AB Inbev (BUD) Q2 2016 Earnings Call

posted in: Earnings Call, Notes | 0

AB Inbev (BUD) CEO Carlos Briton on dealing with the volatile Brazil economy

“In terms of Brazil, we’ve been doing business there for 27 years and net/net it has always been a great market for us. So we continue to be bullish on Brazil, but we know that it’s not a straight line up, but it’s up. But every five years or so, you have one or two years where things go sideways or backwards, but then that’s when you have to take advantage and look for those silver linings.  So, again, we’ve been through tough times before, but it’s a great time when some of our competitor sometimes take a pause, that we accelerate and do the things we need to do, because we’ve always been bullish and there are many reasons to believe on that, that I just mentioned. That’s Brazil. But you’re right, this year is going to be a tough one and as the political macro situation gets cleared up, consumers, of course, will get more confident and go back to their normal behaviors. If you look at the financial markets in Brazil, currency and stock markets and all that, they tend to signal that first and that’s where they are at this point.”

Importing beer from the US into Mexico

“We have to bring Bud Light from the U.S. into Mexico because we do not have enough capacity to produce Bud Light locally and that of course also puts more strain on our logistics costs.”

Focusing on selling premium beers into the Chinese market

“in terms of China, we’re very happy with the business we have there. We made, many years ago, made a decision to go high-end in China. When we got together with them, 2008, we kept that very smart decision they made in China. Today, we lead the premium segment in China, we lead the super-premium segment in China and we’re very well positioned in the core-plus segment. That’s where we put most of our investments and that’s where the growth is coming from. We’re very happy with it because we see our business continuously gain share, margin continuing to be accretive and to continue to go up and it’s very healthy and it’s organic.  It would make no sense for us to grow in the opposite direction, trying to add more core and value brands to our business.”

AB Inbev (BUD) CEO Carlos Briton on the company emphasizing the non-alcoholic beverage space

“We put out there 10-year commitment on our side of having 20% of our volume in 10 years, checked, of course, every year, in non-alcohol and low alcohol beers. This is a great opportunity, not only because there is a consumer trends there from some groups of consumers going to that direction, but also because our brands can extend in that domain. If you look at some markets in Europe, for example, where the beer industry has declined, the segment that’s growing the most, even in Brazil, that can also be said, is the low alcohol, no alcohol beer. Our brands can do it, our asset base can manufacture those beer brands and it’s something that can be very interesting in terms of enlarging the pie of consumers that connect and stay within our franchise.”