使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Welcome to the Anheuser-Busch InBev third-quarter 2015 earnings conference call and webcast.
Hosting the call today from AB InBev is Mr. Carlos Brito, Chief Executive Officer.
To access the slides accompanying today's call, please visit AB InBev's website now at www.ABInBev.com and click on the Investors tab.
Today's webcast will be available for on-demand playback later today.
(Operator Instructions)
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 the management's current views and assumptions and involve known and unknown risks and uncertainties.
It is possible that the Company's actual results and financial conditions may differ, possibly materially, from the anticipated results and financial conditions indicated in these forward-looking statements.
For a discussion of some of the risks and important factors that could affect the Firm'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 24, 2015.
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. Carlos Brito.
Sir, you may begin.
Carlos Brito - CEO
Thank you, Jackie, and good morning, good afternoon, everybody.
As you know, on October 13th, the Boards of AB InBev and SABMiller announced that they had reached an agreement in principal, on the key terms of a possible recommended offering to be made by AB InBev for SABMiller.
Both Companies are now working hard together towards the announcement of a formal offer under the UK Takeover Panel Rule 2.7.
While the proposed combination with SABMiller is an exciting next step in our story, the focus of today's call is on the organic growth of our business and our third-quarter results.
So let's start with the highlights.
First, let me say I was very pleased with the strong revenue and EBITDA growth results in the third quarter.
Our three global brands delivered an outstanding volume and value performance.
In the US, while market share remains a challenge, the industry continues to show improvement, and our incremental investments are driving good results.
Our team in Mexico delivered great results, with a strong performance from our focus brands.
Brazil also delivered solid revenue growth, driven by our core brands and premiumization initiatives.
In China, well-performing industry and gained share based on a strategy of focusing on the winning segments and channels.
In Europe, our team delivered a very good performance, especially in western Europe, despite the overall decline in the beer market, by focusing on the growing segments and geographies.
Looking at the results in more detail now.
Internal revenues grew by 7.9% in the quarter, with strong revenue per hectoliter growth of 7.8% on a constant geographic basis, helped by growth in total volumes of 1.5% and [own] beer volumes up 2.3%.
Volumes of our focus brands grew by 2.9%, and our three global brands delivered their best quarter ever, with volumes growing by 11.5% and revenues growing by 15.9%.
EBITDA grew by 9.6%, with EBITDA margins expanding by 58 BPs to 38.7%.
This result was driven by a very strong top-line performance, as well as the benefit of a favorable comparable following a very challenging third quarter last year, when our results were affected by several one-offs in the US, Brazil, Mexico.
Normalized earnings per share decreased $1.02 from $1.42, with good organic growth in EBITDA being more than offset by unfavorable currency translation and higher net finance cost.
Felipe will explain this in more detail later.
Finally, the Board has approved an interim dividend of EUR1.60 per share for FY15, with the dividend payable as from November 16.
As I said, the third quarter was the best ever for our global brands, with double-digit volume and revenue growth.
Each of our three global brands grew double digits in the quarter, with combined volumes up 11.5%.
This is a great result and shows the benefit of making the right brand choices, leading to consistent global messaging and market activation.
Stella Artois had a great quarter and delivered volume growth of 12.9%, with good results in the UK, US, Canada, and Argentina.
Global Budweiser grew 11.5%, led by China, Russia, and the UK, and a continuing recovery of the brand in the US.
Finally, Corona volumes grew by 11.1%, driven by strong performances in Mexico and most of our global export markets.
We remain very excited about the growth potential of this unique super premium brand.
Global brand volumes are up 11.5% in the quarter, but more importantly, revenues were up 15.9% and 12.5% to date.
The success of our three global brands and our premiumization initiative, in general, has led to an amendment of our full-year 2015 guidance for revenue per hectoliter growth, from in line with inflation to ahead of inflation on a constant geographic basis.
The higher-than-expected premium brand volumes also drives a change in our guidance for the growth and cost of sales per hectoliter, from low single digits previously, to low to mid-single digits, again on a constant geographic basis.
Of course, this increasing cost of sales, which is driven by the higher production and packaging costs associated with our premium brands, is more than offset by the increased revenue per hectoliter.
Turning now to the results in the US.
The US industry continues to improve on the back of an improved macro situation.
We estimated that industry sales to retailers, STRs, were essentially flat in the quarter and down only 50 BPs year to date.
This compares to a decline of approximately 80 BPs in the first nine months of last year.
We continue to expect industry volumes to improve in the full-year 2015 compared to last year.
Our own STRs were down 2.1% in the quarter, while our STWs, sales to wholesalers, grew by 1.2%, benefiting from an easy comparable versus the third quarter last year.
We should expect our STRs and STWs to converge on a full-year basis.
Our market-share performance in the quarter was disappointing, declining by approximately 90 BPs, due to a difficult comparable.
In the third quarter last year, we had a very strong share performance from Bud Light and other value brands, which led to a total market share loss of only 30 BPs compared to the third quarter of 2013, creating a tough comparable for the third quarter this year.
We estimate that our total market share declined by approximately 65 BPs year to date.
Revenue per hectoliter grew by 1.5% in the quarter, an improvement over the second-quarter trend, helped by positive brand mix contribution from our above premium brands.
EBITDA for the US was up 3.1% in the quarter on an organic basis, with EBITDA margin growing by approximately 14 BPs to 40.4%.
Although our share performance in the US remains a challenge, there are many things that were working well.
Industry (inaudible) STRs are improving, an encouraging trend as we work towards returning the industry to growth.
We have also stepped up our investments in the US over the past two years and are pleased to see that investments behind our brands are delivering results.
Budweiser is having its best year in decades, and Bud Light Lime is growing again, helped by the new glass bottle.
Michelob Ultra continues to be the fastest growing brand in the country by absolute volume so far this year, and Stella Artois is growing double digits.
Our craft strategy is also working.
We've seen good results from Goose Island and all four of our recent craft acquisitions are performing well and gaining share.
Our craft and other high-end brands are doing especially well in the off-brands channel, where brands are built.
And we have gained share in this channel every quarter this year.
Our better brands are also gaining share in the [better] segment.
So although our market share in the US is not where we want it to be, many things are working well on driving us in the right direction.
[But what I've got], Bud Light is at the top of the list.
The brand faced a tough market share comparable this quarter after a great quarter last year.
We're working hard to identify the right positioning and messaging for the brand and new creative for 2016.
We're also facing significant competitive pressure in the new beer segment, which is impacting the performance of the Rita's family.
We're committed to continued leadership in this segment and have plans in place to address the gaps.
Finally, we need to build a more substantial presence in the Mexican import segment.
We have made a start with Montero, but there's a lot more to be done.
Turning now to the performance of our brands in the US.
Bud Light faced a difficult comparable, as I said before, with the third quarter last year benefiting from the first Whatever USA activation and the roll-out of the aluminum bottle, resulting in the gain of nearly 1 full share point in the premium light segment last year.
In 2015, Bud Light STRs are down low single digits during both the quarter and year to date, with some share loss in the premium light segment.
The third quarter saw the introduction of the NFL team cans, which have been very well-received by consumers.
These cans, which are available for the 48 -- for the 28 teams we sponsor have resonated with fans and have helped Bud Light's brand health.
Many of our other brands in the US are performing well, and this inevitably puts pressure on Bud Light.
Nevertheless, we still have more work to do on the brand and are excited about our new agency partnership with Wieden & Kennedy.
The initial work is very promising, and we're looking forward to introducing revolutionary new creative early next year.
Turning now to Budweiser; Budweiser continues to deliver one of its best volume and market share results in recent years, driven by successful campaigns, emphasizing the brand's quality and heritage credentials.
STRs declined by low single digits in the quarter, with the brand's share of total market down by only 15 BPs in both the quarter and year to date.
The brutal hard work and pain has struck a chord with many beer drinkers, and they have been very disciplined in continuing that message through the ud and burgers] summer campaign and our Made in America program.
Increasing [investment] behind the brand is making a difference, for sure.
Our portfolio of above premium brands are performing well, gaining approximately 30 BPs of share in both the quarter and year to date.
Michelob Ultra has had an amazing year, and is an important driver of the above premiums segment's performance.
Ultra continues to be the fastest growing brand in the country with the great share results and a healthy margin contribution.
Stella Artois delivered double-digit volume growth in the quarter and Goose Island IPA is on fire, up nearly 150% year to date.
As I said earlier, I'm very pleased with our craft strategy overall.
All four of our recent craft partnerships, Blue Point, 10 Barrel, Elysian and now Golden Road are showing good growth this year and making important contribution to our wholesaler's portfolio.
This performance is being boosted by investments we're making [in premise], while we have gained share every quarter this year.
These strong performances have been partially offset by disappointing results from the Rita's [family[ in the increasingly competitive near beer segment.
We have plans in place for [drives of] performance, including the introduction of Rita's Splash, a low alcohol line extension available in glass.
Moving now to Mexico.
We continue to be very pleased with our results from our Mexican business, which delivered particularly strong volume, revenue, and EBITDA growth in the quarter.
Beer continues to be a big, healthy category in Mexico, with good volume growth in all regions of the country and gaining share of total alcohol.
Our volumes grew by 11.5% in the quarter, driven by the favorable macro economic environment and our own commercial initiatives.
We saw especially good performances from Corona, Bud Light, and Victoria.
Revenues were up 14.2%, supported by revenue per hectoliter growth of 2.3%, driven by our revenue management initiatives and positive brand mix from the growth of Bud Light.
The strong top-line results and the delivery of [over] $60 million of cost synergies, bringing the total to $830 million, led to growth and EBITDA of over 20%, and margin expansion of more than 250 BPs to 51.7%.
Volumes of our focus brands, which represent over 90% of our Mexico volumes grew by 12.2% in the quarter.
The strong performance in the quarter was driven by successful activations with Corona, Bud Light, and Victoria, including a great Corona summer soccer campaign, which contributed to a particularly strong quarter for Corona Extra.
Bud Light's Music for Today campaign and Victoria's 150th Anniversary campaign, supported by regional activations, drove strong double-digit volume growth for both brands in the quarter.
Turning to Brazil.
Beer volumes have benefited from favorable weather and an easy comparable versus the third quarter last year, when we experienced some slow-down following the FIFA World Cup.
Our beer volumes were up 3.5% in the quarter, helped by the growth of our premium and near beer brands, who have reached nearly 9% of our total volumes.
We estimate that our beer market share was up sequentially but down year over year, reaching a level of 67.8%.
Our beer revenue per hectoliter results were solid, with growth of 10% reflecting our revenue management initiatives, increased own distribution volumes, and premium brand mix.
This balanced top-line result helped to grow EBITDA in Brazil by 9.2% in the quarter with revenue growth partially offset by higher cost of sales driven by inflation; foreign exchange; and product mix; higher distribution costs, mainly due to increased weight on own distribution; and the timing of variable compensation accruals.
EBITDA margin declined by 59 BPs to 50.2% during the quarter, but it's up 174 BPs to 49.9% year to date.
The macro economic environment in Brazil remains challenging, and in this context, our commercial focus is to maintain a healthy balance between volume and revenue per hectoliter growth, building on our affordability and pack-price strategies, supported by strong, disciplined field execution.
At the same time, we'll continue to elevate our core brands, Skol, Brahma, and Antarctic in the minds of the consumer, building on the strong consumer preference that these brands have built over the years.
Affordability remains very high on our agenda for core brands, and our packaging mix strategy, including a dip in focus on the (inaudible) glass packages, is a key initiative in offering more affordable products to consumers while retaining profitability.
Innovation is also key in our vision of core, and during the third quarter, we introduced the Skol Ultra, a low carb, low calorie beer.
Skol Ultra has been able to capture consumer interest in active lifestyle brands and has contributed to Skol's already high brand health scores.
Skol is an official supporter of the Rio 2016 Olympic Games, and we anticipate that Skol Ultra will be an important component of our Olympic activations.
Despite the challenging macro situation in Brazil, premium continues to grow, with plenty of opportunities for further growth.
Corona and our recent craft brand acquisitions have been great additions to our premium portfolio.
Finally, we are seeing near beer occasions to gain share of alcohol.
Skol Beats Sense has had a great performance since its start in 2014, with approximately 70% of its volume coming from outside of beer or from competitor brands.
We're confident that Skol Beats Senses and strong relation pipeline in near beer will help us to gain share of total alcohol in Brazil.
Moving now to China.
In China, economic headwinds and cool weather led to a decline in industry volumes in the quarter.
We estimate industry volumes were down almost 7% in the quarter and down over 5% year to date, with most of the impact being felt in the value and core segments.
Our own beer volumes declined by 1.3% in the quarter and were up 0.5% year to date, with our focus on the faster-growing core plus and premium segments leading to an estimated market-share gain of 104 BPs to 18.7% in the quarter.
Budweiser remains the engine of growth, with volumes up double digits in both the quarter and year to date.
Our revenue per hectoliter performance remains robust, with a growth of 7.9% in the quarter, with improved brand mix continuing to be the major driver.
China EBITDA increased by 7.9%, with EBITDA margin up 29 BPs to 23.3%.
As we highlighted during investor seminar in Guangzhou in September, China is too big and too complex to use averages.
We must look beyond averages and focus on the right geographies, right channels, and the right segments; those geographies, channels, and segments that are growing.
Instead of looking at the Chinese beer industry in total, we break it down in different segments.
The chart on page 17 shows that future growth is expected to come from the core plus, premium, and super premium segments, exactly what we have chosen to compete.
Our strong portfolio of brands, (inaudible) Budweiser, Stella Artois, Hoegaarde, and Corona means that we are very well positioned to win in these winning segments.
Our three focus brands represent 71% of all volume in China.
Budweiser delivered great results and continues to strengthen its leading position in the international premium segment.
During the quarter, we had a specific focus on music, including collaborations with leading artists and a strong execution of electronic dance music festivals.
Harbin also continues to strengthen its position among young Chinese adults.
A new music video released by Harbin Ice in August became a hit song on all Chinese music charts and very popular with young adults and [KTVs].
With that, I'd like to hand it over to Felipe, who will take you through some further detail on our third-quarter results.
Felipe?
Felipe Dutra - CFO
Thank you, Brito.
Hello everyone.
Slide 20 shows the EBITDA breakdown by zone for both the third quarter and year to date.
Total Company EBITDA grew organically by just under $450 million, or 9.6% in the quarter, driven mainly by the strong top-line result and good cost of sales performance.
This was partially offset by increased sales and marketing investments.
We are continuing to invest behind our brands and we see a further step back of the investments in the fourth quarter, consistent with our guidance for full-year growth in sales and marketing investments of mid-to high single digits
Turning to our EPS and (inaudible) results, normalized earnings per share decreased to $1.02 from $1.42 in the third quarter last year.
This variance was due to an improvement of $0.21 per share, driven by organic growth in [EBIT], which was more than offset by higher net finance results and a favorable currency translation, particularly the Brazilian real and the Mexican peso and the euro.
Net finance cost in the quarter were $810 million, compared to $366 million in the same period of last year.
This increase of $144 million was due to the negative impact of the mark-to-market adjustments linking to the hedging of our share-based payment programs, which led to a negative year-over-year swing of $729 million.
This resulted from a reported loss of $585 million in the third quarter this year, compared to a reported gain of $144 million last year.
This negative swing in the mark-to-market adjustment was partially offset by positive currency results and other hedging costs of approximately $268 million, and lower net interest expense of $39 million.
Our normalized effective tax rate for the third quarter was 26.8%, up from 19.7% in the third quarter of 2014.
This increase is mainly due to the negative impact from the mark-to-market adjustment related to the hedging of our share-based payment programs, which is nondeductible.
Our normalized effective tax rate guidance for the full-year 2015 remains in the range of 20% to 22%.
As a reminder, this guidance continues to exclude the impact of any future gains and losses related to the hedging of our share-based payment programs.
Moving on to the interim dividend, the Board has approved an interim dividend of EUR1.60 that will be payable as from November 16th.
As I have said on previous occasions, it is our intention to move towards a more [benefit] split between the interim dividend paid in November and the final dividend for the fiscal year, which is paid the following May.
Finally, before closing, I would like to stress that our capital objectives remains unchanged in terms of allocation.
Our first priority will always be to invest behind our brands and to take full advantage of our organic growth opportunities in our businesses.
M&A remains a core competency, and we will always be ready to look at opportunities when and if they arise, provided that the target, deal structure, and price makes sense.
We recognize the value of growing dividends over time, consistent with the low volatility of a non-cyclical business, and our goal is to reach a [dividend deal] between 3% to 4%, in line with [other] consumer goods[companies.
Our optimal capital structure remains a net debt to EBITDA ratio of around 2 times.
And at this level, the return of cash to shareholders is expected to consist of both dividends and share buybacks.
With that, I will hand back to Jackie to begin the Q&A session.
Thank you.
Operator
(Operator Instructions)
Our first question is coming from Trevor Stirling with Bernstein.
Trevor Stirling - Analyst
Good morning, Felipe and Brito.
Two questions on my side, please.
I wonder if you could give us a little bit more color on what you're doing to address Bud Light, the weakness on Bud Light.
And the same question is, you obviously benefited, as you mentioned from the World Cup [facing] last year and the weather this year in Brazil.
Could you give us an estimate of what you think the underlying beer volume trends are in Brazil at the moment, excluding those two factors?
Carlos Brito - CEO
Hi, Trevor, so in terms of Bud Light, and again, an amazing brand, number-one brand by far in the US, close to between 18% and 19% share.
So we're very happy to have this brand in our portfolio.
On the other hand, there are gaps in terms of maybe packaging and some positions of brands that we need to refresh.
We need to change the agency.
We think Wieden & Kennedy is an agency with an amazing track record.
They're being very creative, very independent and I think that's the kind of agency and business partner, more importantly, that we need to deal with such a huge brand in such a fragmented market.
So when you think about it, in a market that's as fragmented as the US is, to have a brand that commands that kind of market share is something amazing.
So the brand is very strong.
But of course, given the more options you have in the marketplace, the way the [panel grams] are being divided by all the other brands that are being implemented, brands as big as Bud Light tend to suffer more because that's where most of the share is.
So [one of the five beers] in the west is Bud Light.
Again, we're very excited.
At the beginning of next year, we're going to have what we think is going to be revolutionary in terms of trying to understand where the brand came from and trying to learn from its amazing 20-plus years of history from zero to market lead in the US, and playing that back in a more contemporary way, going back to some of its roots.
So I'm very excited.
There will be also some package packaging refresh and visual identity.
So, lots of things that's only fair for brands of this size.
So we think we've been unfair to the brand, so our fault, not the brand's fault.
We don't believe in anything about brands having cycle.
We believe in brands that are well managed and brands that could be better managed.
Bud Light is one of those that could be better managed, and that's what we have for next year.
In terms of World Cup phasing, I don't have any specific numbers to give you.
But again, in terms of Brazil for the full year, we expect our net revenues to grow by mid to high single digits, helped by continuing growth in premium, among other things.
That's what we can say, so you have a total picture for the year in Brazil.
Trevor Stirling - Analyst
Thank you, Brito.
Carlos Brito - CEO
Thank you.
Operator
Our next question comes from Edward Mundy with Nomura.
Edward Mundy - Analyst
Hi, morning, everyone.
Two questions, please.
You've had obviously a very strong result with the global brands in this quarter.
How do you think about the opportunity for these global brands in parts of Africa and Latin America where you don't currently have operations?
And secondly, for the Rita's, you mentioned Rita's Splash.
Can you comment on whether you think a hard beer variant would work for the Rita's family?
Carlos Brito - CEO
In terms of global brands, that has been a topic that we've been very excited for a long time.
We believe that the three global wins we have are complementary to each other in terms of occasions in which they have most of their volume in terms of their positioning.
We believe there's a great portfolio to grow and conquer the world, quote, unquote, in terms of beer brands.
We believe beer has been a very local-backed business, different than any other consumer goods you look out there.
So I think there is an amazing opportunity for us to drive the three global brands and really capture what consumers in all markets today want in some occasions, which is more of a global citizen-type brand.
And those are the things we're offering.
So we'll have amazing brands, amazing sponsorships.
And as we continue to increase our footprint within ABI of today with these brands, that offers amazing opportunities.
And great margins, and that's the best of all, great margins.
In terms of Rita's, it's -- we've had a tough year, for sure.
But again, think about this: five years ago, our SMB participation or share within that segment was 0, and we came to market leadership within that segment.
Having said that, the gaps we have is that we (inaudible) we've stayed in one part of the market, the higher alcohol segment.
And there was a lot of activity in both the higher and the lower segment, alcohol segment, and it didn't capture any of the activity in the lower alcohol segment.
So now with Splash, we're coming with the competitive solution for that segment.
Again, very high margins, very incremental.
And Rita's Splash, should not only play on that lower alcohol segment, but also offer a glass SKU, or a glass package that was not -- also not present in the higher ABV Rita's presentation.
So not only lower ABV, but also the glass package.
And that's again, too early to say; STRs will start mid- December, so we'll see.
But again, it's a segment that's out there.
It's growing in the market; we want to have a piece of that.
Edward Mundy - Analyst
Do you think the flavor profile of hard root beer would work with the Rita's?
Carlos Brito - CEO
Again, we're not going to comment a lot on the competitive sense that -- type claim that involves the introduction of a new production.
But again, we think it addresses some of the gaps we have in the SMB in the Rita's, which is low alcohol and glass.
Edward Mundy - Analyst
Thank you.
Operator
Our next question comes in line of Robert Ottenstein with Evercore ISI.
Robert Ottenstein - Analyst
Great.
Thank you very much.
Brito, I've got some other questions that are related to Bud Light, coming back -- coming at it from a couple of different angles.
One, could you talk a little bit about the strategy for Bud Light in Mexico, where it's positioned, price versus mainstream, and how your efforts in Mexico may impact the brand in the US with Mexican-American consumers?
And then second, also on Bud Light, is how much interaction is there with Michelob Ultra?
How much of that -- how much cannibalization do you think is going on there?
Carlos Brito - CEO
Two good questions, Robert.
SO Bud Light in Mexico, we're very excited; the brand is on fire.
Price-wise, it's a 15% premium to our core brands.
We still have some issues in terms of logistics, because we're bringing some of it from the US, some of it being produced in Mexico.
So we're [still tight] in capacity; that's why, among other things, that's why we're building a new brewery in the Yucatan Peninsula.
Again, the brand continues to grow, especially in the northern part of the country, but it's also true everywhere throughout the country.
So good margins.
And I think you're right.
I think at some point, we do expect it to start influencing Mexican consumers or Hispanic consumers back in the US, because, of course, they do tend to travel back and forth.
So that's a very good point.
In terms of Bud Light, for sure, as Ultra grows, the superior light beer, there was some cannibalization.
The good news is that the margins are better, so cannibalized at a better margin.
That's all part of having a big brand like Bud Light come in, (inaudible) brands and some of the brands are growing, some of it will be incremental, some of it will be cannibalistic.
Having said that, this quarter, Bud Light suffered a lot because it had a third quarter last year which was an amazing quarter, given the promotion activity we had around Bud Light, and also the aluminum can and aluminum bottle and the 25-ounce can all gave Bud Light last quarter a 1 percentage point gain within the light segment.
So that's something (inaudible).
Robert Ottenstein - Analyst
Great.
Just as a last follow-up, this is related to Bud Light, but also marketing in general.
You've spent a lot of money on the NFL.
What does your data tell you in terms of the return on investment you're getting for that with Bud Light?
And do these big mainstream properties have the same kind of impact in the current generation of drinkers as they did in the past?
Carlos Brito - CEO
Oh, yes, big time.
We're very happy with the NFL's agreement that we have and sponsorship.
Of course, as consumer changed, the media viewing habits and the way they interact with sports and the NFL, we're also changing, together with the league, on properties and things we can activate.
And the NFL has been a very good partner in agreeing with us on changes that we need to do to continue to be relevant with that consumer base.
Again, a great partnership.
We respect them a lot.
They have a great business and, again, the number one sports in the country could only be associated with the number one beer in the country, so that makes total sense.
Robert Ottenstein - Analyst
Thank you.
Operator
Our next question comes from the line of James Edwardes Jones with RBC.
James Edwardes Jones - Analyst
Yes, good morning, all.
Two quick ones, please.
Your comment, the [60%] dividend increase was very notable.
Do I take it from your comments, Felipe, that there's no change to your previously stated dividend policy and there won't be following a successful acquisition of SAB?
But also, on Mexico, should we regard the strength of the sales performance in Q3 as indicative of the underlying trend of this business or were there some one-offs in there?
Felipe Dutra - CFO
Well, on the dividend, we had an increase on the May dividend that was about 40%, and as we are looking towards a more benefit payment between May and November, naturally, the November, in this case, increase was more relevant than the one we implemented in May.
Our capital allocation strategy remains unchanged, as we've stated, and it's too early to speculate on the May dividend for next year.
Carlos Brito - CEO
In terms of Mexico, James, he macro environment was very positive, and also we had our brands firing on all cylinders.
90% of our business there in Mexico is all based on focus brands, brands that that we invest heavily behind.
Corona had an amazing summer soccer campaign during the third quarter.
Bud Light campaign called Music for Today and some regional activation, especially in the north, very important, and Victoria celebrated its 150th anniversary with special edition packs and a lot based on traditions and Mexican heritage.
So all those three brands really fired on all cylinders and they had very good momentum.
James Edwardes Jones - Analyst
Thank you.
Operator
Our next question comes from the line of Nik Oliver with UBS.
Nik Oliver - Analyst
Hey, good morning.
Can I just come back to the improving trends for Budweiser in the US?
Can you talk a little bit about how that differs between consumer segments and if you're seeing similar improvement with millennial consumers as you offer the overall brand?
Thank you.
Carlos Brito - CEO
Well yes, Budweiser is very excited.
It's not this quarter; it's been now a couple of quarters, a couple of years since we hit the market with our new campaign, Brew the Hard Way.
A lot of consumers that are Budweiser consumers felt supported in their choice, and that was important that the brand speaks -- it was time that the brand spoke out, given everything else that's happened in the marketplace in terms of fragmentation.
And that the brand -- and the brand went back to talk about its heritage and quality messaging.
So that was very important.
Had it been some time that the brand had not really focused on heritage and quality, and that made a difference and a very, strong bold statement.
(Micro) we stand, that's Budweiser.
And that has also an appeal to the LBAs, because LBAs, as it happens in any industry like this more vintage and more iconic brands, as well as represented in a contemporary way.
So we're seeing LBAs that had never been touched so much with Budweiser, being now able to sample it.
And again, the platforms are very millennial, when you think about it, Bud and burgers, music.
So a lot of things that will really provide opportunity for sampling for these young LDAs.
So that has been very good for the brand and the results are showing.
Nik Oliver - Analyst
Great.
Thank you very much.
Operator
Our next question comes from the line of Anthony Bucalo with HSBC.
Anthony Bucalo - Analyst
Good morning, everyone.
Just two quick ones.
The first one is in the release, it says that 9% of your volumes in the quarter in Brazil were premium or near -- I'm sorry, near beer.
What can we compare that to, and where do you see that going in the medium term?
And the second is from the InBev release this morning, it looks like Corona is having a lot of success across South America.
Can you speak to how the brand is interacting with your existing portfolio?
Are you seeing cannibalization?
Are you bringing new consumers?
Are you building market share?
It looks like Chile in particular was successful.
Thank you.
Carlos Brito - CEO
Two very good questions on premium.
In Brazil, you remember that premium was back in terms of industry in our own portfolio at 6%.
So now going to 9%, when you look at the profits of premium brands in Brazil, they're more like around 20%.
So we foresee that this growth could continue, if you put those two numbers together.
And we have an amazing portfolio of premium brands, be it international premium or local domestic premium, and those interactions worked really well.
Corona in Latin America, I think, was your second question.
Doing very well,or more specifically, in South America, doing very well.
And then it's a brand that has a very high price point in those geographies.
And so, yes, it does cannibalize a little bit, but it's mostly incremental we see today, because some of the parts are different because we're going for more quality distribution.
Given the price is more way over-indexed compared to our average portfolio, it's something that really captures a different occasion, a different consumer.
So very happy with it.
We think it's an amazing brand that really complements our business there.
Anthony Bucalo - Analyst
How is it generally priced against, say, Budweiser or Stella Artois?
Carlos Brito - CEO
Oh, way above, I mean, it depends on the country.
But you look at Argentina, the price index is more like 300% or even more than that.
In Brazil, if you buy the regular beer 2, it's priced at north of 4. It's really a very, very interesting brand, very premium -- the most premium brand we have in our portfolio.
Anthony Bucalo - Analyst
Great, thank you.
Operator
Our next question comes from the line of Andrew Holland with Societe Generale.
Andrew Holland - Analyst
Just a procedural one, if I may.
Can you just remind us what the major scope changes were in the course or, in particular, in North America, Mexico, and LatAm South, because obviously that had was something of a bearing on the overall figures.
Carlos Brito - CEO
Andrew, I'm going to ask Graham to follow up with you on this.
Andrew Holland - Analyst
Okay.
Thank you.
Operator
Our next question comes from Andrea Pistacchi with Citi.
Andrea Pistacchi - Analyst
I have two questions, please.
The first is a follow-up on Mexico.
You say that the industry, the category is healthy there.
Is it fair to say that with you and Heineken now in the market, both investing there, possibly the underlying growth rate of the beer category there has sustainably or structurally maybe increased from 2%, 3% historical level?
And the second question is on costs.
I think at [InBev] you've reduced the COGS per hectoliter guidance for Brazil.
North and North America, I think your COGS per hectoliter declined about 3% in the quarter.
So in North America, is this also driven by, which is what you're saying about Brazil, more focused on cost management?
You've stepped up your efforts there, and whether broadly across the Company, is there an increased focus at this stage on cost management efforts?
Carlos Brito - CEO
Andrea, in terms of the first question, Mexico, we're not giving guidance in terms of where we think that the industry will be, given what the players are doing there.
We're not in a position to do that.
But what we see is that the macros are very good.
Our brands are performing very well, and Bud Light, Corona, Victoria.
And that's proving to be interesting, not only -- for the beer category, quite frankly, to capture share from total alcohol.
That's what we have at this point to say.
Felipe Dutra - CFO
Well, on the cost side, in Brazil, the change, or its likely change in cost of sales per hectoliter is more driven by package mix.
While in our case, from the global perspective, there's likely an increase from low single-digit guidance for the full year to low to mid-single digit-guidance.
It is very much driven by higher growth of global and premium brands, which naturally lead to higher revenues, which also triggered the review of the net revenues per hectoliter growth guidance from in line to inflation to above inflation net-net.
All of this is all accretive at the margin level.
Andrea Pistacchi - Analyst
I think though in the US, if I've done the numbers correctly, your COGS per hectoliter decreased.
Is that a function of -- is that the case on these -- what is driving that?
Felipe Dutra - CFO
Well, you have to look at the quarterly numbers very carefully, because this shipment and depending on the shipment part and the packages, and so on, so forth, more aluminum, less aluminum, that may have vis-a-vis from the previous quarter, that may have an impact.
We highlighted the fact that last year, aluminum was big, introduction of several packages in [the four], on a year-over-year comparison, you may have an impact.
Andrea Pistacchi - Analyst
Okay, Thank you.
Felipe Dutra - CFO
You're welcome.
Operator
Our next question comes from the line of Pablo Zuanic with SIG.
Pablo Zuanic - Analyst
Hello, everyone.
Look, two quick questions.
One, in the US business, we've heard from Boston Beer and other companies to more competitive off-premise [derided] environment.
My question is for you, over the last year, do you have more space there?
You have bought these craft brands, you have launched new products, new extensions.
What [do companies ask you] at retail?
But do you have more space, or is it the same space and you're having to swap brands for brands?
That's one.
And the second one, when we see other companies developing the root beer category or the cider category, and you follow that with Johnny Appleseed, do you really make an impact?
Are you going to do anything in root beer?
And why -- I would call these half-hearted efforts.
With your distribution network and power, you would think that you would have done better in cider.
If you could you answer those two questions, please.
Carlos Brito - CEO
In terms of our core premise, you're right.
There have been more brands listed.
And the [planogram] as I said before, answering another question, has been more fragmented.
On the other hand, what you see from IRI data and these are all public numbers, is that retailers that went too broad and wild in terms of assortment ended up losing share of total business, total beer.
And retailers that increases assortment for sure to go along consumer trends for more choice, but did it in a more rational way in trying to look at where the sales and shelf space performed better.
And those are the numbers we're playing back to our clients because -- our customers, because some of them increase the assortment a lot thinking that's what consumers wanted, and at the end they lost share of business.
So it's the guy that's doing it in the rational way that's really gaining share within the category.
And the explanation is very simple.
If you replace Bud Light for a local brand that will sell a six-pack per month, as opposed to Bud Light selling four or five sick-packs for that one front per day, of course it's bad for business, bad for customers.
Because customers will get the other Bud Light will be warm, just replenish, or be out of stock because now you have space for a product that turns a lot, and so on.
There is much to be done here, but I think retailers are going back, some of them, and trying to understand how come, even with more complexity, more assortment, more working capital being tied up, and much harder to manage all of that.
So they did all the investment and they're losing share category.
And others are being more realistic and using more common sense.
In terms of root beer and cider, I think you're right.
I think we're late to the cider game.
On the other hand, it's not only Johnny Appleseed, we have Stella Artois Cidre that's doing well in its segment of high-priced ciders and [special on trade] in draft.
So no excuses here, just the facts.
In root beer, we have our Best Damn Beer Company and that is something that will start churn new products.
And that's a category where consumers like to try to different products, where brand loyalty is much lower than the overall beer category, and people like to try new things all the time.
So that's the DNA of that segment.
Pablo Zuanic - Analyst
Brito, then I just follow-up on China.
To me, long term, that's the most strategic market for you, not Brazil, not the US.
And two quick questions there.
At the Guangzhou seminar, we didn't hear much about Sedrin.
I know you said that your top three focus brands there are up.
But in my math, 60% of the portfolio, Bud and Harbin are doing well, but Sedrin is down about 10%, as about the rest of the portfolio.
So the question is 40% of your business in China does not seem to be doing well.
And then follow-up to that, just provide some color on Sedrin.
We didn't hear much on that and it doesn't seem to be doing too well.
Thank you.
Carlos Brito - CEO
On Sedrin, if you go to, I think page -- I can't remember the page, page 17, I think, in our presentation that we just did, what you see in China is that the super premium segments, the premium segments, are going way ahead -- and the core --are growing way ahead of core value.
And you saw that in our presentation in China.
What's also true is that super premium, (inaudible) Corona, Hoegaarde, and Leffe, what they sit, and in the premium segment where Budweiser sits.
The profitability is 5 times to 9 times the profitability of core value.
And, just to go back to your question, Sedrin sells most of its portfolio in the core and core plus.
So what's happening in the two provinces where Sedrin has a big market share, is that we are cannibalizing ourselves with brands that have 5 times the margins that we have with Sedrin products.
And that's why our mix in China continues to grow, and our volume continues to be totally detached from the industry.
Look at this.
The industry decreased by 6.9% in the third quarter, our volume was down 1.3%, so a 5 percentage point detachment, more than 5. Then for the year, the industry declined 5.4%, or 1.5% up.
So 6 percentage points.
So I would look at margins, our detachments from the overall industry,, and our portfolio that continues to grow and our top line that's doing very well.
And Sedrin supported that, and that could replace some lower macro products, [infusia], for example, for much higher macro products like Budweiser, Harbin Ice, and Corona.
That's the way to look at it, it's us cannibalizing ourselves in those two provinces.
Pablo Zuanic - Analyst
Thank you.
Operator
Our next question comes from Caroline Levy with CLSA.
Caroline Levy - Analyst
I was actually going to ask about China, because the declining per caps on beer, just for the industry seem a little bit inconsistent with rising per capita wealth.
Do you think that continues for a long time, just as people trade up, they're also going to drink less?
Carlos Brito - CEO
Caroline, I think what's happening in China at this point is that there is a big change from an economy that was all led by exports and heavy investments in fixed assets, okay, that generates a lot of blue collar work, or jobs, to now an economy that's much more service- and domestic-oriented economy.
So, more consumption, more consumer spending.
So that, of course, in the midst of this change, we see that in the southeast where some years ago, there was lack of blue collar workers, and now there is too many of them.
So there is a shift in there, and I think that's what the segments are showing us.
But the segments that are more high priced are growing ahead of the ones that are lower priced.
And that's exactly where we have most of our business, and most of our brand's position.
So I think this change, while it may be bad for the industry is not bad for us.
Of course if we could have an industry and this trend it would be even better.
But what we've shown in China and now it's totally true, is that when you look at the profitability of the beer industry in China, today, we have most of it in terms of having the highest [inner tab] take of the inner tab pool in China.
So that attests to the fact that we decided early on to [bat] from the segment that 10 or plus years ago were not that obvious were the winning segments, but now they are very clearly the winning segments, especially given the deal where the economy is going.
Caroline Levy - Analyst
That makes a lot of sense, thank you.
And just because you're so strong in Brazil, could you talk about whether you think the economy stays this bad, gets tougher, and whether there could be more tax increases coming?
One state, San Paolo, I think is talking about higher taxes.
Carlos Brito - CEO
It has been a tough year.
I think that the good thing is that given the environment, our guys have really done a good job following up our business and getting that volume, getting that net revenue to grow.
And they [detach growth], of course, so again a global currency basis.
So that has been very good.
The brands are also doing very well, premium or [no bet] as we've said before.
I think in terms of taxes, the federal tax code has just been reviewed.
It's an enhancement, vis-a-vis the old one.
It provides greater simplistic, predictability, and will ensure (inaudible) tax collection will continue to grow.
So it has just been changed.
In terms of states, you're right.
We have 26 states toward the federal district in Brazil, and they all have different tax laws.
And yes, there's always a risk that states could increase taxes.
But one thing is always the case: in case of a tax increase, we'll pass it through to price the consumers, always.
So we'll see.
If states understand that, at the end of the day, what they want is not to increase the rate, they want to increase the tax collection.
And what we're trying to show them is that the reason it's boosting our business, like any business.
And as we pass it to consumers, sometimes collections are not necessarily going to be bigger, and jobs are going to be lower for sure.
So that's the trade-off we've been always talking to states.
Caroline Levy - Analyst
Thank you so much.
Operator
Ladies and gentlemen, we have time for one more question.
Our final question comes from the line o Mark Swartzberg with Stifel Nicholas.
Mark Swartzberg - Analyst
Thank you.
Good morning Brito, morning, Felipe.
Two questions, one North America, one Mexico.
North America, it seems like these nine-month figures might be a reasonable proxy for your ability to grow profits there.
I realize each year is unique.
But what I'm getting at is EBITDA is down 2.5%.
Revenue is flat.
Your shipments are in line with your STRs.
You're spending to defend share.
I appreciate that you're trying to grow share, but if we take a more bearish view that it continues to be a struggle to grow share, do you think you can actually put up EBITDA growth in North America or is it more likely that we see this low single-digit contraction in North America from an EBITDA perspective?
Carlos Brito - CEO
Mark, as you know, we're not going to be able to give guidance there.
All I want to say is that there are many things at work in the US.
But we have gaps.
We have a gap on Bud Light.
We have gap on Rita's that are very profitable, very profitable segment, and we have gaps on the Mexican imports.
We tend to be optimistic and bullish about the US, we've always been, that's why we came here.
It's an amazing market, very profitable market.
But we need to fix those gaps in order to get net-net sustainable growth, back on the sustainable growth path.
That's what we're committed to do.
Again, Bud Light, already commented on the new agency positioning, packaging for next year.
Rita's, already commented on Rita's Splash, trying to plug a gap that we have there in terms of ABV and glass package.
Mexican imports, (inaudible) but of course we need much more than that.
Because we're the leaders in Mexico, and in the US, we're totally underrepresented, to say the least, in the Mexican import category.
So three big opportunities.
And then you have Budweiser, which is much better, Michelob Ultra, Bud Light Lime, Stella Artois, our crafts and [pramas].
So I think as we get those gaps a bit bridged, we continue to be very bullish on what our business here can generate.
Mark Swartzberg - Analyst
That's great.
Really, hats off on Budweiser, that is impressive, not only here but obviously around the world.
The second question is simply Mexico.
If we take a longer-term view, is it reasonable to think, the volumes slow down a bit.
You continue to take share, but you get better price mix there.
So I'm trying to think about long-term revenue growth here and I'm thinking it's high single digits.
I know you're not going to give us a per annum guide, but just trying to think about specifically the revenue per hectoliter.
Can that improve as these premiumization efforts pick up?
Carlos Brito - CEO
I think revenue per hectoliter n Mexico will be like any other market of ours, a function of three things: revenue measure, initiatives, [organization].
And in Mexico, specifically, like Brazil, if we increase our own distribution.
Let's be realistic, premium in Mexico is only 3% of the industry one.
Think about the potential we have there, and again, think about Brazil, that for years and years and years, the thing didn't grow; one day, it clicked.
And then it's growing, growing, growing.
So I think in Mexico that's reason to believe that there is an underlying, just like in China and Brazil, thing in there, that could help net revenue growth.
And, again, there's no guidance here, it's just a statement of facts.
Again, 3% of the industry being premium, and we have two players that invest in all of that.
Mark Swartzberg - Analyst
That's great.
Thank you, Brito.
Carlos Brito - CEO
You're welcome.
Operator
That was our final question.
I'd now like to turn the floor back over to Carlos Brito for any additional or closing remarks.
Carlos Brito - CEO
Yes, I do have some.
Thank you, Jackie.
To recap, the third quarter was a solid quarter in which we delivered strong revenue and EBITDA growth with a very good performance from our three global brands.
Looking at four top markets, just to summarize, market share continues to be a challenge in the US, but many things are working well.
We'll continue to invest behind winning brands and programs, while continuing to work on growing Bud Light, improving the results from the Rita's family, and gaining share in the Mexican import segment.
Mexico and Brazil performed very well in very different macro-economic environments.
China also continues to gain share in spite slower economy, driven by our focus on the growing core plus and premium segments.
Finally, SABMiller, obviously, we're very excited about the future opportunity that will be created by the possible combination with SABMiller and are working hard towards the announcement of a formal transaction.
However, it is not coming at a big expense or organic growth.
Accelerating revenue growth remains top for our agenda.
With that, thank you very much for your attention today, and I look forward to talking to you again soon.
Thank you, see you next quarter.
Have a great day, bye.
Operator
Thank you.
This does conclude today's teleconference and webcast.
Please disconnect your lines at this time and have a wonderful day.