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Operator: Welcome to Anheuser-Busch InBev’s Full Year and Fourth Quarter 2022 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. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. 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 the 18th of March, 2022. 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.

Michel Doukeris: Thank you, Jessie, and welcome, everyone, to our full year 2022 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our full year and fourth quarter operating highlights and provide you with an update on the progress we’ve made in executing our strategic priorities. After that, we will be happy to answer your questions. Let’s start with our operating performance. We are very pleased with the continued momentum of our business and the strength of the beer category across our footprint in both the fourth quarter and the full year 2022. For the full year, our top line grew by 11.2%, with volumes increasing by 2.3%, reaching a new all-time high. Revenue per hectoliter increased by 8.6% accelerating in the second half of the year, driven by revenue management initiatives and continued premiumization.

Driven by the consistent execution of our strategy and top line growth across all operating regions, our reported revenue is now $5.5 billion above full year €˜19 pre-pandemic levels, with our volumes 5.8% ahead. EBITDA increased by 7.2%, at the upper end of our medium-term growth ambition and 2022 outlook. Underlying EPS was $3.03, a 5.2% increase versus last year. As a result of our performance and strong free cash flow generation, gross debt decreased by $8.9 billion this year, leading to a net debt-to-EBITDA ratio of 3.51 times. Following our deleveraging progress, the Board has proposed a full year dividend of €0.75 per share, a 50% increase versus 2021. In the fourth quarter, we delivered top line growth of 10.2%, with accelerated revenue per hectoliter growth of 11.2%, driven by the implementation of price actions, ongoing premiumization and other revenue management initiatives.

Our volumes declined by 0.6%, driven primarily by the significant impact of COVID restrictions in China and a softer industry in the U.S. which was impacted by the phasing of price increases and abnormally cool weather in December. We delivered an EBITDA growth of 7.6% and underlying EPS of $0.86, a $0.12 increase versus quarter four €˜21. Our diverse geographic footprint provides a unique combination of growth and reliable cash flow generation, positions us well to deliver superior value creation. In 2022, we delivered broad-based growth with a top line increase in all five of our regions and volume growth in over 60% of our markets. Now, let me take you through the operational highlights for the year from our key regions, starting with North America.

In the U.S., we continue to transform and premiumize our portfolio. Our business delivered another year of top line growth and stable EBITDA, despite the elevated cost environment. Our above core portfolio continued to outperform the industry this year and combined with our Beyond Beer brand now represents over 40% of our revenue. While industry volumes in the fourth quarter were soft, we are seeing improved performance to start 2023, with year-to-date beer industry volumes down 1%, and U.S. dollar sales up 5% through the 12th of February, according to IRI. Our business in Middle Americas continues to deliver outstanding results. In Mexico, we delivered another year of double-digit top and bottom line growth, with record high volumes continue to outperform the industry.

Volume growth was broad-based across all segments of our portfolio with our above core beer brands growing over 20%. In the fourth quarter, we completed our Oxxo channel expansion with our portfolio now available in approximately 20,000 Oxxo stores nationwide. Looking ahead, we are focused on continuing to build the partnership and we are excited by the opportunity to activate our brands and gain our fair share across the network. In Colombia, our business delivered double-digit top and high single-digit bottom line growth, led by the consistent implementation of our category expansion levels. The beer category continued to grow, gaining 80 basis points share of total alcohol this year and with 2022 marking the highest beer per capita consumption in over 25 years.

Moving on to South America. Our business in Brazil reached record high volumes and grew top and bottom line by double digits as we continue to expand our market share. Our performance this year was led by over 20% revenue growth of our premium and super premium brands. Now let’s talk about EMEA. In Europe, we grew top line by double digits and EBITDA by high single digits. Our portfolio continues to premiumize with over 55% of our revenue now coming from premium and above premium brands. In South Africa, we delivered record high volumes this year, growing both top and bottom line by double digits, despite capacity constraints in the fourth quarter. And finally, APAC. In China, both the industry and our business were impacted by significant COVID-19 restrictions throughout the year, leading to a total revenue decline of 4.2% and EBITDA decline of 10.8%.

While 2022 was a disrupted year, underlying demand outside of COVID-19 restrictions remained strong. As restrictions have eased and infection rates declined, we are optimistic about the industry recovery and returning to growth as channel traffic and mobility normalizes in China. Now, I would like to share with you a few highlights of the progress across our sustainability priorities. Our priorities are centered around the beer category, which is inclusive, natural and local. With these priorities embedded into our commercial strategy, we can create value and share prosperity for our business, our communities and our planet. We continue to make progress across our priorities. Highlights include: investing over $700 million since 2016 in social norms market campaigns, promoting Smart Drinking and Moderation, reducing Scope 1 and 2 absolute emissions by 39% and improving water efficiency by 14% versus our 2017 baseline.

We are working with nearly 24,000 farmers in our direct sourcing programs through research, technology and hands-on support to help skill, connect and financially empower them. Additionally, we progressed our circular packaging goal, with 77% of our products now in packaging that is returnable or made from majority recycled content; kicked off Cohort of our 100+ Accelerator, program that continues to densify breakthrough sustainable and innovative solutions; increased representation of women in the top 5 leadership levels of our business from 19% in 2017 to 28% today. Now, let’s move on to our strategic pillars. Let’s start with pillar number one, lead and grow the category. This year, our volume reached all-time high with growth across more than 50% of our markets.

This is a direct result of our commitment to lead and grow the category by investing in our brands, innovation and category expansion levers. Our total volumes are now 5.8% ahead of pre-pandemic levels. Our above core beer brands have led the growth, increasing almost 17% versus 2019; with Corona, the star performer, growing volumes by 42% outside of Mexico. Despite the challenge of COVID-19, we invested an average of $7 billion per year over the last four years. On a currency-neutral comparable basis, in 2022, we invested more than $400 million in sales and marketing versus 2019. The consistent investments combined with our digital capabilities and increased effectiveness is driving the power of our portfolio and organic growth of our business.

In 2022, we are named Creative Marketer of the Year by Cannes, the Most Effective Marketer Worldwide at the Effie Awards, and the number one advertiser in the Creative 100 by the WARC Advertisement Research Center. Once again, congratulations to our teams and partners for these truly remarkable achievements. We continued to execute on our five levers to drive category expansion and delivered a strong year of consistent and profitable top line growth. We are making the category more inclusive, offering superior core propositions, developing consumption occasions, and expanding our premium and Beyond Beer portfolios. Our global brands continue to scale and are driving premiumization across our markets. The combined revenues of Corona, Stella Artois and Budweiser, grew by 8.9% outside of the brand’s home market, led by Corona, which grew by 18.6%.

Budweiser growth of 2.5% outside of the U.S. was significantly impacted by COVID-19 restrictions in China, the brand’s largest market. Excluding China, the brand grew revenue by 12.6% in 2022. Innovation continued to support category expansion across each of the five pillars with innovations contributing approximately $5 billion in net revenue in 2022. From expanding our non-alcohol beer portfolio by launching Corona Cero in 11 countries to growing our Beyond Beer portfolio by scaling Cutwater and NÃœTRL within the U.S., our focus remains on driving sustainable long-term growth. Now, let’s turn to our second strategic pillar, digitize and monetize our ecosystem. This continues to accelerate, usage and reach, capturing $32 billion in GMV this year, a 60% increase year-over-year, reaching 3.1 million monthly active users.

Since BEES began its rollout in 2019, our initial focus market have strengthened customer engagement with the weighted average Net Promoter Score improving to positive 56 as of year-end 2022. In 15 of the 20 markets where BEES is live, our customers are also able to purchase third-party products to BEES Marketplace. Customer adoption is increasing with 56% of BEES customers now also BEES Marketplace buyers. In 2022, BEES Marketplace generated approximately $850 million in revenue. As an example of how BEES is improving our business and enabling us to be a better partner to our customers, let’s take a look at one of our countries, Brazil. BEES is enabling us to be closer to our customers and solve their most pressing pain points. Since the rollout of BEES in 2019, we have expanded our customer base in Brazil by over 250,000 plus, increased the total number of annual delivers by 3 million deliveries and broadened the availability of our portfolio.

And most importantly, our relationship with our customers has improved significantly, with NPS score increasing by 24 points. Digital transformation is a key pillar of our strategy and has enabled our accelerated growth in Brazil. Since 2019, the beer category has gained share of total alcohol with beer market share expanded and our beer volume grew by 17%. One key learning from BEES is when our customers grow, we grow. Now, let’s talk about how we are strengthening our relationship with our consumers. Our digital D2C products, Zé Delivery, TaDa and PerfectDraft are now available in 17 markets and generated over $450 million in revenue and 69 million orders this year. That is 69 million opportunities to better understand our consumers and their consumption occasions.

The FIFA World Cup offered an exciting opportunity for our digital DTC platforms as we launched the biggest digital campaign in our history. Our D2C activation yielded impressive results, increasing daily average orders during FIFA World Cup and attracting nearly 0.5 million new consumers to our platform. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Fernando, over to you.

Fernando Tennenbaum: Thank you, Michel. Good morning. Good afternoon, everyone. We aim to maximize value by focusing on three areas: one, optimizing resource allocation; two, robust risk management; and three, efficient capital structure. With respect to capital allocation, we are focused on maximizing long-term value creation by dynamically balancing our priorities. We continue to invest in organic growth to support our strategy to lead and grow the category, and digitize and monetize our ecosystem. The excess cash generated by our business is then dynamically allocated to our other three capital allocation priorities: deleveraging; selective M&A; and return of capital to shareholders. Investing in the organic growth of our business is our number one priority, and we have no shortage of investment opportunities.

In addition to sales and marketing, which, as Michel mentioned earlier, has averaged around $7 billion per year since 2019, we also continue to invest in our facilities and capabilities, allocating $4.8 billion in net CapEx in 2022. Over 50% of our CapEx spend is to support capacity expansions, new capabilities, digital transformation and other growth initiatives. In 2022, we invested a combined $11.7 billion in sales and marketing and net CapEx. And since 2019, we have invested over $45 billion to full growth. As you can see on slide 33, 2 times net debt-to-EBITDA remains the point at which we maximize value, though approximately 90% of the benefits from deleveraging can be captured as we approach 3 times net debt-to-EBITDA. This year, we continued to deliver strong free cash flow generating approximately $8.5 billion.

Gross debt reduced by $8.9 billion to reach $79.9 billion. As a result, we have made significant progress on our deleveraging journey with our net debt-to-EBITDA ratio reaching 3.51 times. Our debt maturity profile remains well distributed with no bond maturity in 2023 and no relevant medium-term refinancing needs. If you look at our debt maturity profile, we have $3 billion worth of bonds maturing through 2025 and more than sufficient liquidity today to redeem all of these bonds. Our bond portfolio has an average pretax coupon of around 4% and a weighted average maturity profile of approximately 15 years. Moreover, our debt portfolio does not have any financial covenants and it is comprised of a variety of currencies, diversifying our FX risk.

95% of our bonds have a fixed rate, insulated from interest rate volatility and inflation. And now, let me take you through the drivers of our underlying EPS this year. In 2022, we grew underlying EPS by 5.2% versus last year, delivering $3.03 per share. This increase was primarily driven by nominal EBITDA growth, which accounted for a $0.29 per share increase. We continue to optimize our business, reducing net interest and income taxes expenses, mostly offsetting headwinds in other line items. To simplify our disclosure, as from January 1, 2023, mark-to-market on derivatives related to the hedging of our share-based payment programs will be reported in the non-underlying net finance line. As a result, we will discontinue disclosing normalized EPS as a separate metric.

As we continue to optimize our business and bring our dynamic capital allocation priority to action, in 2022, we invested $11.7 billion in sales and marketing and net CapEx to drive organic growth. We reduced gross debt by $8.9 billion and reached a net leverage of 3.51 times. As a result of our continued momentum and consistent deleveraging progress, the Board has proposed an increase of the full year dividend by 50% versus 2021 to €0.75 per share. With that, I would like to hand it back to Michel for some final comments before we start our Q&A session. Michel?

Michel Doukeris: Thanks, Fernando. Allow me to take a few minutes to recap my key takeaways from the year and how we are prepared to continue to meet the momentum in 2023. We lead a big, profitable and growing category. Beer is resilient and is gaining share of throat globally. We made significant progress in 2022, executing across each of our three strategic pillars. Driven by the increased strength of our brand portfolio, we delivered all-time high volume and gained share across key markets. We made important strategic choices in revenue management, driving accelerated net revenue per hectoliter growth of 11.2% in the fourth quarter. We progressed our digital transformation with 63% of our revenues now digital. 56% of BEES customers are now also BEES Marketplace buyers.

And our digital D2C products fulfilled more than 69 million orders. We delivered another year of strong free cash flow and underlying EPS growth of 5.2%. As a result, the ABI Board has proposed a full year dividend of €0.75 per share. Looking ahead to 2023, we are focused on the relentless execution of our strategy and driving the momentum of our business. We have an industry-leading portfolio of brands across all price points, an advantaged geographic footprint and superior digital products that are bringing us closer than ever to our customers and consumers. We are well positioned to meet the moment in 2023 and to create a future with more cheers. With that, I will hand it back to Jesse for the Q&A.

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Operator: Our first question is coming from Simon Hales with Citi.

Simon Hales: Thank you. Hi Michel, hi Fernando. I suppose a couple. My first, Michel, is really on Mexico. I wonder if you could just talk a little bit more about what’s been happening there. Clearly, Q4 volumes were a little bit weaker than the market expected, maybe a little bit slower than we saw through the first nine months of the year. But perhaps more importantly, could you talk about what — how you see that market developing as we head into 2023 and you get the full benefit of the Oxxo rollout into the North. And perhaps associated with that, what are you doing in Brazil in Oxxo stores to make sure you get your fair share of the consumer uptake? So, that’s my first one. And then my follow-up would be just around the U.S. market.

Michel, clearly you referenced sort of volumes running down about 1% for the industry year-to-date. How are you thinking about the state of the U.S. consumer for 2023? How do you think about the full year beer market trends there? And what are you seeing in terms of elasticities on your brands?

Michel Doukeris: Hey Simon. Good morning. I think I got all the questions here. We had a little bit of background noise on our side. I will go through the answers. And at the end, if I miss any point, please complement it. But starting with Mexico, I think we had a great year in Mexico. Volumes positive, share positive, top and bottom line double digits. We talked a little bit about this bad weather in the quarter four in North America. And the reality is that this expanded to Mexico as well, even though we’ve been talking a little bit less about that, but it was extremely cold, including some of the Caribbean countries where we do have operations. We think that as we look at this year, things are more normal, and we expect to see how the quarter one is going to be, and we’ll talk more as we announce results for quarter one, later.

Oxxo, we completed the last wave of our expansion, and we could not be more excited now with the opportunities to activate our brands across Oxxo, premiumize the portfolio and get our share — fair share across the network. So I think that continues to be a great opportunity as Mexico is a relevant country, Oxxo expands and we’re going to be expanding our portfolio together with them. In the U.S., I think that we saw this one-off complicated quarter on quarter four. Many things there from phasing of price increase, the effect of the two price increases of the year in one quarter and a really, really complicated weather at the back end of the quarter. As we are now with couple of weeks under the belt into January and February, the published numbers that are there, IRI numbers, they point out for volumes, give or take, 1% down, revenues close to 5% up.

And you see this very consistently across each and every week. Of course, there is phasing of Super Bowl, which is an important part of the industry in the first quarter of the year, but working well so far. Consumer and demand, resilient. We say that different than other categories, beer does not have penetration on private labels. So, we don’t see what other categories see in terms of trade down. What we see is consumers changing a little bit channels and changing a little bit package, so people buying more in larger formats, both in terms of the chains, supermarkets and the packs and people staying more at home. So penetration and consumption at home is being bigger, which in a way is very good for beer because beer has higher share of throat in home than out of home.

And our brands continue to perform well. We see strength in Michelob ULTRA, we see strength in Bud Light. We see better performance so far in some of our core brands and our Beyond Beer portfolio performing very well.

Operator: Our next question comes from Mitch Collett with Deutsche Bank.

Mitch Collett: I’d like to ask a question on BEES, please. I think you say in the release that 40% of your revenue in China is now via digital channels or at least it was by December. And I think at the Q3 stage, that was 15%, so a pretty big uplift. You talked about China and the U.S. being part of the third wave for the BEES rollout due to the wholesaler model there. So, can you comment on the benefits of that digital rollout and what it brings to China and how we might think about that as it goes into other wholesaler-led markets?

Michel Doukeris: Hi Mitch. Thank you for the question. It’s very interesting because I just came back from a trip in China. I was there in the region for one week. And one of the things that I spent time looking at and discussing with the team was BEES. And you are right, like BEES is the — China is one of the markets where BEES was being built for a different role to market. And because of the difference on the role to market is this third wave in which deceleration is not the same as when we have direct distribution. I was super glad to see that the product is very good. It is scaling up very fast. Usage by the retailers is very, very good, and they are very happy. The NPS is high. And one extra point coming from BEES in China is a little bit complicated to explain but I’ll try to put this in a simple way.

In China because of the 3-tier system of China that can be a 5-tier system is very complicated for CPGs to trace product and to have visibility throughout the route to market. Because we are integrating very well QR codes the wholesalers and BEES as a tool, we are doing a lot of geolocation, we are getting an unbelievable array of visibility through the network. And it can really now get even when we have more tiers in the route to market, the full visibility of the sales on a pack-by-pack basis. And of course, by doing that, we are integrating revenue management, promotional actives, our wholesaler and logistics network. So, I think that BEES will continue to scale very fast in China. Both wholesalers and retailers are very happy with the product and what we bring in terms of better data, quality data and visibility.

And I think that the effects in China will be pretty similar to other markets. We’ll see acceleration in sales, better trade programs, better integration with our marketing campaigns and more efficiency. It’s very effective and helps us big time.

Operator: Our next question comes from Brett Cooper with Consumer Edge.

Brett Cooper: I wanted to dig into your approach to managing the portfolio with respect to balancing the need to support the core versus innovation. And more specifically, innovations in more traditional beer like Brahma Duplo Malte have been successful, which we can see in the innovation contribution. But expansion in Beyond Beer has proven, I think, a bit harder with the Company being at the strategy of innovating and extending for a period of time. I was hoping you could share learnings from your work over the last several years and maybe how you balance efforts and investments on the core versus innovation, and if that process has changed at all? Thanks.

Michel Doukeris: Hey. Thank you for the question. I think that the first point is really a matter of and instead of and instead of or. So, I think that we need to be able to invest in the core and renovate, create excitement around our core brands. As you said, best-class work being done in Brazil for Brahma Duplo Malte. If you think about Cass in Korea, incredible results, Victoria and Modelo in Mexico doing extremely well. At the same time, because we know that we have penetration opportunities, and we can gather more consumers and be present in more occasions. We need to continue to innovate in this Beyond Beer space that offers us incredible opportunities for growth, especially with female consumers and sources a lot from liquor and from wine.

One of the key learnings, I can talk about this for a long time, but I — I’ll try to get to you the biggest learning that we had so far because of the timing the other questions that we’d like to talk about is really that when we create new brands that are catered to this consumer and to the occasions that we want to gain share, they work better in the long term. They start — is lower than when you extend brands from our core brands, but they build a much more sustainable model. And the learnings that we’ve been having on that — they go from Brutal Fruit in Africa to BEES in Brazil to what we’ve been seeing with Cutwater and NÃœTRL in North America from Canada and the U.S. And those brands, they are champions of the future that we are investing consistently to build.

It’s a very, very good way to expand the portfolio. It’s aggressive because they go outside of our core and they interact with new consumers, but is much more sustainable. And we’ve been doing things both ways, when we need to do something fast, using our core brands, extension lines, but we’ve been doing also creating new-to-the-world brands, and they are doing very well. And this is true in the physical world. I just gave you examples NÃœTRL, Brutal Fruit and it’s even more true in the digital space. For example, what we are doing in TaDa now in the direct-to-consumer ecosystem is a multi-country already born global brand. We’re are in 11 countries, expanding very quickly, is a very powerful value proposition to consumers, a brand that is being built at fast stellar pace.

And we are very happy with both examples, physical but also digital products that we are creating.

Operator: Our next question is coming from the line of Trevor Stirling with Bernstein.

Trevor Stirling: Two questions from my side, please. The first one, Michel, you highlighted that volumes are up almost 6% compared to 2019. I think by my calculations, revenues are up 24%, but margins are down — EBITDA margin is down about 600 bps. How much of that do you think you can get back? I appreciate there have been input cost pressures, transactional FX, negative operating leverage from COVID. But how much is it realistic to get back and over what time frame, especially since — guess, implicitly, you expect more margin compression in 2024? And the second question, maybe one more for Fernando. The underlying EPS is up 5%. The dividend is up 50%. Is that purely a function of where we are on the deleveraging curve?

Michel Doukeris: Let me take the first one here, and Fernando will take the second. We always talk about this and I always start the conversation around margins with two real statements. The first one is that we love our margin. We really like the fact that we have high margins because this brings us a lot of flexibility to invest as well as to navigate when situations are tougher. And the second one is that our margins, they exist for structural reasons, the power of brands that we have, premium brands that they command higher margins, the strength of positions that we have in key markets and the way that we operate our business in a very efficient way. And yes, I acknowledge what you said, the margins since €˜19. I think that we all saw a huge dislocation in terms of costs because of supply disruptions, because the way that things happen, but also because of inflation, that got worse with the situation last year in Europe and commodities going even higher.

And we’ve been balancing as much as we can, our ability to price correctly and having the category penetration and the growth of the category being prioritized. I think that — we talked about this before. As we look at 2023, with the visibility that we have today, the cost escalation is big but it’s smaller than what we saw in 2022. And on a percentage basis, it’s definitely smaller. And we continue to bring our prices up. So, what we did in the quarter four was a very important wave of prices and revenue management that will yield for us good benefits this year. And I think that things will accommodate with time. I can’t precisely tell you when and how much in a time frame, but we are very focused in continuing to drive the powerful brands, charge the premium price that they deserve and be efficient in the way that we do actives in the Company.

So therefore, we expect our margins to come back.

Fernando Tennenbaum: And hi Trevor, on your second question on dividends, on EPS and capital structure, I always like to take one step back and look at our business. We have a very good business that generates a large amount of cash flow in a very sustainable basis. So, it’s a very good business that consistently generates cash. Having said that, we need — once we have the excess cash for the business and just to quote a number, the free cash flow for 2022 was $8.5 billion. We need to decide what is the best way to allocate? And that’s what we call dynamic allocating our capital. We know that deleveraging creates value, and we know that 90% of the value of deleveraging happens when you get towards 3 times. So, while we were at a higher leverage, we focus most of the efforts towards deleveraging and very little towards other uses of capital.

Now, we are at 3.5%, we continue to use most of our resources towards deleveraging. You see how much our gross debt was reduced in the year 2022, but we already are dynamic allocating and increasing dividend. Still — it’s a sizable increase as a percentage. In absolute figures, we are still driving most of resources towards deleveraging. And the idea is that going forward, at any given moment, we see what is the combination that maximizes value-creation, that should be the main driver of our decision-making.

Operator: Our next question comes from the line of Pinar Ergun with Morgan Stanley.

Pinar Ergun: The first one is on marketing. We’re hearing from a range of consumer companies how they’re looking to increase their marketing spend in 2023. How do you think about that? And then, the second one is when you look at €˜23, which regions do you feel most bullish about in terms of volume development? Thank you.

Michel Doukeris: Hi Pinar, thank you for the questions, Michel here. On the first one, you know that we don’t give guidance by line, and we showed during the webcast here that we continue to invest, it’s close to $7 billion across all years since 2019. And there is a growth when you get 2019 to 2022 of roughly $400 million in organic terms. And our plans are to continue to invest behind these brands. They are great brands. We achieved last year, all-time high power of our portfolio, it’s the measurement that we have for favorite preference, whatever different companies call, we call power. And both brands they deserve good investments because they drive the growth that we want to have for the Company today. And in this journey from inorganic to organic, growth will be achieved by the quality of the sustainable growth of our brands.

But I think that more important than that is increasing investments with effectiveness. And our creative quality is as good as never been, recognized by Cannes, recognized by Effie. We were — not only creative but also effectiveness. And as we expand our digital products, both this and the DTC, we have this unique opportunity to combine data to do all to all, to activate campaigns in large scale as we did, for example, during FIFA World Cup in a very effective way. So, we are not only growing the amount of dollars that we are investing in the brands, but we are sweating these dollars much better than before with higher ROIs. And on the second question, I think that this is easy from our side to answer. I think that the market that we are more excited for the moment is China.

And in a nutshell, China was incredibly disrupted last year by series of lockdowns, open, close and people really losing opportunities to be social and to use our products. And based on what I saw on this trip last week in the market, I visited several places. I could see like restaurants with two hours waiting list on GivingThursday. I saw nightlife parks full of people and consumption resuming very quickly. I think that the market that we are more excited for 2023 is getting China to its full potential and giving our premium presence, the relevance of our brands there and how sizable China is, that can be a nice add-on to build on the momentum that we have across the globe.

Operator: Our next question is coming from the line of Rob Ottenstein with Evercore ISI.

Rob Ottenstein: Great. Thank you very much. And congratulations on the tremendous progress deleveraging and the dividend increase. Can you — kind of going back to a prior question, can you give us maybe a little bit more granularity on the major price increases that you took in Q4 in the major markets? Any — as much detail as possible would be great. And your sense of how well those are sticking, are competitors following? I mean, in most cases, you tend to lead. So, that’s an important dynamic. And then, I have a follow-up question for Fernando.

Michel Doukeris: Hey Robert. Good morning. Thanks for the question. I think that you already know that we don’t disclose much of this price by market and with details. But I think that the best way to answer this question is thinking about our policy of moving prices with inflation. And inflation, as you know, was slightly different on a market-by-market, but growing everywhere. And we had beer — beer total, not only BI behind but lagging behind inflation throughout most of the year, but catching up towards the end of the year. So I think that perhaps more interesting is to think about the positive carryover that this price will have for 2023, while 8%, give or take, during 2022 was above 11% in the quarter four. And we know that inflation is pointing down across most of the markets, but it’s still on a high level.

So, I think that we have a very good carryover. We were able to move these prices globally according to our plan and reorganize the plans as inflation was above what was originally planned. We see majority of the markets holding well, and we know that beer is a resilient category, it’s not immune to inflation and everything that happens, but it’s very resilient. I think that throughout the year, as you see salaries increasing and each and every country has a different agenda for that, right, from March, April, May, in some of the Latin American countries to more middle of the year in North America, in China, we will see their purchasing power coming back. And I think that the balance of volume and price would be very positive. On a relativity basis, historically, we see that the relativity is holding.

And in this very high inflation, high input costs the relativity tends to be good across the markets. We monitor this, of course, because we have to balance the prices that we have, the penetration of our brands and how the category is responding on a market to market. Too early to call more details. I hope that my answer was helpful to you. And I’m sure that we’ll be talking more about that as we go to quarter one to quarter two and then with much more details and information in our hands.

Rob Ottenstein: Great. Thank you. And then Fernando, I just want to push you a little bit on the capital allocation and this idea of the dynamic capital allocation. As you get to three turns and head towards, I think, the long-term goal of two turns, it’s striking to me that where the stock is valued today is on a multiple that is well below kind of transactions that everybody has done in the beer industry for the slowest growing businesses. And if you even put a multiple on your consensus estimates for EBITDA for €˜24 at the lowest valued kind of international transactions, you get a stock price of $100 or more. So it just seems remarkably cheap. I know you expect it to go higher as you delever. But if this disconnect continues, how do you think about the possibility of buying back stock when you get to three turns or less? And that’s something you haven’t historically done, but it’s a new world, and love to get your thoughts on that.

Fernando Tennenbaum: Hi Rob, thanks. It’s a good question, a long question, but a good question. I feel that we go back to the dynamic capital allocation, and what is the main goal of dynamic capital allocation. The main goal is to create value. That’s we’re aiming for at the end of the day. And in different moments of time, you are going to wait all the benefits of each one of the options. You mentioned buybacks. You are going to — of course, you have your model to see the value of ABI share. We have our own model. We’re going to always see the increased IRR versus the IRR of deleveraging versus the IRR of paying dividends versus the IRR of any M&A projects. And we are going to look at every moment in time, which composition is the one that maximizes value for ABI.

So, I think — I don’t have much more to share because I cannot give any guidance, but you can be assured that in any given moment in time, we’re going to be assessing all the different alternatives and seek the ones that maximize value.

Operator: The next question is coming from the line of Olivier Nicolai with Goldman Sachs.

Olivier Nicolai: Just two questions, please. First, if go back to the U.S., ABI is losing share within beer, but beer as a category is actually losing share against spirits, and that’s been the trend for some time. Now, what do you think the beer industry is missing when it comes to innovation or marketing or pricing relative to spirits to stop this trend? And second question, just on — Fernando, you’ve given guidance for the increase in accretion expense this year. But regarding your other financial results, they have increased by 50% to $1 billion. What should we expect for 2023 there? Thank you.

Michel Doukeris: Olivier, Michel here. First question is a tough one to answer. I think that there is a lot happening there at the same time. If you look, I think that — the best part of my answer is going to be, if you look at the last few weeks and what’s happening in the U.S. is beer responding much better, the biggest loser is wine, spirits continue to do well, but the majority of the growth is in ready-to-drinks. And in ready-to-drinks, actually, we are leading the pack, and we are much better positioned to grow the ready-to-drinks based on the footprint that we have, the network that we have. And this is part of our portfolio renovation. So, that’s why it’s so important for us to get premium correct, to get Michelob ULTRA to continue to expand and having NÃœTRL Cutwater and the other ready-to-drinks propositions that we have to grow.

I think that when you think about the main causes for spirits to be performing well in the U.S., has a lot to do with availability. So, several propositions in states, things that increase the availability and for some people questioning how big this can be and all the availability that was created, this it is the correct thing. And the second point, we see throughout the years, more on the affordable cheap side when you compare the spirits prices in the U.S. versus any other market globally, which is something that is interesting, not to say anything different. It’s quite affordable. But it’s good to see that in the last weeks and when you look one through three years compounded, beer is performing better than was performing before, year-to-date is gaining share of value and gaining share of throat.

And I think that innovation, quality of the products and the right alignment with the consumer long trend are the answer, yet a lot of work to be done.

Fernando Tennenbaum: And Olivier, on your second question on other financial results. You mentioned accretion expenses. This is the one that is more predictable, so we can give the outlook and provide the range. On the rest of other financial results, the most relevant line is the carry cost of the hedges. And carry cost of the hedges are a function of interest rate differential between different countries. And this one can float. That’s why we don’t provide too much of an outlook. But if you look at our major exposures, which we have available on our financial statements, and if you understand the carry cost differential, then you can make an educated guess, but acknowledging that interest rates may flow throughout the year and the number may be somewhat different.

Operator: Our final question will come from the line of Laurence Whyatt with Barclays.

Laurence Whyatt: Firstly, we saw a Winter World Cup in much of the Northern Hemisphere, but of course, it was the Summer World Cup for much of the Southern Hemisphere. We didn’t hear too much about any benefit from that over the last few months and the last quarter. Are there any geographies that took a real benefit? Do you see anything in Brazil or South America or Africa from that World Cup benefit? And then, secondly, we’ve seen a decline in a number of your input costs, and I understand you hedged generally on a 12-month basis. If you were to look at the current spot rates of those input costs, would they be below the current hedge rate for your 2023 COGS, i.e., would you expect 2024 input cost to be below the current level of 2023 hedges?

Michel Doukeris: Hey Laurence, it’s Michel here. I’ll take the first one and leave the second to Fernando. I think that you are not hearing me talk too much about that because it’s still depressing, Brazil lost. But all in all, FIFA was a great opportunity once again for us to activate our brands. And different geographies, they had different results. Of course, you can imagine that Argentina had extended party that never ended, went through December and parts of January, and some other countries, they run short and the interest was likely smaller. But I think that the benefit was great for the brands. So Budweiser had a hell of a run and very strong results in brand equity across the globe with the campaigns that we run. The interest for the sport, all-time high and huge excitement building up now for the next event that’s going to be Canada, U.S. and Mexico.

We activated our brand, especially digitally. We gained 500 million consumers more. So, there was an interesting way of seeing the power of integration of brand campaigns and our digital products, and we had a great volume of Budweiser in quarter four. The exception was China once again because of the lockdowns, very relevant Budweiser market for the — for Budweiser. So we saw that the Budweiser was not good, but outside China, very positive, especially in the places where we heavily activated the campaign.

Fernando Tennenbaum: And Laurence, on your question on input costs, it’s too early for us to start looking at this metric. We normally hedge 12 months out. So we are just starting to look at 2024. Probably more as the year goes by, we’re going to have a more relevant information that is more useful for us to start thinking about. So, too soon to make any comment on that.

Operator: 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.

Michel Doukeris: Thank you, Jesse. And thank you, everyone, for participating for the questions. I hope you are all doing well, and we wish you a great 2023. And we will get back, talk to you as we close quarter one. Thank you. Have a good one.

Operator: Thank you. This concludes today’s earnings conference call and webcast. Please disconnect your lines, and have a wonderful day.