are taking action where adjustments are required and are excited about the opportunities ahead to drive shareholder value creation through profitable growth and disciplined capital allocation decisions.

Turning to our operating performance, while overall volumes were below potential, we grew revenue in 70% of our markets. The combination of our disciplined revenue management choices and portfolio of mega brands that command a premium price drove a revenue per hectoliter increase of 4.8%, resulting in top-line growth of 0.9% Our productivity initiatives more than offset transactional FX headwinds to drive an EBITDA increase of 3.3% with margin expansion of 85 bps. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver profitable growth in the long term. Revenue increased in 70% of our markets this quarter, and we delivered bottom-line growth in four of our five operating regions.

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 U.S., the momentum of our portfolio continued, and we are increasing investments in our brands to fuel growth. In Beyond Beer, our portfolio growth accelerated with a revenue increase in the mid-40s led by Cutwater, which grew revenue in the triple digits. Cutwater is now one of the top 10 largest spirits brands in the U.S. and was the number one share gainer brand in the total spirits industry in August and September.

In beer, our market share momentum was led by Michelob Ultra, the number one volume share gainer in the industry and now the largest brand year-to-date in both on and off-premise channels. Ultra has gained market share in all 50 states this quarter. The brand has 16% share of the industry in its top state and 8% average share nationally, but has less than 6% share of the industry in 20 states, so there remains a significant opportunity for further expansion and growth.

Michelob Ultra Zero was launched early this year and is already the second largest non-alcohol beer brand and the number one fastest growing non-alcohol beer in the industry. Ultra is the superior light beer made for those who seek an active lifestyle and balanced choices.

Now let's turn to Middle Americas. In Mexico, our revenue continued to grow, driven by disciplined revenue management choices. The industry was, however, impacted by a softer consumer environment and unseasonable weather, which resulted in our volumes declining by low single digits. With improved weather and consumer sentiment, our volumes improved sequentially throughout the quarter, gaining share and returning to growth in August and September.

In Colombia, record high volumes drove low teens top-line and mid single digits bottom-line growth, with our portfolio estimated to have gained share of total alcohol beverages.

In Brazil, market share gain and disciplined revenue and cost management offset a soft industry to deliver flat EBITDA with margin expansion. Our revenue declined by 1.9% driven by volume performance, which was negatively impacted by unseasonable weather and a softer consumer environment. When we look at our performance across both South America and Middle Americas, it is clear that the industry has been impacted by a combination of cyclical and one-off factors this quarter. Cyclical factors include inflationary pressures and low consumer sentiment, which have impacted demand not only for beer but all consumer categories to different degrees. What has perhaps been more acute for beer than other categories has been the unseasonable weather.

Latin America accounts for 20% of the global beer volume, which is typically 1.5 to 2x the weight of other categories in the consumer goods area, and the region is even more relevant for our business while we are managing through the short-term headwinds. When we look ahead at the outlook for the category, the fundamental drivers are unchanged, and we see clear potential for industry volume growth as conditions normalize, as evidenced by Mexico where our volumes returned to growth in August and September.

In Europe, continued market share gains and premiumization drove flattish volumes and margin recovery. We gained share of the industry in five of our six key markets, with our performance driven by our mega brands and non-alcohol beer.

In South Africa, the underlying momentum of our business continued, maintaining share of beer and gaining share of Beyond Beer. Top-line grew by mid single digits and EBITDA grew by high single digits with margin expansion.

Now moving to APAC. In China, revenue declined by 15.2% with our volumes underperforming the industry. While the overall industry has been impacted by a soft consumer environment, which has been even more pronounced in our footprint and key channels, we recognize that we have opportunities to enhance our execution and route to market to better align our results with our capabilities.

We are a company of owners who strive for operational excellence. We have been working in China to right size inventories in line with the channel shifts, allocate resources towards areas of growth, and elevate our execution. We have a clear view of where to improve, and as we move forward, our priority is to reignite growth and rebuild our momentum.

To achieve this, we are focused on increasing investments in our mega brands, leading innovation within the industry across packaging and liquids, strengthening our route to market in the in-home channels with an increased focus on online to offline, continuing our geographic expansion, and rebuilding our excellence in execution. We are moving with speed to ensure that our business emerges stronger and investing to be better positioned to outperform in the long term.

Now let's take a look at the key highlights of our three strategic pillars, starting with leading and growing the category. Our megabrands continue to lead our growth with net revenue increasing by 3%. Corona continued to drive premiumization across our markets, growing revenue by 6.3% outside of Mexico and growing volumes by double digits in 33 markets.

Through the consistent execution of our category expansion levers, we aim to increase participation across our markets by offering supreme core brands, innovating in balanced choices to provide consumers with no and low alcohol, low carb, zero sugar, and gluten-free options, and expanding our premium and Beyond Beer portfolios. On a rolling 12 months, participation of legal drinking age consumers within our portfolio was stable.

In non alcohol beer, our portfolio momentum continued with net revenue growing by 27%, led by the growth of Corona Zero. We are now leaders in eight of our top 14 non alcohol beer markets and estimate to have gained share in 70% of them. Non alcohol beer is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth.

This quarter, we announced a partnership with Netflix, which is the world's most popular streaming service. They are creating content that shapes culture, and watching Netflix has become a new social occasion. Our iconic brands are part of the fabric of society in the markets in which we operate, and it is a perfect pairing to bring together beer and entertainment in this unprecedented way.

What makes our partnership with Netflix unique is its global reach and scale of activations across our portfolio of brands. Consumers will see this come to life through co-marketing campaigns, activations, title integration, limited edition packaging, and even at live events. What we are most excited about is how this partnership will create more meaningful experiences for consumers across their passion points, including comedy, music, cooking, and live sport events.

The beer and Beyond Beer category remains vibrant, and we are leading innovation to address emerging consumer needs, providing choice and superior value in different occasions and balanced choices. We are innovating liquids to provide consumers with different options to meet different lifestyles. From the rollout of Stella gluten-free in Brazil to Harbin Zero Sugar in China to Michelob Ultra Zero in the U.S. and Cass 4.0 in South Korea, we are leading the category in liquid innovation.

In Beyond Beer, Cutwater continues to expand, growing volumes by triple digits, approaching $0.5 billion in annualized retail sales, and is now a top 10 spirits brand in the U.S. After a successful rollout in Africa, our flavored beer Flying Fish is now expanding to Europe and the Americas. In adjacent beverage categories, we are taking the learnings from developing a number of successful brands in the energy drink space in the U.S. and have launched Phorm Energy to participate directly in this segment.

Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the second quarter, BEES captured $13.3 billion in gross merchandising value, an 11% increase versus last year. The growth of BEES marketplace accelerated with more than 500 partners on the platform. Quarterly GMV increased by 66% versus last year and is now approaching $1 billion.

In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and help us in developing new occasions. Our digital platforms generated $138 million in revenue, serving 11.9 million consumers and generating close to 18 million orders online.

With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, Optimize Our Business.

Thank you, Michel. Good morning. Good afternoon, everyone. I will take a few minutes to discuss the progress we have made in optimizing our business. Our EBITDA margins improved by 85 basis points this quarter, with expansion in four of our five operating regions. We know that each quarter will be different, but we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time.

Moving on to EPS, we delivered underlying EPS of $0.99 per share, a 1% increase in U.S. dollars and a 0.3% increase in constant currency versus last year. EBITDA growth accounted for a $0.09 per share increase, partially offset by higher other financial results, which increased due to a higher cost of FX movements and cost of hedging. The objective of our capital allocation framework is to maximize value creation for our shareholders.

Given the progress we have made on our deleveraging and our solid year-to-date financial results, we have increased flexibility on our capital allocation choices. We remain confident in the long term growth and value of our business and have announced today a new $6 billion share buyback program to be executed within the next 24 months. In addition, we have announced an interim dividend of EUR 0.15 per share, our first interim dividend since 2019. We also continue to proactively manage our debt portfolio and have announced a bond redemption of $2 billion. Our bond portfolio remains well distributed with no relevant near and medium term refinancing needs. Upon completion of the bond redemption announced today, we will have no bonds maturing through 2026 and we have no financial covenants.

Our results in the first nine months of the year, the resilience of our strategy and the strength of our megabrands all reinforce our confidence in our ability to deliver on our 2025 outlook of 4% to 8% EBITDA growth.

With that, I would like to hand it back to Michel for some final comments.

Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on our performance year-to-date. We are encouraged by our results for the first nine months of the year as we delivered EBITDA growth at the midpoint of our outlook range. Underlying EPS increased by mid single digits in U.S. dollar and by 12% in constant currency. While our volume performance has been below potential due to a combination of cyclical and short term factors, we remain confident in the long term fundamentals of our business. With strong free cash flow generation, we have increased capital allocation flexibility and announced a $6 billion share buyback program, an interim dividend of EUR 0.15 and a bond redemption of $2 billion.

As Fernando just mentioned, our performance year-to-date and the strategic choices we have made position us well to deliver on our outlook for the year. Our brands have met consumers in some of the most iconic events in sports and culture this year, creating moments of celebration and cheers.

But, as we look to 2026, there is an incredible opportunity to activate the beer category because next year, on top of our powerful lineup of mega platforms, we have the FIFA World Cup in North America. This iconic event encompasses 104 games across three countries. Each game is an opportunity to bring beer and sports together and create unforgettable moments for our consumers.

With that, I'll hand it back to the operator for the Q&A.

[Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies. Please proceed with your questions.

Two questions for me please. The first is around the board's thinking around the shift to a two-year buyback program of $6 billion. Given the balance sheet repair, is it to signal clearer capital allocation priorities from here? Is there also a practical reason insofar as it gives you a little bit more flexibility in the pace of buybacks, given that historically you've tended to get your buybacks done ahead of schedule? That is my first question.

My second question is around the broader category, the broader beer category. One of your peers recently highlighted a medium-term outlook for global beer of about 1% volumes. Putting the external environment to one side, how important is it that the rate of pricing required across the broader industry could start to moderate after the huge extremes over the last few years given inflation and negative transaction? How important is it that the pricing going forward might become less meaningful in helping to stimulate volume growth?

Fernando here. Let me take the first question and then I will transition to Michel. When we talk about capital allocation, I think it's always important to put in context that the objective of the capital allocation is to create long term shareholder value. The framework is unchanged and remains very disciplined within our choices. What is evolving is that now that we have an improved balance sheet, we have increased flexibility and what you see is that we are exercising some flexibility. The share buyback in itself is an effective use of capital for shareholder value creation. If you think about it as we move from an inorganic to organic transition, I think the first thing that was important for us was to give a framework so people understand the sort of growth that we can deliver. That's the medium term outlook that we provided four years ago.

If you look at what we did in the beginning of this year, we provide a framework with the ambition for a progressive dividend. I think now the share buyback is just another natural evolution on that, a two year share buyback of $6 billion, but that should not be seen on a standalone basis. It's the share buyback, it's also the interim dividend which is consistent with our ambition of progressive dividend over time and also the debt reduction that we announced which is consistent with our capital allocation priorities. Much more of an evolution and kind of the consequence of the additional flexibility that we have nowadays. Michel?

I think that just building on the share buyback point, there is a lot of consistency on the capital allocation choices and this, of course, is the return to shareholders, the debt, but that is the number one priority that we have, which is organic growth. We'll continue to invest for this number one priority, which is drive the category and the company forward on an organic basis. In terms of the category overall, I think that we shared with you during the capital markets day the view that we have around the category and the potential that we see for future growth coming from structural tailwinds related to economic growth, demographics, and where this growth most likely will come from developing and emerging markets where we have a strong footprint, strong growth to market, and scale.

Therefore, we are in the same line where the full potential of the category today would be around 1% growth in normal conditions. The more we increase the addressable market with these Beyond Beer propositions, there are opportunities for us to further stretch this growth, right?

Looking at the short term, I think that we see this Latin America impact on the beer category overall. Latin America is very important for CPGs, but is much more important for the beer category to the range of almost twice the size that it represents for beer versus other CPGs. We saw some pressure across CPGs overall in Latin America, but this is more impactful for beer and even more for us because Latin America is much bigger for us than it is for beer overall and for other CPGs.

When you think about price, I think that there are two components on that. One is that beer is an affordable category and affordability is very important for beer. And after 3, 4 years of high cost pressure, high inflation for us and for consumers in general, of course we had to be very disciplined in revenue management and to recover our margins, as you just saw during the webcast, to continue to recover our margins over time because of revenue but also cost discipline.

As we look forward, inflation is normalized, coming down, so we would expect less pressure on the prices coming from inflation. I'm of the view that we should be very disciplined as category leaders to continue to build over time the capabilities to move prices with inflation so we can continue to recover our margins, but also have a good category and ability to deliver on the investments and everything that we want to do for the future.

And how you do that? You need to balance, as we always do, the affordability with the ability to build brands, because premium brands, they command premium price, use the right revenue management capabilities. A good revenue management strategy needs to deliver at least with inflation. This is in the long run, because in the long run we need to capture the cost increase and the opportunities that we have to premiumize in the market. Nothing changed on our side there. I think that what's going to change is a little bit of the environment because inflation is coming down, therefore less pressure will hit consumers.

Our next questions come from the line of Mitchell Collett with Deutsche Bank. Please proceed with your questions.

I've also got two questions, I think one for each of you. The first one is on longer term volume growth. I mean, you cited some of the external factors that have impacted not just this quarter, but overall 2025. How do you think about volume growth longer term for the category, particularly in your footprint? You gave the comment that 2026 offers an incredible opportunity to activate the beer category. Do you think you can get back to volume growth in 2026?

My second question, which I think is for Fernando, is can you give us any color at this stage? I know it's early on the potential impact of input costs in 2026. I'm specifically thinking about the impact of FX and the timing of your FX hedges.

I think that you're right, like 2025 is being very typical and that is this combination of the pressure that inflation has been built over consumer and the consumer baskets. We see this overall across many markets, reduction on the total basket, while beer and alcohol has been maintaining the share of baskets. It's really about a little bit of pressure on consumption.

There is this big one-off of this change in the weather pattern because of the La Niña that is impacting the Americas. Some countries such as Brazil were heavily impacted by that. The fundamentals behind the category growth remain the same. As we said before, a lot of this growth, projected to be over 80%, will come from developing and developed markets. Our footprint is very strong in these regions and I see no reason today why this will change over time.

Next year then becomes a very special year. While you know that we don't guide for volume, we see the outlook as a positive one because there is less pressure on consumers coming from lower inflation. As salaries rebuild, purchase power rebuilds, prices tend to normalize. Consumers tend to be in a better position. I'm not making any forecast on the consumer sentiment, neither the purchase power for next year.

Consumer sentiment is impacting this year and as everybody else, we hope that things will normalize over time. If this bounces back, it should be a positive as well. Overall for CPGs, it's hard to believe that's going to be worse than what we saw this year. The worst case scenario should be the same, but we think that can be better.

Then we have FIFA. FIFA over time is being 0.20 to 0.25 impact on the category in the years that we have the games. The fact that's going to happen in North America is great for the category because it's going to impact the overall Americas, of course, but then has great viewership time across Europe and Africa and of course in Asia. People always adapt.

The nightlife is much stronger as a consumer occasion in APAC. I think that's going to be a great year for FIFA. Everybody's very excited. The games will be longer next year because more teams, so more people participating. We can't wait to see the fans across the globe gathering and gathering over a beer to watch for that. We continue to work hard focusing on what we can control. You see that the growth of non-alcohol is a great opportunity for us.

Our Beyond Beer portfolio continues to accelerate and we continue to innovate in the balance choices. We are providing more options for consumers in more occasions. We are doing our part and we are looking forward to see how consumers will react next year.

Mitch, Fernando here. Your question on COGS. We don't provide any specific guidance on cost of goods sold, but you know our hedging policy always hedge 12 months ahead. If you look at where FX is today and what it was one year ago, you can get a good sense on that. From where the market is, it's kind of more like a normal year. Once again, I think we said normal year in 2025. I think 2026 is more of a normal year.

Different dynamics in different markets, I think next year probably given where you see Midwest premium today, probably a little bit more pressure on the U.S., but then again, this is based on current market prices. They can always move around and effects a little bit the other way around as we saw in 2025. In 2025, we saw more pressure in the first half given the currency behavior in 2024 and more pressure in the second half, I'm sorry, and less pressure in the first half. In 2026, given how things are evolving, things continue to be the same way. Likely to be the other way around, but then again, this is basically on current effects. We still have two months to go, but let's keep monitoring that.

Our next questions come from the line of Laurence Whyatt with Barclays. Please proceed with your questions.

A couple from me as well, please. Firstly, you kindly gave some information on the exit rate in Mexico suggesting that was improving throughout the quarter. I was wondering if you had a similar view on what was happening in both Brazil and Colombia just to see if we're getting a similar consumer improvement in other parts of Latin America. Secondly, perhaps Fernando, historically you would say that going below 2x net-to-EBITDA was value destructive for AB InBev, just wondering if you continue to share that view and what steps you could take if that metric were to be getting close to being hit.

Yes, we made a comment on the exit rate for Mexico because I think that was very telling the fact that once the price environment normalized a little bit, the weather was slightly better. We could see not only our market share bouncing back, but also volumes improving through August and September. Unfortunately, in Brazil it is a tale of two stories. I think that the industry overall remains very impacted by this very unseasonable weather. At this point, it can really be said that's unseasonable because the winter was cold. Yes, winters can be cold, but you see September is usually much better weather in Brazil, even October, and still cold and wet in a very strange way. Brazil didn't improve a lot for the weather.

Of course, we've been adjusting our execution. Relative prices in the market improved after more than a year of prices being very open on the gap, and our share bounced back strongly, which reinforces the strength of our portfolio. The way that our megabrands are growing in Brazil and the share gains on the premium segment that continue to accelerate. When you look at Colombia, Colombia is not getting all this impact. Colombia volumes continue to grow, share of alcohol beverages continue to improve, very strong performance.

Consumer confidence is not that high, but not as low. Inflationary pressures in Colombia are more moderate, so consumer is in better shape there than it is in some other parts in Latin America. Of course, this all is bouncing back and now we are looking at the summer so we can see really where the industry is going to land overall and how the weather is going to be. As we said, as we look forward for 2026, some of these one offs can actually be positive as we build back in 2026.

And Laurence, it's Fernando here. Your question on leverage. We've been very consistently saying that our optimal capital structure is around 2x. It's also fair to say that most of the benefit of leverage you get once you get to 3x. The long term goal is still 2x, but you have less of an urgency to go there. You can have more flexibility once you're below this level, which we reached at the end of last year. Of course, every year is going to be slightly different. Sometimes you have effects, fluctuations, but the resilience of our business gives us the consistency to be more on the, as I can say, more on the offense now.

Bear in mind that the priority #1 is always organic growth. We keep investing, we keep, if you see this quarter, sales and market, we continue to invest there, but definitely way more flexibility and kind of still 2x is the optimal capital structure.

Our next questions come from the line of Rob Ottenstein with Evercore ISI. Please proceed with your questions.

Thank you very much. Two questions from me as well. The first one is I want to focus on the announcement that you've won the Champions League. That came as a bit of a surprise to me. So maybe put that in the context of how you're looking at sports and some of these big assets, how that's evolving. Most importantly, obviously there's a lot of big numbers on this. I don't know if you can talk about the numbers on this, but maybe talk about the ROIC, how you see that being an efficient use of marketing investment, and also a little bit about timing. My understanding is that Heineken still has it for the next couple of years. That's the first question on the Champions League.

The second question, arguably in the U.S., perhaps the greatest success this year has been Cutwater.

That's a brand that you've had for a number of years and it's just exploded this year. Maybe talk a little bit about the success that Cutwater is having this year, what you think the drivers are for that, whether you think that's sustainable, what you've learned from it, and can you take that model to other countries?

So starting with the recent announcement and the role of these events, sports and occasions, I would start by talking about consumers. This is the main reason why we do the investments and why we are lining up into mega platforms. Consumers are behaving different and consumers are as usual evolving. As such, it was very important as we build our strategy and we fine tune our execution to make sure that we are leading and moving fast to where consumers are and will be more and more. That is why when we start leading in terms of execution with this concept of mega platforms and megabrands, integrating our brands with big partner, big partnerships, big events and relevant cultural moments is key for our brands to win in the long term.

As I said before, these winning brands that command premium price and premium positioning are very important on our strategy. This works for FIFA, this works for Netflix, this will also work for UEFA, which is an important component as we build this integration with platforms and culturally relevant moments that consumers are looking for, are talking about and are experiencing. It is all about the consumer, how we integrate our brands and these relevant cultural moments and how our brands over execute competitors within the category. That is a great addition. We could not be more excited with the opportunity. As everything moves, 2027 is the right timeline for us to start executing on that.

The second part on the U.S. and Cutwater, I think that you have been following. We have been talking about this portion of the consumer and consumption occasions where bitter is not the choice, where more refreshing is not the choice, where people want to indulge a little bit more, where the palate is a little bit more sweet, right, and more mixed. We decided to bet on that back in 2018 with Cutwater. We have been building this brand very patiently, but we have built the brand in a very high quality way.

Consistency, right distribution, right price as a premium brand, right investments, right consumer occasions and as the brand improves availability, as consumers get to know the higher quality that we have on this proposition and we position very right for the right occasion, I think that the brand is gaining relevance. What we saw over the summer now is consistent brand building and relevance getting to a tipping point.

This brand is now the number one share gainer in spirits, triple digits over the summer, becoming one of the top 10 spirits brands in the U.S. and built from scratch. If one would say what we learned from that is that yes, we can build brands in a very relevant way, yes, we can build this Beyond Beer segment to be what we expect to be for us, so incremental and something that will increase our addressable market. We have been rolling out this notion of the Beyond Beer and how to tap into more occasions across many markets.

I gave here during the webcast the example of us rolling out now Flying Fish across many different markets from Africa to Europe to Americas. The early results and indicators are very positive as well. There is more to come and we continue to build Cutwater. We are just at the beginning. I think that the brand, still very small for us, is accelerating and we have a big ambition to drive not only Cutwater but Nutrl and the other propositions that we've been betting on in this Beyond Beer space.

Our next questions come from the line of Andrea Pistacchi with Bank of America. Please proceed with your questions.

This is the first one. So your volumes have been more challenging this year. But after 9 months, you're still very much on track, in fact, you're at the middle of your 4% to 8% EBITDA guidance range. So I wanted to ask whether you had to make any adaptations to the plans that you would have had at the beginning of the year, maybe more agile revenue management or something more tighter cost control?

And again, then you would have had at the beginning of the year. If you could discuss this a touch? And then just on the MAZ, the Middle America Zone, there's a question earlier on Colombia, I just wanted to broaden it slightly. So Middle Americas ex Mexico is very profitable for you. It continues to deliver solid volume growth. So could you just discuss a bit on how the environment is in these markets, why you think it's different from, say, Mexico, Brazil? How confident you are in your ability to continue to deliver volume growth in these high-margin countries in the next 12 months-or-so?

I think that in a way they are in the same vicinity right on volume and how performance and our execution is adjusting, adapting on this environment. I think that the environment is one that's very dynamic and we've been seeing this of course over the last few years. Every year there is some extra components. As I said before, to me, the extra component on this dynamic operating environment this year was the unseasonable weather in the Americas, but more pronounced in Latin America. I think that we've been adjusting. We often say here in house that our strategies, just like beer, can be used in many different occasions. We've been adapting the execution. We are very agile in reallocating resources.

Our portfolio has breadth that is useful for us in this moment because we have from premium brands to value propositions that they can adapt and be used to accelerate a little bit our execution when it's needed. The discipline in cost management, the discipline in revenue management was very, very important for us. A differentiator, I would say, during this period because despite a very challenging consumer environment, we are able to deliver margin expansion, EBITDA growth, EPS growth. Saw very solid financial results that are a product of our very solid operational capabilities and delivers through the quarter.

When you look at mass, it is not only very important for us and very relevant for our performance during the quarter and in the long run, but, of course, this quarter specifically because overweight in the beer category versus other CPGs and overweight for us ABI was a big impact on the volume. It is relevant. We are adapting, brands are performing very well, we continue to invest, we continue to manage the portion of the business that we control. And of course, in the long term we continue to see this as a very relevant growth driver for the industry. We are best positioned to capture this growth over time with the operations, scale, and brands that we have in the region. Thank you for the question.

Our next questions come from the line of Celine Pannuti with JPMorgan. Please proceed with your questions.

My first question, could you, coming back maybe on the Cutwater question, but in a broader sense, how big is Beyond Beer now for you in terms of the portfolio? You said it grew, I think, 27%. Where do you see the capabilities outside or the opportunities outside of North America? If you could help us a bit frame the growth journey and as well the profitability of that category both in North America and outside of North America.

My second question, I think it was an impressive performance in gross margin despite some of the FX headwinds that you were facing. Could you give us a view on the building block on the gross margin performance in the quarter, please?

I think that I'll hit some numbers quickly here to cover the points that you asked about. I think that the last time that we talked about that, I mentioned that Beyond Beer is a great opportunity for us because it cuts across this interaction of the different alcohol beverages and is incremental for us, right, so, 2/3 plus of the volume that we capture in these occasions from these consumers is incremental to our portfolio. I also remember that the last time that we talked about this, this was around 1% of our overall volume. This today for us is around 2%. It is growing 27%. The opportunity here is huge because the addressable market outside of the beer category is very relevant and is bigger than the beer category itself. It is a huge addressable market.

Today it is a very small portion of our volumes, but it is growing very fast. It is all about the consumers. There is a group of consumers there that indulge in different occasions with different liquid profiles. We have been learning a lot about that and we have been having some very successful launch and scale up products in this area. Cutwater, Nutrl, Brutal Fruit, Flying Fish, Busch Light Apple, to mention a few of them. On average, they are sold at higher prices than the beer equivalent products that we have. They have profitability per hectoliter per SKU that is higher than the profitability that we have with equivalent beer SKUs. I think that we continue to work hard on that.

This is small for us today, 2% of the portfolio, but it is big in our opportunity to grow with more consumers in more occasions and in a very large addressable market of consumer occasions and volume pool.

I'll hand over to Fernando to the second question.

On the gross margin side, I think the gross margin side one is a function of your health brand portfolio. You see the net revenues per hectoliter. As Michel said, premium brands command premium pricing. You can move with the revenue management agenda. The second component of that is of course the cost of goods sold. In the cost of goods sold, you have one component that is the FX and commodities, which is market price, but you have the other components, which is the efficiencies, the kind of fixed costs. There is always a kind of opportunity for us to keep driving on that. For me, it's a combination of strong portfolio with premium brands and also driving efficiency on the cost of goods sold.

If you remember, we talked about it several times that when we look for margins, we still see opportunities for us to improve our operations, to improve our margins and a lot of that would be coming from gross profit. It's just delivering on what we already mentioned several times in the past.

Our next questions come from the line of Simon Hales with Citi. Please proceed with your questions.

My first question, I wonder, Michel, could you talk a little bit more about China? Again, I wonder if you could quantify how big the destock was in Q3 in the context of the little over 11% fall in volumes, and should we expect some further destocking, do you think, in Q4? Is there any reason to believe in overall terms that your Q4 volumes in China will be less bad than they have been in Q3? Perhaps just associated with that, you highlight some new innovations that you've got coming in the market, Magnum and some 1-liter cans, are they in market yet or will they be in market in Q4? That's the first question.

The second one, a little bit more briefly, I wonder if you could talk a little bit about the early consumer and retail reaction to the launch of Phorm Energy in the U.S. and maybe highlight what really differentiates that brand from other competitors in the energy space.

On China, I think that what we highlighted in prior quarters is a kind of one third of what we see in the volumes is coming from really geographical footprint, channel footprint. One third comes from these adjustments on the inventories. You give me here an opportunity I'll take to talk about this. I think that just so I'm clear about the adjustments on the inventories, of course, when regions start to decline, we need to adjust our inventories with the wholesalers so we can have a healthy operating environment. This is what we are doing this year as channels shift as well.

You have a second adjustment that needs to be done so we keep the channels healthy, and once they rebound, we can then grow with the channels without stressing the ecosystem. One third is really the shift that happened between on and off premise, where the off premise started growing faster. The propositions that grew in the off premise are more on the core plus sub premium, and then this caused a share loss for us because we were more on the off premise, and we are of course smaller and less distributed in the off premise. Here is where we are making most of the adjustments.

When we look at China, most of this adjustment is being already done. There is still, of course, a little bit to be done as you go through October, November, December, but should not be beyond the fourth quarter. At the same time, because we start expanding distribution off premise, adjusting innovation, adjusting execution. That will be a combination of continuing to right size the inventories, but then having acceleration on our STRs and some of the innovations that we launched and tested. You mentioned BUD Magnum, very successful in India, very successful where we launched it in China.

We will start to roll it out now, not only the product itself, but some very interesting new packaging that is making a big strike in China will come to BUD Magnum. We had the new Corona can called drop line can, which is a full lid opening can. That's very interesting. We launched it first in O2O, was a big success, and now we're going to expand distribution on this packaging. We have some new deals coming in Harbin as well, not only the expansion of Zero Sugar, but some new propositions there that will be helpful as we further enhance our route to market in the off-premise.

Inventory adjustments, one-third channel shifts, one-third, these both should phase out as we go through quarter 4. And then we have increased availability in the off-premise, increased investments for execution and innovation that will start to kick in in quarter 4 and will be very relevant for us in the next year.

Phorm is interesting because in a way we've been participating in the energy drink in the U.S. for over a decade, and we have had some very successful scale up of brands in our network, but we were never majority owners of any of these brands. While we were an important component of the scale up and growth of these brands, we were not the owners. The latest one we divested at the beginning of this year, end of last year, was a good divestment, was a good run of the brand.

But now we have a brand that we are majority owners, committed to the long term. Incredible partners that are with us in the journey from our wholesalers to the Phorm partners to the UFC. Not UFC, but Dana White partner with us in building that. Brand launch is being very exciting. The product is great because I think that the most differentiated thing is the fact that we are focused on a very specific consumer cohort, those who do the work and need this energy every day. The product brings this clean energy approach, very balanced elements, and I think that the proposition is a strong one, is getting good traction, and we are just at the beginning. I think that there will be a nice upside coming next year because the launch was this year.

Distribution is building, awareness is building, and we have some flavors that we are expanding on the back end of this year and will be fully available next year. The most important thing here is our commitment and investment to the long term, because now we are majority owners of the brand and we have incredible partners that are with us on the journey.

These were the final questions. If your question has not been answered, please feel free to contact the investor relations team.

I will now turn the floor back over to Mr. Michel Doukeris for closing remarks.

Thank you very much. Thank you, everyone, for joining, for the ongoing partnership and support for our business. I hope that you are all doing well. Remember to drink a beer for Halloween, and we'll talk soon. Thank you.

Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time and enjoy the rest of your day.