Anheuser-Busch InBev SA/NV Sponsored ADR Aktie

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.

Welcome to AB InBev's Second 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 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 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 and 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 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 this quarter. After that, we will be happy to answer your questions.

Let's start with the key highlights. The consistent execution of our strategy delivered another quarter of solid results, with EBITDA increasing by 6.5% and continued margin expansion. The performance of our premium brands and the strategic choices we made in revenue management drove an acceleration in our revenue per hectoliter growth, increasing by 4.9% versus last year.

In the U.S., our portfolio is continuing to build momentum and gain share of the industry. We are continuing to increase our investments in our brands to fuel growth. Our non-alcohol beer portfolio continued to outperform globally, increasing revenues by 33%.

The growth of BEES marketplace accelerated this quarter, increasing GMV by 63% versus last year to reach $785 million. And the ongoing optimization of our business drove an 8.7% increase in the underlying U.S. dollar EPS and $0.5 billion increase in free cash flow.

Turning to our operating performance. Volumes declined by 1.9%, impacted by soft industries and performance in China and Brazil. While overall volumes were below potential, the underlying momentum in markets representing the remaining 2/3 of our business continued with volume growth of 0.7%.

Double clicking on these two markets. First, Brazil. The majority of our volume decline was driven by a soft industry, which was impacted by adverse weather conditions. During the second quarter, we made strategic revenue management choices to position the business well for the second half of the year.

Second, in China, the quarter 2 industry volume trends were in line with the first quarter, declining by low single digits versus last year, but our volumes underperformed with continued weakness in our regions and channels.

Moving back to the global results. Top line growth accelerated with revenue increasing by 3% this quarter versus last year. EBITDA increased by 6.5% and the continued optimization of our business drove operating leverage through the P&L., resulting in EPS growth of 17.4% in constant currency and 8.7% in U.S. dollar terms.

Our diversified geographic footprint enables us to deliver consistent results. Revenue increased in 70% of our markets. And we delivered top and bottom line growth across 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, led by Michelob ULTRA and Busch Light, the #1 and #2 volume share gainers in the industry. Our market share momentum accelerated and we delivered both top and bottom line growth. And in the spirits-based RTDs, our portfolio grew volumes by low teens, led by Cutwater and Nutrl.

Now moving to Middle Americas. In Mexico, our volumes grew by low single digits, is likely ahead of the industry, which benefited from Easter shipment phasing, but was negatively impacted by a diverse weather in June. Revenue increased by mid-single digits, with growth led by our above core beer portfolio.

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

In Brazil, our revenue declined by 1.9%, impacted by volume performance. EBITDA increased by 5.3% with margin expansion of 216 basis points as productivity initiatives more than offset the top line decline and transactional FX headwinds.

In South Africa, the underlying momentum of our business continued gaining share of both Beer and Beyond Beer. Revenue and EBITDA grew by mid-single digits with our performance driven by premium and super premium brands, which grew volumes by mid-teens.

In Europe, an improved industry, continued premiumization of our portfolio and further margin recovery drove top- and bottom-line growth. Our volumes were flat, outperforming the industry in five of our six key markets, led by our mega brands and our non-alcohol beer portfolio.

While we are talking about Europe, I spent a lot of time with our team in the market over the last few months. And looking at the industry performance this quarter, we can see an interesting example of the resilience, momentum and relevance of the beer category. With more normalized weather, the industry delivered flattish volumes and revenue growth with beer gaining share of total alcohol. In our developed markets, we have the opportunity to innovate, premiumize, increase category participation, and be present in more occasions to deliver profitable growth.

To mention just a few examples from Europe, consumers are enjoying the taste of Leffe with meals in France and Italy, the perfect serve of Stella Artois during Roland Garros and Wimbledon, celebrating 100 years of the refreshing taste of Corona during the summer. The PerfectDraft experience at home in the U.K. and our non-alcohol beer portfolio in more occasions. With the right portfolio, innovation and focus on consumers and occasions, the category has attractive growth opportunities across our footprint.

Now moving to APAC. In China, revenue declined by 6.2% with our volumes underperforming the industry. We are committed to our strategy and are taking action to strengthen our execution by increasing discipline and excellence in our role to market, increasing investments in our mega brands, accelerating our expansion in the in-home channel and scaling up key innovations such as Harbin Zero Sugar.

Now let's look at the key highlights of our three strategic pillars, starting with leading and growing the category. We continue to invest in our megabrands and mega platforms. In the first half of the year, we invested $3.6 billion in sales and marketing and have averaged more than $7 billion on an annualized basis over the last 6 years.

Focused portfolio management, increasing market investments and improved effectiveness drove an increase in brand power of our portfolio, led by our megabrands. These consistent investments in our brands are reinforcing the strength of our portfolio.

According to Kantar BrandZ, we own 8 of the top 10 most valuable beer brands in the world. Michelob Ultra and Stella Artois, two of our global mega brands moved up in the rankings by one position to reach #5 and #9, respectively; and Corona and Budweiser continued to lead at the top 2 brands globally.

We have evolved our portfolio management approach to focus our investments in our megabrands to drive efficient, profitable growth. We have around 50 megabrands globally, typically five per market. And these brands continue to lead our growth, with net revenue increasing by 5.6%.

Our global megabrand, Corona, continued to drive premiumization across our markets, growing revenue by 7.7% outside of Mexico and growing volumes by double digits in more than 30 markets.

Through the consistent execution of our category expansion levers, we are increasing category participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with no and low alcohol, low carb, zero sugar and gluten-free options. And we are expanding our Premium and Beyond Beer portfolios.

As a result, on a rolling 12 months basis, participation of legal drinking age consumers with our portfolio increased across our markets. In non-alcohol beer, our portfolio momentum continued with net revenue growing by 33%, led by the growth of Corona Cero. We are now leaders in 7 of our top 13 non-alcohol beer markets and estimate to have gained share in 70% of them. With 65% of the volume coming from new consumers and new occasions, we believe non-alcohol beer is a key opportunity to develop the category and drive incremental volume growth.

Innovation is a key component of our ambition to drive increased participation and develop new occasions. Two good examples of our innovation capabilities this year are both from our U.S. business, where we are leading the industry in innovation year-to-date.

Busch Light Apple is a seasonal offering that provides consumers with a crisp, refreshing taste and was brought back to the market by popular demand after a 3-year absence. Since launch in May, the brand is now the #1 innovation in the industry, driven primarily by 21- to 24-year-old consumers who have a 6x higher rate of purchase for Busch Light Apple versus the industry average.

Michelob Ultra Zero, with only 29 calories, is brewed for those consumers looking for a great tasting, zero alcohol, low-calorie beer. Since launch early this year, the brand is the #2 innovation in the industry and is the #6 volume share gainer in the overall beer category year-to-date.

Let's turn to our second strategic pillar: digitize and monetize our ecosystem. In the second quarter, this captured $12.2 billion in gross merchandising value, a 10% increase versus last year. The growth of this marketplace accelerated with GMV increasing by 63% versus last year to reach $785 million.

In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and help us in developing new consumption occasions. Our digital platforms generated $134 million in revenue, an increase of 6%.

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 116 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 $0.98 per share, an 8.7% increase in U.S. dollars and a 17.4% increase in constant currency versus last year. EBITDA growth accounted for a $0.16 per share increase, with translational effects an $0.08 per share headwind. Lower net interest expense and the optimization of other below EBITDA line items drove the balance of our EPS growth.

As we continue to focus on optimizing our business, in the first 6 months of this year, we increased our free cash flow by $0.5 billion versus last year through a combination of driving organic EBITDA growth, reducing our net interest expense through deleveraging, optimizing our net working capital and improving the efficiency of our CapEx through disciplined resource allocation.

With this increase in cash generation, we continue to make progress on our deleveraging journey. Our net debt-to-EBITDA ratio reached 3.27x, an improvement from 3.42x year-over-year. As is typical, the ratio increased versus the full year given the seasonality of our cash generation and increased cash outflow from our full year dividend and completion of our share buyback program.

In the first half, we continue to strengthen our debt maturity profile by executing a bond redemption and issuance, allowing us to extend our average maturity while maintaining our weighted average coupon.

Our bond portfolio remains well distributed with no relevant near- and medium-term refinancing needs. We have approximately USD 3 billion worth of bonds maturing through 2026 and no financial covenants.

Our results in the first half 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 the first half of the year, and look ahead at the opportunities our brands have to activate the category. We are encouraged by our first half results as we delivered EBITDA growth at the upper end of our outlook. Underlying EPS increased by high single digits in U.S. dollars and by 19% in constant currency. The performance of our premium brands and our revenue management decisions drove an acceleration in our revenue per hectoliter growth.

Our diversified footprint is proving to be a strength as our developed markets across the U.S., Canada and Europe, showed a resilient performance, growing top and bottom line in the second quarter of 2025. And as Fernando just mentioned, our first half performance and the strategic choices we have made position us well to deliver on our outlook for the year.

In the first half of this year, our brands met consumers in some of the most iconic events in sports and culture, developing new occasions and creating moments of celebration and cheers.

Looking ahead to the second half, we are uniquely positioned to activate the category. From the NBA and NFL, to celebrating 100 years of Corona around the world. To the buildup of the Winter Olympics, we will be focused on connecting with consumers and bringing to life our purpose of creating a future with more cheers.

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

[Operator Instructions] Our first questions come from the line of Mitch Collett with Deutsche Bank.

Michel, Fernando, I've got two questions, please. So firstly, given the volume decline in the first half and some of the headwinds you've seen that might persist into the second half. I guess, it looks unlikely that you'll see volume growth in fiscal '25. But how comfortable are you without -- with not achieving volume growth this year? And how do you think about volume growth longer term? I appreciate you won't guide on fiscal '26 today, but how confident do you feel about volume growth going into fiscal '26 based on what you know today?

And then, the second question, I guess, is linked. Given those temporary headwinds to volume this quarter, you've actually had a pretty decent organic EBITDA growth delivery and you're in the top half of your range. So to what extent is that margin improvement permanent? And how should we think about organic EBITDA growth in a better volume context?

Thanks for the question. So I think that to start answering this question and talk about volume, it's always good to remember, the business that we have, which is a large one globally with operations in over 50 countries, selling beer in over 100 countries. And as we always say, this is a great footprint. Because it allows us to navigate different environments and continue to deliver on a consolidated basis. But of course, this can also time to time expose us for different countries, specific challenge. We are all aware of the slowdown in China, the reset in Argentina, just to mention a few of them.

In a business that is as large as this one, difficult to draw conclusions on a quarter or just taking one KPI, volume, for example, you can look at the volume this quarter, I can look at the volume evolution over the last 5 years. Since pre-COVID, our volumes have been growing 0.5% on average.

And this quarter, specifically, driven by especially Brazilian industry, where both countries had tough industries, but also our performance in China and in Brazil were below our expectation. This volume was not where we would like to be.

But if you go to other KPIs and you look at what we deliver, of course, revenue, all-time high EBITDA has been growing over and over in each quarter within the range that we have for the market. This is a year outlook, and we've been delivering EPS growth very consistent in constant currency but also in dollars, growing 8% this quarter, 7% since 2021. And we continue to make progress on our cash flow that continues to improve year-on-year.

I think that -- all of that to say, we remain confident on the footprint that we have and the advantage of this footprint globally. The forecasts for the industry in the long run does not change this industry, will continue to grow, is gaining share of growth, and we are confident on the business and the strategy that we are executing.

I will leave Fernando with the second part of your question.

Mitch, Fernando here. So when you ask about margins, if you look like in the second quarter, the margin expanded by 116 basis points, and we expanded in four of our five operating regions. We don't provide margin outlook, but we said several times before that 2025 looks to be more like a normal year of cost inflation, somewhat in line with inflation across our markets for the year.

But then when you double click and you said that several times, when you look at the FX curves, we always hedge 1 year out. So we have a very good visibility on what is happening. We expect the -- specifically Mexican pesos and Brazilian real, the phasing of cost inflation to be weighted from Q2 onwards.

And then taking like one step back and a broader picture. We also said several times that the EBITDA performance that we have, especially during the COVID years has been driven by transaction effects and record high commodity prices. But none of these headwinds were structured. So the fundamental drivers of our industry-leading margins, they remain intact. So that's to say that we are controlling what we can control. And when we look forward, not specifically quarter-by-quarter and look forward, we still see a lot of opportunities to improve margins.

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

Great. Michel, the results in the U.S. are really impressive. And it's really -- it's an incredible turnaround story and quite a success. As you kind of stand back and reflect on what you've accomplished in the U.S., what are the key learnings? And are there things from the U.S. that you can transport -- learnings that you can transport to other regions to help improve performance in those areas as well?

Robert, thanks for the question. So U.S. is being a topic in our calls and conversations over the last several years. And I think that we always need to start with the idea that we proposed back that in 2017, this rebalance on our portfolio. And we have been since investing on the brands that we thought had potential for acceleration and that were in line with what we saw is emerging and consolidating consumer trends.

And our share momentum on this quarter 2 improved. So we are -- any cut you take from Circana to BIR on the 60 to 70 bps. This growth so far has been led by Michelob Ultra and Busch Light. And because the intentionality of the innovations that we had during the year, so less innovations, but more meaningful innovations. You get a boost on this share, especially on the quarter 2, because we launched Michelob Ultra Zero on the quarter 1, but really hit the sets on the quarter 2. And Busch Light Apple came in too as a seasonal in the quarter 2.

The learnings from this is consistency. We've been talking a lot about this. So a long-term plan, a very consistent view on the category on our portfolio choices and the investments we made for the long term. We called somehow last year this inflection point, because we've been following a lot this percentage of brands on our portfolio growing and where the industry is going.

We see now a further acceleration that you don't capture on this share on the Beyond Beer space, because a lot of our choices were in the ready-to-drink cocktails and the vodka seltzer, but both Cutwater and Nutrl, very consistent growth. And some of those things, of course, they are embedded in our plans globally. When you think about the 10-year plan that we have in the company, the megabrand choices and the consistency on the investment behind these choices, but also for innovation and expansion of tools to increase penetration, such as the non-alcohol, the gluten-free, the zero sugar and the Beyond Beer choices that we have.

So I think that there is more for us to see in the U.S. There is much more for us to do. But so far, we are pleased with the current momentum and especially with the demand for the brand. So Ultra continues to accelerate. Busch Light, very well positioned and innovations are working hard to help and to support this growth.

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

Michel, Fernando, first of all, I've got a follow-up on Mexico. I think in the press release you commented that Mexico grew in the quarter, but in June, it was weak, blaming the weather. Is there any consumer slowdown in Mexico that you're seeing at the end of the quarter, which could have an impact in H2?

And then, the question is going back to the Brazil Beer volumes decline. So beyond the weather, could you perhaps break down the key elements to explain the underperformance? Have you been increasing prices perhaps a bit too much or more than what your -- way more than the rest of the market? And would you believe that volumes could bounce in H2 when it comes to mainstream beer? Or is there something a bit more structural there?

Good morning, Olivier, Michel here. I'll take, I think that there are the two questions. They are -- one more specific, one more broad, feel free to follow up if I didn't cover both of them.

So I think that in Mexico, again, great industry, great business that we have in Mexico. Volumes during the quarter increased low single digits, outperformed the industry. Results were good top to bottom. We had different components during the quarter. So I think you can remember several of them. So Easter shifting from quarter 1 to quarter 2 comparables because last year was a very strong quarter in Mexico. I think we all remember that the government, because of the elections had more spending on the first half of the year, and this helped the quarter 2, was a great quarter last year in terms of weather, as a matter of fact.

I'm not sure if I captured it well, but you said something like blaming the industry. We actually just state the fact. We are not blaming the weather, right? So I was just saying it was cold, was rainy. There was some storms in Mexico this quarter. So the back end of the quarter was rather slow versus the beginning of the quarter because of Easter. But all-in-all, we delivered a great quarter, outperforming the industry. Underlying demand for our brands remain very strong.

As in many markets, and I think that this somehow connects the first part of the question with the second. What we see is that the economy continues to progress. But across the board, we see consumer confidence, not at the high levels that we saw back that in '22, for example. And one would expect that at one point, as the economy continues to progress, consumer confidence will converge. But we are not there yet. And more specifically, if you look at the different consumer cohorts by socioeconomic level, the more value-seeking consumers because of inflation we see are under pressure in some specific markets.

And when we look at the basket, I'll give an example of the U.S., the consumer basket, a different consumer cohorts and economic -- socioeconomic levels are being somehow stable like they are buying on average the same dollars that they usually buy. But we all know that the same dollars with inflation will mean less units being bought in the basket. And this is a point that we all need to be carefully monitoring and following.

And beer, alcohol so far has been keeping the share of these baskets stable. And in markets where the purchase power is already rebuilding. You take Europe, for example, that suffered more after COVID, because of the cost of electricity and fuel and energy, because of these costs those are normalizing, purchase power is recovering, then you see the industry recovery in line, not only on the euros that people are spending, but also in quantity.

So I think that situation globally for the consumer is economy continues to progress, consumer confidence below historical levels. At one point, we all expect that this will converge. Baskets somehow stable in dollars, euros, but where there is more inflation, consumers, of course, are much choiceful in their quantities.

So we need to continue to monitor economy, do our job on the parts that we can control, and then we will see, as we move forward, those things converging like purchase power, consumer confidence and volumes. Thank you.

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

Michel, Fernando, a couple from my side, please. Firstly, on China, can you talk us through how you're seeing the on-premise channel progressed through the quarter? On the one hand, you're cycling some of the macro headwinds from last year. However, it feels like the government has really stepped up the anti-extravaganza campaign. And maybe talk us through how you're thinking about that into the second half of the year. So the first question on China.

Second question on Brazil. I think one of your peers confirmed they had taken a price increase in July. Have you noticed an improvement in your market share trends as you're going into Q3 on the back of that?

Sanjeet, good morning, Michel here again. So two points on the question there. First, China, I think that is not new on our conversations that the industry had a big slowdown. And as we look at quarter 1, quarter to this year, as anticipated, comps not easy for the industry and the industry continue to perform slightly negative. So that was the picture on first quarter of the year, remained the picture on the second quarter.

Of course, the size of the underperformance now is much smaller relative to what we saw last year. And we continue to think that as we move through the quarters, we will see this impact reducing, the comps becoming more in favor of the industry. And at one point, this industry should start fire on the right direction, but not there yet on quarter 2.

The on-trade channel which is an important component of that stubbornly continues to be very weak. So the on-trade is not rebounding. The growth that we see in the industry is more in the off-premise. So a big portion of our plants in China now are improving the role to market, improving the propositions that we have for the off-premise.

The good part is that we under-index in share, in the off-premise. So there is a lot of space for us to capture and to grow, but it demands adjustments on the execution. I can tell a lot about any new measures from the government on the on-trade because it's new.

I was in China a couple of weeks ago, and I heard a lot about that. And you could see that there was less traffic in the on-trade, especially Chinese restaurants. But I think that we need some more time to see where this will land.

While on the other hand, we all see growth on the off-premise. The off-premise looks to be already beyond the declining of the industry, already turned into growth. And it's a big opportunity for us, given the fact that we under-indexed there.

Second, Brazil, I think that we commented a little bit on the press release and during the call now. But in Brazil, industry was soft in quarter 2. So the same weather conditions that we saw in the U.S., in Mexico, they extended throughout the Americas. To be honest, Brazil, Argentina, but because the nature, the size of Brazil, that's a tropical country, so you had tough winters in the south but mild weather in the Southeast, when the weather is too bad across the whole country, then this has a big impact. That was the main adverse impact that we saw in the industry in Brazil in the quarter 2.

But we also have our revenue management calendar. We discussed this the second half of last year hedge that we have transactional effects, have a component on cost that are big for Brazil this year, and the revenue management had to follow our plans. So we had prices as we have every year in our calendar.

Relativity in terms of price was rather tough during the first half of the year for Brazil team. And we see the market somehow adjusting throughout the year. Prices are moving and we expect to have better relativity as we move forward. But of course, we only control our own agenda, our own revenue management. So we are monitoring, executing, preparing the business for the good second half of the year.

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

Yes. Michel, Fernando, two questions, please. The first one on the U.S. I mean, you had a very solid performance, particularly on profit in the U.S. But the industry -- the rate of decline of the industry in the last couple of months seems to have got a bit worse. Clearly, weather impact, pressure on the low-income consumer which we know. But should the industry continue to decline at a greater pace than it has been historically, that historic 1%, 2%. Do you think you have enough levers to continue to at least hold profit flat or maybe grow it a bit in the U.S.? And what are these levers?

And then the follow-up will be, I think, for Fernando. So I wanted to ask about share buybacks. You completed the EUR 2 billion finished back in June. Free cash flow in H1 was very solid. Yes, most of the cash is generated in H2, but H1 very solid. The yen currency is relatively stable. So what held you back from increasing the buyback already at this point? I know over the past couple of years, you announced a buyback in October, but particularly given the attractive level of the share price, why not increase the buyback earlier?

Andrea, Michel. I'll take the first one here and hand it over to Fernando to follow up on your second question, okay? So I think that the U.S. industry and our own performance, we discussed it a little bit on the question before from Robert. But we see this good momentum on our portfolio, good brands for us leading this. So Michelob Ultra is a premium brand in our portfolio. So it's one of the levers for us not only to continue to grow share, but to improve our financials. Busch Light and innovation continue to fire, and this is very positive.

When you look into the industry, you are right, like remain below the long-term trend. And as you mentioned, we mentioned this before as well. So very strange weather with many, many different events over the first half of the year impacting the industry. So mathematically, we see this in the states where these events and the weather was worse versus the other states. So a big portion of what makes the difference between historical trends and what we see today.

The second topic, pockets of consumer constraint, as we said, baskets pretty much stable in consumption, but because of the food inflation, inflation, of course, quantities are impacted. The share of alcohol beer on these baskets remain stable. Therefore, as economy continues to progress, as purchase power rebuilds for these consumers, one can only expect normalization. And we keep working hard on productivity as we always do. So we are managing costs, improving productivity. Those are very important levers together with mix and the growth of the Beyond Beer to continue to yield for us the top and the bottom line that we have seen on this quarter too.

But let me take your question and use a little bit of the call that we have now the material. Just to give you one example, which I think that could be very useful for everybody that's why I brought, which is Europe. So you don't take a market that's more developed than Europe in the beer industry. You don't take a more diverse and dynamic economic environment than we see across Europe. And we talked a lot last year, was a little bit of the reverse of this Americas weather that we are seeing, how complicated the weather was last year in Europe.

So this year, we are having a very good summer, sunny, a little bit dry than average. We monitor consumer purchase power, which has been restoring in Europe to what was before 2021. And the industry is in growth in dollars, pretty much stable in volume. And our portfolio is outperforming the industry.

So you get all the components that we discuss in every call about all the trends and headwinds to the industry, good weather, consumers in good shape, and then the industry is growing dollars, euros, in this case, in Europe, and our portfolio is performing.

So I think that the long-term trends to the industry will not change. What we need to cycle is this more dynamic environment and getting to see consumers in a better place. So the industry will continue to grow as Euromonitor, IWSR forecast for the years to come. So every quarter will be different, but the long-term trends, I don't think that are too different.

And Andrea, Fernando here. So on your question, what I can tell you is that our capital allocation plans aren't changed. We are always very disciplined how we use our cash. But what is fair to say and you made this point is that with the increased cash generation and the lower leverage, we have increased flexibility in our capital allocation choices.

The main goal of our capital allocation policies, we stated several times, is creating value for our shareholders. And as you said, well, cash flow is weighted towards the second half of the year. Although first quarter was strong, it was $0.5 billion better than the previous year. So we have, of course, nothing to announce at this time, but if there is one key takeaway is that plans are unchanged, and we have increased the flexibility as we continue to progress on our stronger balance sheet and very good cash flow generation.

Our next questions come from the line of Edward Mundy with Jefferies.

Good morning, Michel, Fernando. So first question is coming back to the concept of volume growth where you're growing probably below your potential. I think historically, some of the developed markets have probably held you back a little bit, but you're sounding much more assured on Europe, and we've seen outperformance for a couple of quarters now in the U.S. Does this give you more reassurance in your ability to grow group volumes over the medium term as you get through some of these short-term issues in Brazil and China?

And then second question is on your plans to activate category. I think Slide 31 shows some of the sports properties against which you activate. Thinking about FIFA 2026 and probably some of your learnings from the FIFA Club World Cup this year. I think relative to 3 or 4 years ago, it's fair to say that you're getting sharper on marketing. Do you see there's a bigger opportunity for the business and the category as you look out to next year?

So two-fold, I talked a little bit about this before. That is the gift of our global footprint and then the idiosyncratic issues that we face in challenging environments in some countries time to time. And we keep the focus on the things that we can control. So you look at our EBITDA growth, EBIT growth with leverage. And then EPS, while we manage the specific conditions on volumes here and there.

The long-term perspective is that we continue to focus on this optimized portfolio. We continue to focus on the advantages of our footprint for the long term, the growth that the developing and emerging countries can add to the category. And we are very pleased to see this quarter that our developed markets, you can cut from Canada, U.S., Europe, the share gains in South Korea, they are all building on our full potential.

So we will continue to see specific events in each and every market, differences in the quarters, but we continue to believe that the long-term category opportunity in our business because of our footprint remains in place for us to deliver growth in the long term.

2026, this question is an interesting one. So FIFA and the event in itself is always a great opportunity for the category. So our models show that in the years that we have the World Cup, there is a bump in volume, both in the month of the World Cup as well as for the whole year, given the magnitude of the event. Curious to see what's going to happen next year is a larger event. So there will be more countries, more excitement, more weeks on there. And this will, of course, be part of the buildup for the category for our business next year.

In our case, the location, meaning U.S. and the fact that this will span across the Americas could not be better, it's where most of our footprint sits. So it's going to be very welcome to see the time of the games, the participation of the countries from the continents and what's going to happen here.

And if you take the momentum that we built with Michelob Ultra this year as a sponsor of the FIFA Clubs World Cup. There is a lot of excitement building for next year. And just as a reminder, in between now and there, we also have Winter Olympics that will be very interesting, because it's going to cut from the back end of this year into the first quarter of next year, and we have now more experience, more knowledge on how to activate the Olympics. So we will continue to invest on these mega platforms. They have very good ROI for us and very helpful for the momentum of our brands.

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

A couple from me, if that's okay. Firstly, on the U.S. business, you hopefully showed the slide showing the very strong brands you have across the world and included in the Bud and Bud Light. I think over the recent years, those brands have struggled, as you pointed out that mainstream beers been outperformed by some of the premium brands and imports. But of course, recently, you've shown a success with Busch Light, which sort of holds a similar category. Do you think there's any opportunity to reinvigorate those two brands? Or do you think there's simply the potential for other brands to take your marketing spend and make better use of it with better returns?

And then secondly, on Europe, you've highlighted almost the perfect conditions across that market, excellent weather. You've taken share in a number of five out of six of your markets. But of course, volume growth, you said was flat. Sort of going back to a couple of the earlier questions, are you surprised by that? Do you think there's better opportunity to grow volumes in Europe? Or is it just going to be a very difficult market to be able to get volume growth in future?

Thank you, Laurence. So U.S. on the portfolio, again, the key for us is to continue to rebalance this portfolio and making sure that the offers we have are aligned with the main consumer trends. So Michelob Ultra, very well positioned there, gaining both scale and momentum. And it's a brand that is just sitting on a very important place with many opportunities to continue to grow, like just to give you a couple of numbers there for you to reflect upon.

So Michelob Ultra is growing this year in all 50 states in the U.S., all 50 states. I don't think that there is many brands in the industry or outside the industry that are having growth across all states.

When you think at the brand in some states, the brand is as big as 11% share. If you take the entire West Coast or the Northeast of the U.S., the brand is only 6% share. So it's half the size in the Northeast and West Coast, that it is in the leading states for the brand in the U.S. So there is much more that we can invest and continue to expand Ultra there.

The case is similar to Busch Light. So in the Busch Light strongholds, the brand is very big. So the brand is the leading brand in the mainstream and has share above 10% in some of the strongholds. It's the second fastest-growing brand now in the U.S., but the distribution is still very limited. So the brand can continue to find growth areas across most of the U.S. because it's very concentrated in the inland and is now expanding South, West, North, and Northeast from there. So we continue to increase.

And same statistic for Busch Light, leading states, 11% share of the industry. In the rest of the U.S., as I was mentioning, is less than 3%. So a lot of headroom there.

And when you think about Bud Light, Budweiser, the other brands, the answer for your question is yes. But we have choices, priorities and work to be done across all these brands. We are more advanced with Ultra, more advanced with Busch Light while we continue to work on the other brands and make, of course, the right choices in terms of allocation of capital and investments for these brands.

Thinking about Europe. The question is also very interesting. So conditions were good. Industry was flat, growing in dollars. We know that the underlying trend of the industry in the last few years was not that. So there is an improvement that we can see under the good conditions. And because the industry is a much bigger thing, of course, the improvements are never overnight, but it's good to see the industry, but also the share of throat.

So part of the trip that I had in Europe, went to countries like Italy, France, and beer is gaining share of throat in these countries. You see beer growing a lot in new occasions in Italy, for example, led by Leffe. You see the positioning of our brands, plus the portfolio that we have in France, working very well from south to north of France, different occasions, different brands, but all of them increasing penetration and gaining more occasions in the country.

So markets move, consumers move, the innovation that we have, the portfolio that we have is working for consumers across the continent. And I think that we'll continue to see under the right conditions this industry to progress in Europe, but also as we see in other markets.

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

Thank you very much, Michel, Fernando. Just a couple of quick questions. Just following up on the China question. There's a lot of talk about it being a cyclical shift by category. But do you think given how long it's been going on now that there may be a more fundamental change in the way beer is being consumed. And have you had to reweight your sales force to target that off-trade opportunity? Or do you still generally believe the economy comes back, people go back to night clubs, it will return to normal.

And then secondly, it looks like you're sort of stabilizing and growing share in India, which is encouraging. How much are you investing in that market for the next sort of 10-, 20-year story?

Chris, thank you. So on China, as we said before and addressing in a very straight way, your question, I think it's both. So we need to continue to protect the strength that we have on the on-trade, the share that we have and look for the bounce back of the channel. While with no doubt rewinding the whole business, not only the sales force for the off-premise is key.

And what I mean by that? The SKUs that we sell in the on-trade are different from the SKUs that we sell on the off-trade. And we need to improve our portfolio assortment. We are doing that and our offers and our distribution in the off-premise. The execution of the off-premise is very different than the execution of the on-trade. We need to have the right people, the right supply, the right wholesaler, the right merchandising, so the brands can harvest the high equity that we have on average of consumers by being present and executed in the right channels.

And of course, because our business was over skilled in the East in the on-trade channel, making these adjustments in China takes time, but we are working very hard on that. The team there is pretty focused on rebalancing our presence on these channels and building the distribution. As I said before, the exciting part of that is that we're under-indexed by a lot in the off-premise. So the headroom for growth is very good. We did just need to realize that.

And then, back of it, that -- sorry?

So just to clarify, because the margin's holding up in China quite well despite the volume declines. That's happening at the same time as you're doing this investment. It's not being delayed. That's quite encouraging.

Yes. And the premium products are premium, regardless the channel. We sell more premium products, and we have a very efficient business in China. So we have space to invest as we are investing now and we will continue to invest.

And in India, the story of India is, a sort of like, vitality in the growth of the industry, because the industry is really growing. But it's also a little bit of volatility, right? So our business is a national business, but it's not the same across all states. The states have their own rules, the idiosyncratic issues that you deal with time to time. But what is really important for us there is the size of our premium business. So we lead in premium and super premium with a very high share. We broke into double-digit share now with Budweiser as a brand in India overall. And of course, in the premium, the share is very high.

The growth there is good. We keep improving our business from systems, footprint, brand equity and capabilities. And this is a market that has, for sure, a very long-term growth prospect, because the beer industry is still very underdeveloped. And as more states improve flexibility in distribution, adjust the structure of the market in taxes and access, we will continue to have many opportunities to grow in India. So we are pleased so far with the quarter 2 and the momentum we have there. But that's a story that's just at the beginning. So there is much more to come. Thank you.

This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team.

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

Thank you. And thank you all for your time today and for your ongoing partnership and support of the business. So tomorrow, Friday, International Beer Day. So I hope that you have the time to grab friends, drink some beer and celebrate. So cheers. Thank you, and stay well.

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