Anheuser-Busch InBev Q3 2026 Earnings Call Transcript

Anheuser-Busch InBev (NYSE:BUD) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Anheuser-Busch InBev reported a 4.9% increase in revenue and a 22% rise in underlying EPS to $1.21 for Q3 2026, driven by consistent strategy execution and strong global market share growth.

The company achieved record high volumes in 15 markets, including Colombia, Peru, and South Africa, despite flattish beer volumes due to a challenging industry environment in China.

An interim dividend of €40 cents per share was approved, reflecting increased capital allocation flexibility and a strong balance sheet.

Strategic initiatives included increased investments in mega platforms and digital marketplaces, with GMV rising 45% to $1.4 billion, and continued focus on premiumization and non-alcohol beer growth.

Management highlighted strong performance in North America and Middle Americas, with market share gains in key regions, while acknowledging challenges in China due to adverse weather and economic conditions.

Full Transcript

OPERATOR

Welcome to Anheuser-Busch InBev’s third quarter 2026 earnings conference call and webcast. Hosting the call today from Anheuser-Busch 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 Anheuser-Busch 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.

At this time all participants have been placed in listen-only mode and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing two. If you should require operator assistance, please press zero. 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 Anheuser-Busch 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 Anheuser-Busch 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. Anheuser-Busch 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 begin.

Michel Doukeris (Chief Executive Officer)

Thank you and welcome everyone to our third 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 will be happy to answer your questions. Let’s start with the key highlights. The momentum of our business continued in the third quarter. Consistent execution of our strategy enabled us to deliver solid top and bottom line performance while investing in our brands and capabilities to fuel future growth.

Volumes grew for a third consecutive quarter with market share growth globally and record high third quarter volumes in 15 markets including Colombia, Peru, Ecuador, South Africa, India and Dominican Republic amongst others. Revenue increased by 4.9% with solid revenue per hectoliter growth of 4.2%. Underlying EPS increased by 22% to reach $1.21. We stepped up sales and marketing investments to activate key mega platforms this quarter, strengthening our brand power and supporting increased participation with our portfolio.

Our performance was driven by our replicable growth drivers with continued momentum across our mega brands, non-alcohol beer and beyond beer; these marketplaces continued to scale with GMV increasing by 45% to reach $1.4 billion. Given our strong balance sheet and increased capital allocation flexibility, the board has approved an interim dividend of €40 cents per share. Turning to our operating performance, total volumes grew by 0.4% in the third quarter led by growth in our soft drinks business. Beer volumes were flattish as growth in two-thirds of our markets was offset by a challenging industry in China. Our best-in-class revenue management capabilities, combined with positive mix contribution from our mega brands, delivered a revenue per hectoliter increase of 4.2%. EBITDA increased by 3.9% with flattish margins as higher sales and marketing investments and commodity headwinds were partially offset by disciplined revenue and cost management.

U.S. dollar EBITDA increased by 6.5% in the third quarter and by 10% year to date. EBITDA increased by 6% and underlying EPS grew by 22%. As we continue to optimize the business and drove operating leverage through the P&L, our geographic footprint and global scale continue to enable us to deliver consistent results across different operating environments. Our footprint is both well diversified and balanced with around 70% of our EBITDA generated in emerging and developing markets.

We are well positioned to capture future industry growth with a mix of currencies. Now let’s review our key regional highlights starting with North America. In the U.S. our portfolio momentum continued with share gains in both beer and beyond beer. We have gained share of total alcohol for 10 consecutive quarters and are the number one share gainer year to date. Our beer performance was led by Michelob ULTRA and Busch Light, which were the top two volume share gainers in the industry. Our Beyond Beer portfolio continued to expand our total addressable market and delivered revenue growth in the low teens, led by Cutwater and NÜTRL.

Now let’s turn to Middle Americas. In Mexico, market share gains and margin expansion drove mid single-digit volume growth and double-digit bottom line growth. We grew revenue in mainstream, premium, non-alcohol beer and beyond beer and continue to increase our portfolio brand power. In Colombia, record high third quarter volumes drove double-digit top and bottom line growth. Volume and revenue grew across all price segments, with our portfolio gaining share of alcoholic beverages.

In Brazil, market share momentum and volume growth drove a mid single-digit top and bottom line increase. Our premium and super premium beer portfolio led our performance and delivered high teens volume growth, strengthening our leadership position in the segment. In Europe, market share gains and premiumization drove continued top line growth. Volumes were flat; we are estimated to have gained or maintained share in the majority of our key markets, with our performance driven by our mega brands and non-alcohol beer. In South Africa, record high volumes and premiumization drove high single-digit top line growth. Our premium beer portfolio led our performance, delivering mid-teens volume growth.

Now moving to APAC. In China, revenue and volumes declined by 16.8% as we underperformed a challenging industry. We estimate the industry declined by low teens in our footprint, impacted by abnormal weather and continued weakness in the on-premise channel. While our overall results remained below potential, we made progress in areas of strategic focus. We continued to invest in our mega brands, innovations and strengthen our portfolio brand power.

Our in-home channel market share trend improved versus last year, supported by continued momentum in our core plus and super premium brands and growth in the O2O channel. There is more work to do and we are investing to improve our execution and rebalance our portfolio towards growing segments, channels and geographies. Let’s now turn to our strategic pillars, starting with lead and grow the category. Our mega brands continue to drive profitable growth across our markets with net revenue increasing by 7.7% during the quarter. Corona continued to drive premiumization, growing revenue by 20% outside of Mexico and growing volumes by double digits in 37 markets. The combination of our mega brands and platforms is a powerful opportunity to connect with consumers through key moments of culture and celebration.

Following successful activations in the first nine months of the year, we have a strong lineup for quarter four and into 2027. These mega platforms, including our partnerships with Live Nation and Netflix, are placing beer and our brands at the center of culturally relevant moments for consumers. Our strategic investments strengthened the connection with consumers and supported a continued increase in our portfolio brand power. Consistent execution of our category expansion levers drove increased consumer participation with our portfolio this quarter, with growth across our core, premium, balanced choices and beyond beer brands.

In non-alcohol beer, our portfolio outperformed the industry and delivered a 35% revenue increase led by Corona Cero and Michelob ULTRA Zero. With an estimated 60% of the volume coming from new occasions and new consumers, non-alcohol beer is an opportunity to develop the category and drive incremental volume growth. Let’s now turn to our second strategic pillar, digitize and monetize our ecosystem. In the third quarter this captured $15.9 billion in gross merchandise value, a 12% increase versus last year. BEES marketplace continued to scale with GMV from third party products increasing by 45% versus last year to reach $1.4 billion. Our digital D2C business is growing and enabling us to further monetize our ecosystem. Our digital platforms served 13 million consumers and generated $158 million in revenue.

We are also commercializing third party products on our D2C platforms and now have a growing marketplace with annualized GMV of $200 million. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Fernando Tennenbaum (Chief Financial Officer)

Thank you, Michel. I’ll take a few minutes to discuss the progress we have made on three areas in optimizing our superior profitability, compounding EPS growth and increased capital allocation flexibility. Let’s start with superior profitability. Our margins are best-in-class, reflecting the fundamental strengths of our business: our brands, scale, leadership positions, efficient operating model and ownership culture. Disciplined revenue and cost management enabled us to offset commodity cost headwinds and maintain our margins while stepping up investment in key mega platforms. This year, over the last 12 months, we have invested $8.1 billion in sales and marketing to support our growth priorities as we move into the next phase of our strategy.

While each year has unique dynamics, we are confident we have opportunities for further margin expansion over time. Moving on to EPS. Top line growth, effective cost management and the continued optimization of our business drove constant currency EPS growth of 13.9%. With translational FX tailwinds, EPS increased by 22.4% to reach $1.21 per share. We have a strong balance sheet given the proactive management of our bond portfolio. Our last 12 months free cash flow is greater than any of our annual bond maturities, putting us in a position where we have no relevant refinancing needs. 90% of our debt is fixed rate with an average coupon of around 4%, and there are no financial covenants on our bonds. Given the strength of our balance sheet and free cash flow generation, we have increased flexibility on our capital allocation choices.

The objective of our capital allocation framework is to maximize value creation for our shareholders. Consistent with our ambition for a progressive dividend over time, we have announced an interim dividend of €40 cents per share compared to an interim dividend of €15 cents per share last year. We also continue to execute on the 24-month $6 billion share buyback program announced last year, and to date we have repurchased $2.6 billion of shares. Looking ahead, the strength of our ownership culture and execution, together with our best-in-class brands and solid year-to-date results, reinforce our confidence in our ability to deliver our 2026 outlook.

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

Michel Doukeris (Chief Executive Officer)

Thanks, Fernando. Before opening for Q&A, let me recap on our performance this quarter and the opportunities we have ahead of us. Our continued momentum reflects the resilience of our strategy and our ability to deliver reliable, compounding growth across different operating environments. We continue to invest to strengthen our capabilities and brand power to lead and grow the category. Revenue grew by 4.9% with continued volume growth and a revenue per hectoliter increase of 4.2%.

Underlying EPS momentum continued, increasing by 22% in both the third quarter and year to date. With our strong balance sheet and increased capital allocation flexibility, we announced an interim dividend of €40 cents per share. As we progress to the next phase of our strategy, we are well positioned to deliver superior value creation. With that, I’ll hand it back to the operator for the Q&A.

OPERATOR

Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. Again, if you have a question or comment, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. We do ask that while you pose your question, you pick up your handset to provide optimal sound quality. Thank you.

Our first questions are coming from Edward Mundy with Jefferies. Please proceed with your questions.

Edward Mundy (Analyst at Jefferies)

Morning, Michel, Fernando. So my first question is a pretty big picture question if that’s okay. So in 2026 you’ve got a pretty healthy balance between volumes, price and mix and the replicable growth drivers are clearly working. I’m not looking for explicit guidance for 2027, but how are you thinking about those three buckets going into next year, especially as there’s a bit more commodity pressure creeping in? And then my follow-up question is really around non-alcohol, which accelerated in the quarter. What is it, do you think, you’re doing differently relative to your peers that’s driving this outperformance? And do you really feel like you’re at the tipping point now where zero alcohol can really scale and become a meaningful growth engine?

Michel Doukeris (Chief Executive Officer)

Morning, Eddie. Michel here. How are you doing? So two questions there. I think that they interconnect in a way. But I think you mentioned, and just to reinforce, that we are not providing any guidance so far for 2027. During the capital markets day we talked about this midterm outlook evolving from EBITDA 4 to 8 to become EBIT 5 to 9. As we now get into what we call the second phase of our 10-year plan and as we look at the components of the results this year, year to date, now nine months gone, volume is growing, very healthy net revenue per hectoliter. Of course it comes from two different areas. We’ve been pricing, as we always do, in line with inflation, and our revenue management capabilities, which we discussed during the capital markets day, are something that we are investing a lot in.

They continue to evolve and, due to the strong brands that we have and the capabilities that we have, we are topping up what we put in terms of price with very healthy mix. That’s coming from premiumization, right pack price strategy, and also from the growth engines that we refer to because non-alcohol is at the premium margins for us, ready-to-drink beverages, higher price per hectoliter, incremental net revenue there. And we continue, of course, in a very detailed way using all the tech capabilities that we have to optimize the way that we promote, discount, and go to market.

So as we look forward, this type of algorithm, which is volume, healthy net revenue per hectoliter gains in mix, optimization of the cost lines, and the right growth engines, is what we anticipate will drive our momentum moving forward on the non-alcohol. I think that we’ve been investing in this now for five years and we’ve been very clear on why we are investing. The reason is because it brings new consumers to the category, and we are seeing today participation for our overall portfolio growing globally across the vast majority of the markets.

It brings new occasions because it’s very flexible as a liquid. It can be during the day, during the night, weekend, weekday, and covers a very wide range of consumers from LDAs to adults that want to continue to enjoy beer but want to try in some occasions non-alcohol beer. And what we are doing, I think, is investing in the right brands and platforms. You remember we made a massive investment with the Olympics. Our technology for the liquids is a huge breakthrough.

So today the taste and the quality of the liquids that we are putting in the market is second to none and the best that we have had so far. But we don’t stop investing in fine-tuning the technology and improving taste and quality. And this, of course, is getting traction. It used to be less than 1% of our business; today it’s more than one and a half, approaching 2% on the run rate. And the growth rates are very good across the globe, double digits in most every market.

We are taking leadership in the segment in many markets but now it’s stretching this leadership up, and we see this continue to grow. It’s very early stage. We’ll continue to see more coming there. I think that the third component on this question on the same lines is how we are leveraging the business beyond this growth. You just saw the EPS growth of 22%. I think that Fernando can add a little bit on that because optimizing the business is also a component on how these strategies are coming to life.

Fernando Tennenbaum (Chief Financial Officer)

Thank you, Michel. Ed, you mentioned volume, price and mix. At the end of the day it’s all connected. We are investing more into our business. You saw sales and marketing, we’re investing behind the mega platforms, and doing all of that while managing to maintain the EBITDA margins. And then when you start going below the line, kind of all the things that we’ve been doing — this, for example, you are improving cash flow, improving cash flow. You have a higher average cash balance on your bank accounts.

You have better interest income that helps net interest income. Some of the different mix of countries that are performing — we see the Americas’ very strong performance. Just to give some countries like Peru or Colombia, they are bigger than China today and they come with a higher EBITDA margin and very good profitability. So when you start adding all these components, we make sure that we are investing enough to support the strategy. Top line is in a healthy place. It is in a healthy place because we’re investing behind our brands. And then you have a lot of leverage through your P&L. Then you can deliver a solid EPS. Of course this year you had some tailwinds from FX on your EPS. But even without the FX we are growing at 13.9% at constant currency, which tells all the efforts that we are doing to optimize our business.

And then again we see opportunities to do more as we continue to deliver, as we continue to fertilize our business. Thank you, Ed.

OPERATOR

Thank you. Our next question has come from the line of Sanjeet Aujla with UBS. Please proceed with your question.

Sanjeet Aujla (Analyst at UBS)

Hey Michel, Fernando, a couple from me please. I’d like to dig into China a little bit. I think on the call, Michel, you referenced the category downtrends in your footprint. Can you help us disaggregate how much of that is weather-related versus underlying consumer? And do you think destocking will be done by the end of this fiscal year? That’s my first question. My second question is on the strength of Middle Americas. You saw a nice acceleration there in Q3. I think the whole region is on track to deliver the strongest volume growth outside of COVID in the last decade. And so I’m just trying to understand how material is the World Cup impact there in the quarter versus what’s an underlying strong consumer backdrop. Thanks.

Michel Doukeris (Chief Executive Officer)

Morning, Sanjeet. Thanks for the question. Two very different parts of the world there in terms of not only geography, but momentum for the category and for our business. I will start with China. And when you look at the results in China, one can take this in a way that’s very hard to understand, like volume down 16%. But when you dig into the numbers — and we have several sources to check these numbers in China, and we always say that the sources do not align 100% always — you have production, you have production reported by the companies, which is different from the Statistics Bureau, and you have Nielsen.

And I think that they all converge in quarter three to an industry that is high single digits down at national average, so depending on the source, between 8% and 9% down for the industry. When you take this industry on our footprint — because, again, we are more in the East Coast of China, expanding inland in a faster way now but still very concentrated — we were very exposed to all this incredibly bad weather that landed in China and in the region over the summer. So our footprint, considering the channels, geographies and the overall industry, was north of 10% down. So in this context, our performance, if you look through the quarters, just as an example, quarter one the industry was flattish.

It was not too different in quarter three than what it was in quarter one. In relative terms, performance — if you go to the share — was actually better because we started the year with a negative market share, one point, one point something down, and this share is getting closer to zero as we go through the months and was below half percent in quarter three. So the actions that we have in place in China in innovation, the investments that we’re making on the key brands — being on the brand, equity power is growing — but also in distribution.

Distribution is in good place, evolving. They are working. We are growing in the O2O channel. We are growing with the key innovations that we did in brands and packs. But the industry was really the big deal. And you are right on your question because, take any market of ours where you have wholesalers — more than one tier like China — and the retailers after the wholesalers. When you get in the summer a 10% industry down, you are confronted with a choice that is not easy many times, which is you either leave your channels stuffed and then with too much inventory as you head towards the winter on an industry that is very negative, or you need to adjust your inventories, and a drop in the industry like 10% will push you to get inventories two to three days down in a month.

You know that this is another big component on your shipments, which is after all what we report. So majority of the decline in China was industry- and inventories-driven, while we continue to underperform in sales to consumers this industry that was very negative. I don’t see a reason that is consumer-driven for these industries to be too bad in China. Again, you go through the quarters: quarter one was [flattish], quarter two was less than mid-single digits down — like between two and four depending on the source — and then in the third quarter we saw this big deceleration.

We need to look more into the fourth quarter now and the comps are easier because, after all, it’s hard to believe that something like this will repeat itself. And we will need to continue to make the right investments and continue to make progress there on what we want to do. Inventory is a moving target because if the industry is up then you have, of course, a benefit on your inventory. If the industry is moving down as you saw in the third quarter, you need to adjust anyway.

But we are planning and we work very hard to get to the end of this year with normal inventories in China. That’s our objective so we can have a more clean cut in everything that we do for next year. When you think about Middle Americas, I think this is just fantastic performance. We hosted our capital markets day three years ago so we could give you a picture of how relevant this industry is and how exciting the opportunities that we had ahead of us were in March. And I’m really happy to see how these opportunities are becoming not only reality, but the materiality of these opportunities is becoming even bigger than what we shared over there.

So I think that the team in Middle Americas, together with Jean Jerry, are doing a fantastic job. We saw participation growth across all the markets. We saw industry growth. The underlying trends that are driving that, such as the economy, the health of the consumer, the LDA population, all playing in our favor. And this was boosted by very good weather. You remember that we talked a lot about the bad weather last year in March, so this year was the opposite of that — we had some tailwinds coming from the comps and the weather.

Gaining share across the majority of the markets where we have space in the beer share and gaining share of total alcoholic beverages in the markets where our share in beer is very high. So the beer category is moving ahead of the other categories. What’s driving that? Very consistent efficiency of our strategy. All the growth levers — in non-alcohol, beyond beer, premium — are growing well ahead of the industry and the growth was broad-based. So, in an interesting way, the overall consumer environment in this region is better than the average at the global level. Inflation is moving in the opposite direction from what we see across the globe, especially in Europe, Asia and North America. And this is bringing a little bit more affordability to the category when you compare disposable income to the prices that are moving with inflation. And this is all supportive to the underlying momentum that we see in both the category and our brands.

Thank you, Sanjeet.

OPERATOR

Thank you. Our next questions come from the line of Andrea Pisaki with Bank of America. Please proceed with your question.

Andreas (Analyst)

Yes, thank you. Hi Michel and hi Fernando. My first question is on Brazil, please, where the industry, I think you said, grew mid-single digit in sell-out based on Nielsen and you gained share; your beer volume was up half a percent. So could you possibly help us bridge the gap here between sell-in and sell-out? And with the comps becoming a bit more demanding going forward, how do you see the consumer and the industry environment evolving over the next few quarters, with the elections also now behind?

And then I’ll have a follow-up question for Fernando on the dividend, which you obviously increased, the interim dividend, quite meaningfully. As you said previously, I think you’d indicated that dividend increases would likely be relatively gradual over time. So should we see today’s increase mainly as a rebalancing between interim and final dividend, or does a stronger balance sheet give you—you say it gives you more options—but does it give you scope to accelerate the increase in the overall payout?

Fernando Tennenbaum (Chief Financial Officer)

Hi Andreas, Fernando here. Let me start with your second question and then I’ll move to Michel. So on the dividend, we said before that we have this ambition to grow for a progressive dividend over time. We also said that our cash flow is skewed towards the second half of the year. So you’re right. With the strong balance sheet now, we have increased capital allocation flexibility. So as business performing, you see our EPS continues to perform. We announced this interim dividend, which is $0.40, €40 cents, which compares to €15 cents in 2025.

And I think this is, at the end of the day, consistent with our stated ambition of a progressive dividend over time. And on Brazil, I think that it is not that complicated to triangulate the numbers, but of course it demands clarification on the sources and how we look at each of these components. Right. So you have, in Brazil, the supply data—let’s say what goes out of production in the breweries. And when you look at this data, in the year to date we are gaining share and the industry is performing relatively well, and then I’m not using the comps of last year here, but the year only.

When you look at the sales-to-consumer data, Nielsen, the industry on the quarter was also relatively good, perhaps one would say under expectations versus the comps last year. But the weather that impacted Brazil last year was not really much better this year. And the economic situation in Brazil is still resilient, but is not one, at least in the middle of the year, that was supportive for the overall consumer and consumption power. And in this environment, the difference between production shipments and sales to consumer is the way that people ship and control inventories through the channels and the comps when you look at all of that. So the underlying demand for the brands and the market share in the different sources is positive, is being driven by our premium brands that are growing well ahead of the industry, but a very strong performance from the balanced choices portfolio that we have and the core, and the market share is healthy.

Nielsen and production data also have a mismatch in terms of when you do the cut for the data. Right. So a little bit of the news in quarter three data is skewed towards the World Cup period and therefore in production will be more second quarter than third quarter. But at the end of the day, when you look at the accumulated of the nine months and the cut only of the quarter three sales to consumer, they are both very healthy. I think that as we look to the fourth quarter in Brazil, we will see a little bit of the consumer environment, on your question, improving, because you are aware that we had elections this year in Brazil, October, right at the first month of quarter four. And usually during this period there is more money into the economy, so people see that some of the adjustments in the salaries, in the benefits that go to the overall population.

And we are now phasing from the winter period towards the summer in Brazil, where, if all the forecast is correct, we’re going to have a little bit of the bounce back from the El Niño that was more on the negative side from half year last year to half year this year, and that should be a little bit of an inversion. Now as we go to the summer in Brazil, it’s going to be a little bit hotter, it’s going to be drier. We will see a little bit of better weather to the big regions in Brazil, especially Southeast and the Northeast region in Brazil.

That should benefit our industry from better weather than what we saw last year. So after that then we need to see how the year ends and the next year starts to then measure how the consumer environment will be for next year. But this is for quarter three and what we are seeing as we phase from quarter three to quarter four. Thank you.

OPERATOR

Thank you. Our next question has come from the line of Robert Ottenstein with Evercore ISI. Please proceed with your questions.

Robert Ottenstein (Analyst at Evercore ISI)

Great. Thank you very much. My first question is on the cost outlook. You know, it’s changed a lot since the beginning of the year, so I was wondering if you could touch on the incremental pressures that you’re seeing going into Q4 and ’27, and how comfortable are you that you have operating levers to deal with that environment and still hit your medium-term guidance? Maybe touch on what actions you’re doing now to meet those challenges. So that’s the first question.

The second question, a little bit longer term, is fairly recently you’ve added Michelob Ultra to your global brands, and I’d love to get a sense of a little bit more detail on the strategy there, what kind of traction you’re seeing, and reasons to believe that Michelob Ultra deserves to be a global brand and can make a meaningful difference to the top line longer term. Thank you.

Fernando Tennenbaum (Chief Financial Officer)

Hi Rob, Fernando here. I’m going to take the first question. If you recall, in the beginning of the year we said that we are always fully hedged on the things that we can hedge. There are things that we cannot hedge, and we said that costs were more skewed towards the first half than the second. Then, on our update on the last earnings call, we said that the non-hedged piece, we saw some further pressure. So our expectation is for the cost to be more balanced between half one and half two, and I think this still stands.

So we are seeing—and this is what you saw in Q3—that costs were more balanced between half one and half two. Having said that, we’ve been proactive in our revenue and cost management agenda to make sure we balance and improve stability, and I think Q3 clearly shows that. When we look for next year, we’re not providing any guidance or any outlook so far, but if you look at the current market prices and, knowing that we have this 12-month hedging policy, we are pretty much—not 100%, but almost—fully hedged for next year. You have some sort of visibility, and it’s looking like more of a normal year—more to be updated when we have the final hedge—but it’s looking more like another normal year.

With the efforts that we have in revenue management and cost management, we should be able once again to continue consistently delivering. We don’t have an outlook for next year yet. We are going to disclose the outlook for next year during our full-year earnings in February, but so far looking more like another normal year.

Michel Doukeris (Chief Executive Officer)

Robert, good morning. Michel here. On your question on the global brands strategy, and more specifically Ultra playing a role here: I think that one of the main things that we are doing—and we communicated a lot during the capital markets day—is this idea of consistent compounding growth today while investing for the future. And we are investing in very specific platforms that we call growth levers that are aligned with the consumer trends that we see that are both relevant but also global trends.

And one of these trends is what we call balanced choices. So consumers that love the category, that love the experiences around beer and want to do this regularly, more often, consistently, but they want to balance this with other choices and activities that they have in this area. Our portfolio has been growing way ahead of what we are growing on average or the industry is growing. And this idea of low calories, low carbs, low sugar and, in some cases, as we said before, non-alcohol beers—they are leading this trend and reshaping, in a way, the way that the category interacts with consumers and the way that consumers see our category. Because after all, beer is very social, very enjoyable, refreshing, and when you adapt the process and the formulation, you end up having less sugar, less calories, less carbs, less alcohol than other competing categories.

And in this sense, Michelob Ultra is the most successful brand that we have in this portfolio. We don’t need to talk here about the momentum in the U.S. and how the brand became the number one brand, the fastest growing. We started the expansion where it was very logical—Canada, Mexico. But we saw an unbelievable opportunity to invest and align this with our mega platforms during the FIFA World Cup, and we made the push for the Americas. So if you look at the quarter three, 60% of all the growth that the brand had globally came from outside of the U.S. During the World Cup, we said it was 40%; this quarter it was 60%, which shows an acceleration and a long-term legacy that this investment will leave to the company. Because the brand across all markets outside the U.S. is either core-plus, as it is in the U.S., or it is even premium. So it’s even more profitable on a relative basis than the price positioning that we have here. And the momentum is huge. So you look at markets like Brazil, Argentina, Colombia, Mexico—the brand is doing very well and accelerating, and we are very confident that it is the right positioning, it is the right liquid, it has the right platforms.

So you just connected now FIFA with NBA that Michelob Ultra sponsors, so you can talk about the benefits and the key assets of the brand year-long. So it’s a great brand right at the center of a megatrend that is global for consumers. We are expanding now through the Americas. This is working very well, and we will continue to do, in a very organized and disciplined way, the extension and the investments to grow this brand further. It is very incremental for our portfolio.

Thank you for the question.

OPERATOR

Thank you. Our next questions come from the line of Mitch Collette with Deutsche Bank. Please proceed with your questions.

Mitch Collette (Analyst at Deutsche Bank)

Hi Michel. Hi Fernando. My first question is for Fernando, I think. So, Fernando, at the Q2 stage you talked about a relatively balanced year in terms of EBITDA growth from 18 to 28. Is that still your expectation with just one quarter to go? Because it implies a step up in Q4. And can you talk about the puts and takes as you see it for Q4? I appreciate you just said that you expect COGS to be reasonably balanced. And then my second question is a broader question on pricing. One of your bigger competitors yesterday talked about taking pricing below CPI. I’m conscious that you just said that it’s going to be a relatively normal year for COGS. But Anheuser-Busch InBev has always aimed for pricing to be roughly at CPI. Are you seeing any change in the industry pricing environment? Thank you.

Fernando Tennenbaum (Chief Financial Officer)

Hi Mitch, Fernando here, just repeating what we said in Q1. We said that this year would be more or less balanced between first half and second half. I think given what we are looking, the market still holds, kind of. Of course we have puts and takes. But again, business is resilient, kind of. We continue to be proactive in revenue management and cost management. So it still holds.

Michel Doukeris (Chief Executive Officer)

Hey Mitch, Michel here. On the pricing part, I think that first and foremost we stated this before and there’s no change on our view that we price in line with CPI on average. And we do this every year with a very simple calendar across the countries. And when we do that, we are always assessing, as I always say, the different realities across markets because we want to price with the right discipline and carefully balance the consumer environment, the competitive environment and the ability that our brands have to charge a higher price or a premium price in each and every market.

We discussed a lot during the capital markets day how much we are investing in capabilities, best-in-class capabilities. And one of these capabilities is revenue management. So I could talk about this, but I think that the results, they speak louder than that. If you look at the year to date, revenue per hectoliter is up 4.3%. If you look at the quarter it was up 4.2%. We said that a portion of that is coming from healthy mix, which is part of our revenue management agenda.

But the price part is robust and is earned. Given the quality and the investments we are making on our brands, they continue to grow participation, they continue to grow power. And of course because of that we earn the right for the premium price that we have in the markets, but also to follow inflation. While of course not talking specifically about any competitor, the industry overall tends to price around inflation. And I have said before, still the reality, if you look pre-COVID to post-COVID, the industry took a lot of costs and did not price it all into the price to consumer. So the margins are not where they used to be or should be if you just go back to before COVID. So it would be, I think, a little bit different to believe that the industry overall will continue to take more costs without passing on prices.

But of course, for you to be able to keep up with inflation, you need to have the right capabilities and in this case revenue management capabilities. You need to have healthy brands and you need to have these brands performing and those two things, they come only with quality management and teams that have the experience and the ability to manage the brands and the business that they have. So I can’t comment on the capabilities and the management teams of any other competitor, but we are very confident on what we are doing at Anheuser-Busch InBev.

So we’re going to keep up with our policy.

OPERATOR

Thank you. Our next question has come from the line of Lawrence Wyatt with Barclays. Please proceed with your questions.

Lawrence Wyatt (Analyst at Barclays)

Hi Michel and Fernando, thanks very much. A couple of questions for me as well, please. Firstly, you’ve had BeatBox for nearly a year now and so I just wanted to check in on the progress against your expectations when you acquired that brand, how it’s fitted into your wider portfolio of the Beyond Beer portfolio and whether you think that portfolio is now sufficiently diverse to be able to deal with a continued growth in the Beyond Beer space, particularly in the US but also in other markets.

And then secondly, I guess a bit more technical for Fernando. Just noticed that SG&A line in Asia Pacific was quite a bit lower as a percent of sales in this quarter. Wondering if you could just give any explanations. Of course, that division, a few challenges this quarter. Is there any specific reason why the SG&A line was quite a bit lower? Thank you very much.

Michel Doukeris (Chief Executive Officer)

Hey Lawrence, Michel here. Thanks for the question. BeatBox, if you would like, follow how we do the integrations of the other brands, being Cutwater, NÜTRL and now BeatBox. After the acquisition we always partner big time with the founders. They often stay in the business for many years with us. And the idea of the year one of any integration is really a learning experience. And we get together with the founders, we learn about the brand, we learn about the operations, we organize with them the integration of the key areas and we plan for what we call the year two, full integration of the commercial plans.

So BeatBox is going through the year one of the integration and next year is the year where it’s going to be fully integrated on the commercial plans, on the sell and resets with retailers and probably will take the stage in the US on our meeting with our wholesalers, our SAMCOM, we call, and it’s gonna for sure have a big push from the team because we have opportunities in distribution, household penetration, innovation and probably pack and price that will be integrated into the commercial plans.

So I think that’s going to be a good addition for next year. The integration so far is doing well, no surprises and the contribution that we are looking forward for next year is the big thing. I think that when you combine the portfolio that we have today in the U.S. in Beyond Beer, it’s a fantastic portfolio that will allow us to interact with a broad base group of consumers, cover very well channels and occasions and because of that we are very optimistic about continuing to grow and further strengthen our position on this segment.

On Asia here between Fernando and I. Please add on, Fernando, if you want, but a lot of our expenses in SG&A in Asia are variable with volumes. So we’ve been, of course, because of the industry performance, adjusting this through the quarter and I think that is just linked to the overall industry performance because the expenses, they follow in a way how much we sell, ship and execute on the channels.

Fernando Tennenbaum (Chief Financial Officer)

Yeah, just to add. And on top of that there is always the ongoing overhead management that we always do, try to be more efficient. But it was mostly driven by sales and marketing.

OPERATOR

Thank you. Our final questions will come from the line of Olivier Nicolai with Goldman Sachs. Please proceed with your questions.

Olivier Nicolai (Analyst at Goldman Sachs)

Hi, good morning. Michel, Fernando and Sean, got a follow up and a question. But before I start I was just wondering what was the mix component within revenue per hectoliter in China? Is it similar to the 1% you had in H1? And so the questions are on the follow up. Could we go back to the EBITDA decline that you had in the US in Q3? And how much of a drag was actually linked to the extra marketing investments related to the World Cup versus the input cost inflation and transportation cost that you mentioned?

And then lastly on Brazil, taxation is apparently set to increase in February 27 from what I’ve read. But there’s also an online gambling ban coming up. I was just wondering how do you assess those two elements and the potential impact on volume for both of them and how much of a headwind has online gambling been historically in terms of share of wallet? Thank you.

Michel Doukeris (Chief Executive Officer)

Olivier. That was a nice build up on the last question. I’ll try to take the parts here if I can get all of them right. Okay, so mix very similar contribution. We don’t disclose each and every quarter what is one thing, what is the other. But we are pricing roughly with inflation. In a way you can say that 25 to one-third of the revenue per hectolitre is a contribution from mix, mix of premiumization, mix of the right categories. Think about RTD, non-alcohol and brands.

Okay, so 25 to 30% is mix, around 70% pure price rate. The EBITDA in the US I think that we talked a lot about this during the call and we even showed a little bit of this on the press release and the presentation. But delivery overall, very broad-based growth for the company, very solid. And we are investing on our next phase of the ten-year plan. So the US as a host of FIFA had costs linked to that mega platform. Very important for the business globally, but also for the US and this cost is a big component on the quarter three.

But the US is also having costs related to unhedged commodities. The simplest one for you to understand is transportation because of oil. Diesel costs. There is a cycle of higher transportation costs in the US, which is not abnormal because every X years the US has these cycles of higher costs in transportation. So I think we are in the middle of one. In this case it is diesel oil driven and it is impacting the business. Because this is not 100% hedged in most of our geographies, especially in the U.S. But other than that, business normal course: gain share in total alcohol, gain share in beer, healthy growth on the key brands, leading growth in RTDs and in beer, and with number one and two brands in beer at this point. So costs from FIFA marketing, costs from transportation.

When you think about Brazil, we talked a little bit about this overall consumer environment. So it’s stable, resilient. But it’s not at the same pace of other Latin American countries. It is a little bit under pressure. And the pressure comes from inflation, interest rates. And there is always something else. I think that gambling was a big discussion in Brazil. It was biting into disposable income, especially for low-income consumers. It grew very fast and was impacting not only the debt that these consumers are carrying, but also the available income for consumption in general.

That was not only beer; it was across all categories. I’m not following this 100% close, but there was a ban on this gambling that came before the elections. People are trying to recover their money that was into these platforms. And I think that the overall speech that you listen to in Brazil is that that was very important to recover disposable income and purchase power of the families because it was a little bit out of control. And because of that the government made the decision that they made.

On the tax reform, still very early. Things are evolving. We continue to say that of course any efforts to simplify taxes in Brazil are welcome. The watch-out is that the tax burden in Brazil is very high. If you look at beer specifically, it is one of the highest tax burdens globally. So we are following. I think that again with the elections, there will be more money in the economy. With the gambling, if this is contained, there will be more disposable income.

The tax reform is a watch-out. But it’s still too early. The overall speech from the government is a neutral tax burden. When you combine everything and if anything is beyond what it is the rate today, I would assume that the different categories and companies will need to price this into the final price to pay for that and to keep their margins under control. So there’s more to come. I think that on the back end of the year, beginning of next year, if anything is more supportive from the consumer standpoint given the injection of money coming from the election plus the control on gambling.

But then the tax reform is going to be a chapter for us to discuss next year. Thanks for the questions.

OPERATOR

Thank you. That 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 (Chief Executive Officer)

Thank you. Thank you, everyone. Thank you for your time today and ongoing partnership and support for the business. And don’t forget to drink some beer. Cheers.

OPERATOR

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

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