Anheuser-Busch InBev SA/NV (NYSE:BUD) Q1 2024 Earnings Call Transcript

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And we saw that the industry was recovering through the quarter with the end of March being stronger and part of that was because there is a shift. And then the beginning of April had the tougher comps because Easter was in the first weeks of April last year. We saw that the weather as we go from winter to spring to summer has a big impact, of course, any change from winter to spring. And it’s a little bit of a late spring this year. So the weather was colder in April. So April in terms of volume was slightly worse than the quarter one. But I think it’s too early for us to call any deterioration at this moment because dollar-wise was pretty similar. And even we face all data sales to consumer, it still was on this range of minus 1.5 to 2, right?

So I think that’s too early to call quarter two based on April, while the biggest impact on the April was really the Easter shift.

Fernando Tennenbaum: Thank you. For sales and marketing, we don’t give any disclosure specifically on that or any guidance for the year. Everything that we do is comprised by this fourth week outlook. As Fernando was discussing before, so we’ve been extremely disciplined on all fixed cost, and we continue to apply this everyday efficiencies mindset, which is very important for us when you think about overhead and overall SG&A. That’s why we are growing less than inflation. While in the sales and marketing, we want to continue to drive growth by investing in our megabrands and in our mega platforms. So we have very strong activation opportunities throughout the year that will really, really make a difference for the category, and our brands will have the right investments so they can capitalize on all these investments that we have.

This investment, of course, is becoming ever more efficient because as we have the right portfolio, the right brands invest behind these brands have scale, and we can seize better performance from these investments and because we are now very digital, both in the sales to retailers, but in sales to consumers as well, we know that data is the place to mine for efficiencies. So we’ve been investing more, but in a more efficient way for growth while we continue to be extremely disciplined for all the fixed costs and the financial discipline is part of our company that we’ve been driving stronger, stronger every day. So thanks for the question.

Sarah Simon: Thanks.

Operator: Thank you. Our final questions will come from the line of Brett Cooper with Consumer Edge. Please proceed with your questions.

Brett Cooper: Thank you. A question and a follow-up on your DTC platforms, and I think it dovetails with what you were just talking about. But in the press release, you quote 18 million e-commerce orders globally, 16 million of those are in Brazil. So in the other 20 markets, you have 2 million orders. So can you just talk about the opportunity and headwinds to develop DTC in the non-Brazil markets? And then the follow-up is, is there some way to frame what the minimal level of development that you need in direct-to-consumer in the market to extract the data necessary to generate the majority of the benefits on optimizing your decisions in developing the category in your business or maybe how many of those 20 markets you’ve gotten to that level of scale? Thanks.

Michel Doukeris: Hi, Brett, Michel here. Thanks for the question. I will address both of the questions. I think that they are very interesting questions, and they give a good opportunity for us to talk about this direct-to-consumer and the link to inside. So as many of our initiatives, given the global footprint that we have, we tend to get our ideas around what we want to develop, choose, select one market, implement the programs, in this case, product, which is our direct-to-consumer product that’s called Zé Delivery in Brazil. And of course, for a period of time, we need to perfect the model and build the scale. So, today, that delivery has a meaningful scale in Brazil, both in number of orders as you were talking. But in terms of number of consumers reach an ever percentage of our volume that goes through direct to consumers in Brazil.

When you think about that, to give an example that links to your second question, if you think about the way that we do consumer sites and consumer groups to validate an idea, you, of course, can fit 20, 30 people on the consumer group. And if you do 10 of these groups, we’re going to cover 250 to 300 people. Today, with that delivery, we validate ideas with 10,000 surveys with our consumers in a matter of minutes or we can digitally test ideas on a database of millions of consumers and understand real behavior like purchase behavior rather than just declared behavior. So, when you get the scale that we have with Ze Delivery in Brazil today, the insights that we have, the ability to test ideas, the ability to survey behavior response to what we are doing, the innovation, promotions in this proportion, it is disproportionately bigger.

And then now we are scaling the product. So the tech product that we developed we are scaling in 20 new countries under the brand TaDa. And the reason why we are doing TaDa we discussed before is because TaDa brings for the Hispanic language countries and the English speaking countries are easier concept and a very broad concept that brings some magic to the category and to these important meaningful moments that you are at home because the value proposition of Ze, TaDa is beer called at home in 30 minutes. So, the magic of doing this. And we are scaling the platform, of course, as any other product that is adoption. Some countries are moving very quick in terms of adoption. An example we saw in the market in Mexico, but many other countries are following a similar adoption curve as we had for in Brazil.

The difference is that Ze in the market in Brazil for over two years now, while TaDa is completing first anniversary in most of the markets that we have. In terms of the scale, let’s say that once you get above 1% of your sales, you already have meaningful data that you can use as long as you have all the intelligence behind and the product is well delivered for that, which, in our case, the products and strength. And in Brazil, we are a multiple of this scale. So, the data is already very good, and we are using to develop brands and to develop special occasions in Brazil, so we can already activate big amount of consumers to develop occasions. And in the other countries, we are expanding reach building scale, but the data is already confirming to be very good data for us to work in all markets.

So, thank you for the question, and thank you for the opportunity.

Operator: Thank you. These were the final questions. If your questions have 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: So thank you, everyone. Thanks for your time today for the ongoing partnership and support for our business. Stay safe and well, and we’ll talk soon. Thank you.

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

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