Ambev S.A. (NYSE:ABEV) Q4 2018 Earnings Conference Call Transcript

Feb 28, 2019 • 11:00 am ET

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Ambev S.A. (NYSE:ABEV) Q4 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) And our first question comes from Antonio Gonzalez with Credit Suisse. Please go ahead with your question.

Analyst
Antonio Gonzalez

Hello, Bernardo and Fernando, thank you for taking my question. Just two quick ones, please. The first one is Brito at ABI's conference call gave a pretty detailed presentation on the high end and he qualified it as the single largest opportunity for the Company in the next few years. So I just wanted to ask, even if you cannot quantify at the Ambev level, just conceptually, do you see this as your largest opportunity as well or -- because obviously, we've seen a down trading from mainstream to value and the Brazilian industry arguably is in a different stage compared to the rest of the ABI portfolio. I just wanted to ask if you can mention qualitatively whether you see a more balanced growth or more SKUs versus premium or mainstream in the very specific case of Brazil.

And then secondly, Bernardo, you seem very bullish about innovation at Skol, right, and this is perhaps a second iteration, the pure malt variant. And so I wanted to ask if you have an early reading of how much is genuine growth? How much is cannibalization of the mother brand? And is the mother brand starting to grow a sort of a halo effect from the line extensions that you're putting in the market?

Executive
Bernardo Pinto Paiva

Thanks, Antonio, for the question. I think first of all in premium, we really think that premium will grow in the future in Brazil. It has been growing even with the crisis, and it's been gaining share in the segment in the past several months. It's a strong portfolio of brands that meets multiple consumer needs and occasions. So there isn't a market in the world that the premium segment is dominated by a single brand. So it's a portfolio strategy, and it's a portfolio gain. And as we said, I mean, we're in very good shape to win this gain. By the way, again, we were gaining share in the last several months with this portfolio of international brands and domestic brands. I mean, for the premium segment overall, there's a strong preference for premium beers in Brazil, and the segment is 200 -- I mean, it's not growing in the pace that we think compared to the other markets. Just to give an example, in Paraguay, the weight of the segment is 20%. In Brazil, it's around 10%, 10-plus. So if the rebound of the economy is for sure, the premium segment, it's our reading, will grow.

And I think that the execution and the road to market and the excellence in how to execute better our brands in the tray, I mean, have been evolving overall. So not only the message of the brands that I mentioned in my speech, but in the way that we get those brands in the market. So yes, we think that the premium segment will continue to grow and in