Anheuser-Busch InBev SA/NV

from AB InBev are Mr. Michelle Dukaris, Chief Executive Officer, and Mr. Fernando Tenenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab and the Reports and Results Center page. Today's webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. If you should require operator assistance, please press star 0. Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see Risk Factors in the company's latest annual report on Form 20-F. filed with the Securities and Exchange Commission on 19th of March, 2021. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Dukaris. Sir, you may begin.

Thank you, Jessie, and welcome everyone to our fourth quarter and full year 2021 earnings call. It is a pleasure to be speaking with you all today, and I hope you are staying safe and well. Today, Fernando and I would like to cover three topics with you, our fourth quarter and full year operating highlights, an update on the strategic pillars of our strategy, and how we are meeting the moment in 2022. We will then be happy to answer your questions. So, let's start with our operating performance. We are very pleased with our performance in both the fourth quarter and full year 2021. In the fourth quarter, we delivered top-line growth of 12.1%, with 3.6% volume growth. Revenue per hectolitre accelerated in quarter 4-21 to 8.1%, driven by the implementation of pricing actions across some of our key markets, ongoing premiumization, and continued recover of the on-premise. EBITDA increased by 5%. Versus Q4 2019 pre-pandemic levels, we grew top line by mid-teens and EBITDA by low single digits. We delivered normalized EPS of $0.09 and underlying EPS of $0.74. Let's now move on to our full-year results. We delivered 15.6% top-line growth in full year 21, comprised of 9.6% volume and 5.5% revenue per hectolitre growth. EBITDA grew by 11.8% at the top end of our 2021 outlook. Compared to pre-pandemic levels, we grew top-line by more than 10%, and nearly recovered EBITDA on an organic basis. Normalized EPS increased to $2.85, and underlying EPS increased to $2.88. As a result of our performance and strong cash flow generation, we reduced gross debt by nearly $10 billion this year, leading to a net debt to EBITDA ratio of 3.96 times. This ratio is now below four times for the first time since the combination with SAB in 2016. The board has proposed a full year dividend of 50 euro cents per share for fiscal year 2021. Now I would like to share some highlights from our key market. Our business in the US delivered a third consecutive year of top-line growth, driven by consistent execution of our commercial strategy, focused on rebalancing our portfolio. Our above-court portfolio now represents over 30% of our revenue and grew by high single digits this year. In Mexico, we finished the year strong. delivering double digit top and bottom line growth compared to both 2020 and 2019. Market share expanded by over 150 bps versus pre-pandemic levels. In Colombia, we delivered double digit top and bottom line growth versus full year 2020 and above pre-pandemic levels. Led by the implementation of our category expansion model, 2021 was marked by the highest per capita consumption in Colombia in the last 25 years. In Brazil, we delivered double digit top line growth with record high beer volumes. However, bottom line was impacted by anticipated transactional effects and commodity headwinds. Bees now covers more than 85% of our active customers And Zed Deliver fulfilled 6 to 1 million orders, more than double of 2020. Our business in Europe recovered top line to pre-pandemic levels. Premium and super premium brands now make over 50% of our revenue and grew by double digits. In South Africa, we grew top line ahead of pre-pandemic levels in both the quarter and full year. A strong consumer demand for our brands resulted in full year market share expansion in both beer and total alcohol versus 2019. In China, we delivered double digit top and bottom line growth. Premium and super premium brands increased by double digits. Our market share expanded versus both 2020 and 2019. Moving on, I would like to spend some time talking about the progress we've made on our ESG agenda. Our ESG priorities are organized around three themes, inclusive, natural, and local. With these priorities embedded into our commercial strategy, we can drive meaningful value and shared prosperity for our communities and our planet. I'm proud of the journey our teams are on to advance our ambition ESG agenda. As part of our focus to drive decarbonization and build climate resilience, we have announced our ambition to achieve net zero by 2040. In 2021, we made progress across our priorities. Highlights include reduced our overall value chain emissions, by 13.5% versus our 2017 baseline, named to CDP's Water A-list for the third year in a row, advanced our smart drinking agenda by updating our label designs on 100% of our primary product packaging in all countries where guidance labels are not required. Recognized in the inaugural ranking of Forbes World's Top Female Friendly Companies in 2021. Selected in the Reuters Events Responsible Business Awards in the categories of Social Impact and Circular Transition. You can learn more in our 2021 ESG report. Now let's pivot to an update on the three pillars of our strategy. Allow me to start with pillar one, lead and grow the category. Our commitment to lead and grow the category by investing in our brands, innovation, and creative marketing is already delivering results. We met the moment in 2021 with all-time high volume. As we move from being category leaders to leading category growth, we continue to execute on the five levers of our category expansion model. First, we are building an inclusive category through scaling pack and product innovations. In full year 21, our portfolio of inclusive brands increases revenue by double digits. Second, offering superior core propositions. Our mainstream portfolio gained an estimated 1.4 percentage points of share of the segment globally. We have rolled out our double multi-innovation concept across 12 brands in 10 markets, contributing revenue of over $450 million this year. Third, occasions development. We are tapping into new occasions with our global portfolio. Estelle Artois grew over 20% globally, supported by increasing penetration in the meal occasion. And our non-alcoholic beer portfolio grew revenues by double digits. The fourth lever is leading premiumization. Our premium portfolio delivered over 20% revenue growth in full year 21, and now represents approximately one-third of our total revenue. Our global brands continue to lead this growth. The combined revenues of Budweiser, Estelle Artois, and Corona grew by 23% in full year 21, outside of the brand's home markets. Finally, we continue to expand the category with our Beyond Beer offerings. Our global Beyond Beer business grew by over 20%, contributing $1.6 billion of revenue in full year 21. Innovation supports category expansion across each of the five levers of our model, from entering new occasions to our growing non-alcohol portfolio, to driving premiumization by expanding Michelob Ultra to even more markets. Our innovations contributed 10% of our revenue, in total more than $5 billion in 2021. We are leading the way in innovation across our footprint. Our rolling 36-month share of innovation increased year over year in almost all of our key markets, including the US, Brazil, and China. We are leading and growing the category with best-in-class creative marketing capabilities. Just this week, Ken Lyles honored ABI as the Creative Marketeer of the Year. I would like to take a moment to acknowledge our talented teams and agents partners who made this remarkable achievement possible. Now, let's move on to our second strategic pillar, digitize, and monetize our ecosystem. We are investing to scale our global innovative technology products to become a tech-first FMCG company. Products such as BIS, ZDeliver, and EverPro allow us to unlock value from our existing assets. BIS is enabling us to turn customer pain points into opportunities for growth. It is now live in 16 markets, offering our customers flexible delivery and data-driven insights, while empowering our frontline sales team with real-time information on customer behavior through our BizForce application. Biz has seen remarkable acceleration in usage and reach, capturing approximately $20 billion in gross merchandising value in 2021, up from $3 billion in 2020. Total monthly active users more than doubled this year. Now let me talk about our direct-to-consumer. Our DTC products generated more than $1.5 billion in revenue across 20 countries, already contributing nearly 3% of our top line. Our e-commerce net revenue grew by 62% with 66 million online transactions. That's 66 million opportunities to capture data and insights to solve real consumer problems. Our DTC tech products are leading beer e-commerce growth by leveraging our ecosystem of brands that consumers love. our proprietary technology, and our extensive distribution network. In Latin America, Zed delivery is already present in roughly 300 cities in Brazil, and we are deploying this tech product across 10 additional countries. In Europe, Perfect Draft delivered more than $170 million of revenue. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimizing our business. Fernando.

Thank you, Michel. Good morning, good afternoon, everyone. I hope you are all safe and well. We aim to maximize value by focusing on three areas, optimized resource allocation, robust risk management, and efficient capital structure. First, let me take you through the drivers of our underlying EPS this year. Our underlying EPS increased by 37 cents from $2.51 to $2.88. Normalized EBIT increased by 81 cents per share. In net finance costs, we recorded lower interest expense due to gross debt reduction, offset by other finance costs related to Brazilian tax credits. We saw higher income tax expense due to increased profitability, country mix, and reduced benefits from tax attributes, worth $0.30 per share. We also recorded higher share of results from associates, worth $0.05 per share, and higher profit attributable to non-controlling interests, worth $0.23 per share. With respect to capital allocation, we aim to maximize long-term value by dynamically balancing our priorities. Our main priority for the use of cash is to invest in organic growth opportunities that fall within the first two pillars of our strategy, lead and grow the category, and digitize and monetize our ecosystem. The excess cash generated by our business is then dynamically allocated to our other three capital allocation priorities, the leveraging, selective M&A, and return of capital to shareholders. As you can see here, two times net debt to EBITDA is the point at which we maximize value, though approximately 90% of the benefits from the leveraging can be captured as we approach three times. This year, we achieved an important milestone in our deleveraging path. with net debt to EBITDA falling below four times for the first time since the SAB combination. In the near term, the leveraging is still the most value-accretive opportunity. As we continue to move towards our optimal capital structure, returning cash to shareholders and pursuing selective M&A opportunities can have a more meaningful impact on value creation. In balancing the company's capital allocation priorities, and dividend policy while returning cash to shareholders, the Board has proposed a full-year dividend of €0.50 per share for the fiscal year 2021. We have taken significant steps in recent years to accelerate debt reduction. We have reduced gross debt by approximately $34 billion since 2016, with almost $10 billion in 2021 alone. Moving on, you see that our debt maturity profile remains well distributed with no significant maturity over the next 5 years, with the weighted average maturity more than 16 years. Let me elaborate further on the characteristics of our debt portfolio. As a reminder, we do not have any financial covenants on our entire debt portfolio, including our sustainability-linked revolving credit facility. The portfolio is comprised of a variety of currencies, including the US dollar, euro, Canadian dollar, pound sterling, and Korean won, diversifying our FX risk. Our bond portfolio remains largely insulated from interest rate volatility, as approximately 94% holds a fixed rate with a very manageable weighted average coupon rate of approximately 4%. Before I hand it over to Michel, I'd like to highlight the key metrics that reflect how we are optimizing our business. In 2021, we reduced gross debt by $10 billion, totaling $34 billion of gross debt reduction since 2016. Our net debt to EBITDA ratio is now at 3.96%. below 4% for the first time since our combination with SAB. 94% of our bond portfolio is fixed rate, with a manageable 4% coupon, and we have no near-term refinancing needs. I'll now hand it back to Michel for some final comments. Michel? Thanks, Fernando.

I would like to take a few minutes to recap our reflections in learning. and how we are prepared to meet the moment in 2022. The beer category continues to demonstrate strength. We are operating in a big, profitable, and growing category. Beer is gaining share of throat globally. We remain flexible and agile in a challenging operating environment to deliver strong results. Driven by our leading brand portfolio, and our accelerated digital transformation, our volume hit all-time high and we gained share across key markets. Our business has momentum. Looking ahead to 2022, we have already implemented or announced our revenue management initiatives in the majority of our markets. We will monitor how the year develops across all our markets and are prepared to continue to meet the moment. Additionally, this year presents unique opportunities to activate demand, such as continued reopening of the on-premise and marquee events returning in full force, such as Chinese New Year, Super Bowl, Carnival, and the World Cup. In conclusion, I'm proud of our ongoing transformation as we position the company to deliver a future with more cheers. I would now like to hand it over to Jessie to begin the Q&A session.

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 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We do ask while you pose your question, you pick up your handset to provide optimal sound quality. Thank you. Our first question is coming from Rob Ottenstein with Evercore. Please proceed.

Great. Thank you very much. Obviously, inflation is on everybody's mind. You know, ABI perhaps more than most given, you know, the background in Brazil has had tremendous amount of experience dealing with inflation. You're known for your cost discipline. So kind of two-part question. First, how is the organization dealing with greater across-the-board cost pressures? Are you pivoting it at all, changing targets, anything special to deal with it? And then second related, you do have a different business model today. Given the digitization of the business with B2B and D2C, how has that impacted your ability to deal with the inflationary environment?

Thank you. Hi, Robert. Fernando here. Thanks for the question. I'm probably going to start, and then I'm going to have Michel offer some thoughts as well. So in our outlook, we stated an organic EBITDA growth of 4% to 8% in FY22. which, of course, takes into account this dynamic cost environment we are seeing. We are not providing specific cost per hectolitre guidance, but what we mentioned in our look is that revenue is going to be growing ahead of EBITDA. And then, Michel, I don't know any other additional thoughts.

Yes, thank you, Fernando. Thank you, Robert, for the question. I think that you are right when we think about the very dynamic environment and inflation costs so i think that 2022 in a way is going to be very similar to 2021 and what we learned during this pandemic and is something that you mentioned is very core to our dna is this ability of adapt and being flexible but always focusing on results If you think about the quarter four 2021, we have already implemented or announced most of our revenue management initiatives in the majority of our markets. And this is consistent with what we've been talking since last year, that we were prepared to meet the moment. And quarter four net revenue per hectolitre at 8.1% is already a proof of point how agile the company is being in dealing with that you know and you mentioned that that we we operate in very different markets so we have inflation now across the board but we've been dealing with inflation for many years in developing markets and our revenue management toolkit is being very helpful over the years but it's almost like if we are in a 2.0 version of with data that we have in hands now. Because of this, because of direct-to-consumer, there is much more data that's turning not only the way that you go to market more efficient, but also how we manage our promotions, activations, in a way that's much more dynamic, but is much more efficient as well. And as a proving point, you think about us achieving all-time high volumes in 2021. And then I think that last but not least, our brands continue to perform very well, and enhanced by the digital capabilities that we have today, we are very well positioned for 2022.

Thank you very much.

Thank you. The next question comes from James Edward Jones with RBC.

Morning. Thank you for taking our question, well, two questions. Can you say a little bit more about resource allocation between the different price segments? You mentioned that you grew share in mainstream, but my sense is that your focus is more on the premium end of the market. Is that correct? And secondly, your sales and marketing ratio dropped by 120 basis points in the year and has fallen by 140 basis points since 2017. Is that one of the things that's going to change under this new management team?

Hi, James. Thank you for the question. I'll take the first one first and then try to address the second one if I understood right. You were talking about sales and marketing as a percentage of net revenue, right? That's correct. Yeah. So the first one in terms of allocation, we have a – dynamic way of allocating resources by segment. And Fernando mentioned this during our investor meeting last year, that we improved big time our model. And despite the focus that we have in growing and accelerating the premium segment, which grew 23% last year, we continue to allocate resources across all segments and trying to be very efficient. And as we rebalance the portfolio, we have clear objectives for each segment. While share of segment in the mainstream business is very important, and we are driving innovation and growing with propositions such as double mouth, we are also investing in premiumizing and accelerating growth because it's very, very important to get to scale with our global brands, where then we can harness most of the benefits. And now our category expansion model is a very good tool, because based on the five levers, we can deploy resources where we have higher chances to win. And this connects very well with the second question, because in a way, looking only into the percentage of sales and marketing versus net revenue, doesn't really paint the full picture. Let me put it this way. Like, in one hand, we are becoming much more efficient as we digitize. As we get more data, we can then tailor much better our investments by segment, by region, to the detail of cluster of clients that we can, through the usage of data, be very precise. Combined with that, our creative work driving the brand is also becoming much more efficient. So we are driving higher ROI campaigns. You just saw, we shared with you now, being recognized by Ken as the creative marketeer of the year, has a reason, and this creative power drives efficiency. So more creativity, usage of data, higher percentage of sales going direct to consumer allows us to really really improve our efficiencies on the other hand as we accelerate growth and our revenues grew 15 last year the full picture is really more into how much money are we deploying for growth and then just to to get the figure from 2020 to 2021 we invested more than $400 million additionally to continue to drive momentum and power on our brands. So this is, I think, a good explanation maybe why our business has the momentum it has today and why we ended up 2021 at all-time volume high.

Thank you.

Thank you. Our next question comes from Trevor Sterling with Bernstein. Please proceed.

Hello, Michelle and Fernando. So my first question, Michelle, is I wonder if you can give us a little bit more colour on terms of the components and the elements of your guidance of your four to seven. Clearly, you're implying a little bit of margin compression going on. But in terms of the top line growth, do you think it's going to be mainly volume, mainly price mix and some sense of maybe which geographies you expect to drive the growth in the coming year? And my follow-up question, maybe one more for Fernando. EBITDA is now back to or slightly ahead of where we were pre-pandemic, but the tax rate is staying quite high. Is that because of a fundamental change in the country mix, or is it because of underlying tax rates in any of your key geographies?

Hi, Trevor. Thanks for your question. Let me start by taking the second one, and then I'm going to go back to the first one. So on the tax, the tax outlook is a function of the country mix. You are correct on that. And it's underpinned by the strong performance of emerging markets, like Mexico and Colombia, which are growing at a faster pace than the rest of the operations. And this translates into an average higher tax rate. But no other reason than that. And then on your question on outlook, our outlook is actually 4 to 8. And what we said is that it's 4 to 8. and with revenues growing ahead of EBITDA, and with a health combination of volume and price. So this is what we said, and this is as far as we'll go on kind of making a statement on the outlook. So the important for us to focus on the 428s.

Very good. Thank you, Fernando.

Thank you.

Thank you. Our next question is coming from the line of Pinar Ergun with Morgan Stanley. Please proceed with your question.

Hi. Thanks for taking my question. I have one on the U.S. This is now the third consecutive year of organic sales growth in the country. Has your portfolio shift towards more premium areas got this business to a point now where you would be able to maintain this growth momentum going forward? And it would be useful if you could please also comment on the STRs versus STWs and stock levels and anything you can share about the U.S. EBITDA evolution going forward. Thank you.

Hi, Pinar. Michel here. Thanks for the question. I think that we are very pleased with the momentum in the U.S. And if we go back when we talked about the U.S. strategy, the new commercial strategy, and the challenge that we had there in turning around the business and rebuilding momentum, I think that we can now say that with three consecutive years of top-line growth, the top-line momentum is back in the right direction. And this is a product of our portfolio rebalance. We accelerated a lot the growth in segments where we had good headroom, great brands to drive this growth and that are growing segments. So, structurally, the business is now in better shape and, of course, we need to earn each and every day consumers, retailers in partnership with our wholesalers. And, of course, as these brands scale and as we get into a more normal situation, which we hope that's going to be sooner than later, this growth will translate in margins and EBITDA. And we've been seeing that top line is coming, margins are coming. We continue to invest not only behind the brands, but also investing in maintaining our marketing momentum there. And this will translate into EBITDA. Just to give you one metric, we have today around one-third of our business in the US already in the above course segments. And this one third is driving the overall top line growth because the growth is far ahead of what the industry average is. In STRs and STWs, I think you remember over the last one year and a half, because of fall disruptions in supply chain, we ended up in very short inventory low inventory with our wholesalers. This is more like normalized now. So it's almost back to the same level of STR, STW when you put like the last 18 months combined. And inventory is starting in a health stage today there. So as we prepare now to phase towards spring and summer, we believe we will have a much better summer in terms of product availability this year in North America.

Thank you.

Thank you. Our next question is from the line of Mitch Collette with Deutsche Bank. Please proceed.

Thanks. Hi, Michelle. Hi, Fernando. My first question is on the guidance again, I'm afraid. So the 4% to 8% EBITDA growth guidance is I would say a relatively narrow range given the current level of geopolitical uncertainty and the scope for further COVID related disruption and even potential for more input cost pressure. So can you talk about some of the scenarios you've considered when saying you could come in with the medium term guidance range? And then my second question is on Colombia specifically. where you've been affected by capacity constraints, and yet you also said you hit a 25-year high in terms of per capita consumption. When do you expect to be able to ease the capacity constraints, and where do you think per capita consumption can get to when you do? Thanks.

Hi, Mitch. Fernando here. So when we provide the outlook of 4% to 8%, we provide this outlook based on all the information that we have on our hands, and all the capabilities that our team have. So, of course, it's a dynamic environment. We mentioned that. But given all the different puts and takes and our revenue management capabilities, the strength of our brands, we felt it was the right outlook to provide the 4% to 8% for full year 22. And on the second one, I'll turn to Michel.

Yeah, Michel here on the second question in Colombia. I think that Colombia is a great example of our market expansion model and technology with beef and direct consumer working at its full force, right? So we see a market that is growing, industry is growing, It's premiumizing at the same time. We had double-digit growth there, top and bottom line. Brands performing very well. Some of the Cannes awards came from Colombia. Very good creative work there. Very good integration, commercially speaking, and innovations helping in further accelerate category expansions. volumes really moved faster than our ability during the pandemic to build up capacity but we have two trenches of capacity come live this year 2022 that will allow us to service the demand while we continue to invest to further accelerate growth both in the category and in our portfolio so two big investments come to life this year in Colombia to help us with more product availability.

Thank you. Our next question comes from Edward Monday with Jefferies.

Morning, Michelle. Morning, Fernando. Two questions for me, please. So, innovation delivered 10% of sales in 2021, and DoubleMob was a big success. Can you talk to your degree of confidence that your innovation pipeline can sustain this level of innovation into next year and beyond. And as a follow-up, we've seen a big step up in revenue perhaps later in the fourth quarter. How sustainable is this into 2022 and could it accelerate further as the full benefit of pricing and developed markets drops through?

Hi, Ed. Let me start with the first question on innovation. I think that this is a very important topic for us is a journey that we are in the company for some years now in understanding better insights and consumer needs and being able to tailor products, packaging, and even consider expansions beyond beer to address more occasions and drive this growth and category expansion. So this innovation has been great to add to the current brands in segments that we have, as well as to allow us to tap into new occasions and gather more consumers around the products and offerings that we have. This is becoming much more mature inside the company as a process. So we are innovating in product development. We are innovating in technology products. So Bees is a great example. Z Delivery is a great example. as well as business models. You think about perfect draft in Europe, it's more than only a product, it's more than only technology, it's a new business model implemented in a very innovative way. And we have a strong pipeline. You just think about the U.S., for example, what came to life now this year with hard sodas in seltzers, with zero carb in Bud Light, with our brands in Beyond Beer continue to power and innovate. And if we think about the second question in the revenue per hectolitre, we talked about this during the quarter three last year that we were actively and proactively implementing the actions to meet the moment. Quarter four net revenue was the highest in the year and was, as I said before, a consequence of many markets already having the price increase in place for this year or announced in some other very important markets. And we will continue to monitor as the environment remains very dynamic. And as said before, we are prepared to continue to meet the moment.

Thank you.

Thank you. Our next question is from Lawrence Wyatt with Barclays. Please proceed.

Hi, Michelle, Fernando. Thanks very much for the questions. Could I ask on your digital capabilities? You've now reiterated that 50% of your revenues are coming through digital. Could you break that out into the B system that you talk a lot about and we heard a lot about at the Capital Markets Day to the other digital systems that I think you've had in place in the past? And then building on that, within B's, How much of bees comes through your own brands and how much is coming from the marketplace? And do you have any potential ideas on how big the marketplace part of bees could get? And on that, I'm just interested on what that could do to margins if you do a lot of marketplace type work. Thank you very much.

Thank you, Lawrence. I'll try to tackle the question here piece by piece. But the 50% of our revenue coming from digital is on our sales to retailers. We add on top of that this 3% that we communicated on direct to consumer. So the 50% is very meaningful because it's kind of a landmark, right? So more than half of our sales now being digital. This proves that the technology, the product that we have, it's very good product. that has stickness and has performance. And this is the obsession of our team at Bees, is deliver a great experience for our customers. And they've been doing that. The usage is very high. 2.5 million customers already adopted and use Bees all the time. And they use Bees because it's convenient, because it empowers them. to have better visibility on their business, to have better ways to put their orders in place and control and learn things about their business. With that, our business becomes more efficient and becomes a win-win solution for us and customers. And this is by far better technology than any other system that we had before. And that's why the adoption is so fast. And that's why the usage by customers and by our sales team with this force is so big as well. So it's a great step, and we continue to expand, going to more countries and gathering more customers to use this. When we think about the second part of the question, which relates to the marketplace, we are... implementing Marketplace in different markets. Of course, it goes together with this. As the convenience of that and the logistics reach that we have and the ability to bring partners on board with great service level to the partners as well, we see that today there is a big amount of our customers already buying in Marketplace. we see that they buy a great amount of products. So we have like single digits still when you think about the revenues on bees being from marketplace, like 5% to 7%. And you see that more customers are joining, which is very good because when you think about the average composition of these small and medium outlets that we service, beer accounts, anywhere from 20% to 25% of their revenues, their purchases. So therefore, we have between three and four times addressable market that's non-beer for us to tap into with marketplace. The two is good. The service level is very high. Adoption so far is being very good because more and more customers are buying beer and other products into the marketplace, and we've been partnering with great companies that are joining us in this quest to service with high service level our customers. So it's exciting. Still at the early stage, we will share more with you whenever we have some materiality that's worth sharing with more details. But at this moment, it's growing very fast, both in adoption and total revenues. It represents somehow 5% to 7% of the business revenues across the market. And the opportunity for us to tap into is three to four times GMV at the small and medium outlets.

That's great, Michel. Thank you very much. And just to follow up on that, if it's around 5% to 7% of bees' revenue today, assuming bees continues at the rate it's growing, in many years out, sort of 5 to 10 years out, how big do you think the marketplace could be as a percentage of bees' revenues?

We are not speculating about numbers for the future. We are trying to give you facts and data. about the numbers that we have on quarter four and full year 21. But again, it's growing fast, much faster than the overall revenue of the company. The market opportunity, three to four times the GMV that we have with beer in these small and medium outlets. And we are confident in the tool. So technology is great on this. It's a great product. We are confident on our partnership with the small and medium enterprise. And so far, all companies that have been joining us, today we have more than 150 partners on bees across different markets. They've been enjoying growth as well on their business. So it's a win-win-win solution when you think about the marketplace.

Excellent, Michel. Thank you very much.

Our next question comes from Tristan Van Streen with Redburn Partners. Please proceed.

Hey, hello. Two questions for me. One, Fernando, just wanted to ask about your working capital inflow, which was quite incredible, about $2.5 billion. Just trying to understand, I think that's the best ever inflow you've had. So trying to understand what drove that exactly and how sustainable those kind of inflows are as we think about this going forward. And my second question, Michel, I think this is the first time in 20 quarters that AB InBev has not mentioned the affordability strategy. I think in light of all the inflationary environments and economic pressures, where does that sit in your thinking? How relevant is that going forward? Thank you.

Hi, Tristan. Fernando here. So on your question on working capital, given that we have a negative working capital. Once we have volumes increasing, that's very powerful on the cash flow line. So that's one of the effects. The other effect, when you look at the working capital, when you compare 2020, we increased the CAPEX expenditure, so that has an impact on payables. And also, as Michel pointed out, for example, Colombia, in some of our markets that were growing volume a lot, inventories were more on the lower side, and that also have a positive effect on the working capital. So on the long run, as long as you have volume growth, the negative working capital always plays in our favor, but some of the other effects are more temporary and you should not see it repeating.

Thank you.

Tristan Michel here. Thanks for the question. I will take the second part on the affordability. and in a way we are talking about that talking a little bit different and i will expand and explain you this so the affordability part is a very important component on the category expansion model but we decided when we talk about the five levers we decided to make this broader and we are calling inclusive category and why we are talking about inclusive category rather than only affordability because when we think about inclusivity and you think about all the consumers that beer doesn't have penetration today but they are consumers that we can target and grow the category you include women you include people with low purchase power you include people that they are drinking different beverages, and the innovations that we have or different formats and packs can address. So today, the affordability part, as you knew before, is included as one subcomponent of what we call now inclusive category, because that is much more inclusive than only price. And you are right to say that in the inflationary scenario, we'll be working smartly with tech, price, and innovation, so we can achieve both our revenue targets, but also our volume ambitions as we continue to lead and grow the category, because the taste of this all-time high volume is very sweet, and as we work to build a company and create a future with more cheers, we need to continue to develop the category and grow as we lead the category. So we need to include more people into the future.

Thank you. That's very insightful. Appreciate it.

Thank you. Our next question comes from Simon Hales with Citi. Please proceed.

Thank you. Hi Michelle, hi Fernando. Two for me as well, please. Can I just come back to the issue of pricing and the strong revenue pay-to-lead momentum you've reported? As we look forward into 2022, do you expect the price actions that you've been taking will need to recover the cash impact of the COGS inflation you're seeing? And maybe just building on that affordability issue in relation to Tristan's question in the short term, how do we think about the incremental elasticity impact in 2022 on your volumes from these price moves so that was the first question and then secondly i just wonder in terms of supply chain supply bottlenecks in the business is there anything we should be aware of at the moment in any of your geographies and has the glass supply situation now normalized fully in the us thanks simon this is fernando i'm gonna i'm gonna take the the

The question 1A, so out of your question. So the first one, when you ask it about pricing and what does it mean for revenue and dynamics on cost, in our outlook, going back to it, we said 4% to 8%, and we said that revenues are growing ahead of EBITDA. So there are some pricing and cost dynamics implied in this outlook, but... We remain on the 4 to 8. That's what we should be delivering this year. Then on the 1B and 2, I'm going to transfer to Michel.

Simon, thank you for the question. Let me try to address it here to you. On the elasticity part, I really think that we can only learn from the past, use the models to project, But, of course, as the environment is being very dynamic, we need to continue to monitor the evolution. And if you go back to 2007, 2008, when was the last time that we saw such spike in costs, followed by price and inflation, what we saw was actually that across many categories, including beer, the elasticity came and charged the price. So there was indeed contraction in the market, was different, developing, developed markets, and was also different from today. So I think that one, there are elasticities in play there, indeed, and it's still too early, given the recent price movements, for us to precisely say how big the elasticity will be. But the environment today is also different because in many countries, people have enough money, giving all the stimulus that were given during the pandemic to maintain purchase power, even with the inflation that we are seeing. And in other countries, we'll need to be monitoring closely because in some of these countries, all the incentives and stimulus that people have they burn out during the pandemic. And then people will need to rely on salaries increasing, aligned or ahead of inflation in order to be able to keep purchase power. I think that our brands are in very good position. I think that momentum that we have today in market sharing volume helps us to continue to moving forward. And because most of our markets implemented or announced prices already in quarter four, we are now very focused on activating the demand. And we have this year this balance of the difficult inflationary environment combined with a very unique opportunity for demand activation. Think about all the marquee events related to sport, but beyond that, that they didn't happen in the last two years. And now as we see Omicron phasing out in many markets and with the best information that we have today, many of these events are coming back. We just moved from Super Bowl two weeks ago. There was a great activation. Volumes in the own trade grew 35%. Week versus week, Super Bowl this year versus last year was up. And we had like a great celebration in the US on the event was, I was there, I saw people on the streets, people on the stadium and high consumption. Think about on-trade reopening now in Europe and everything that this can add in terms of occasions coming back for consumers to enjoy beer. And most importantly, then we have summer, which is going to be, I hope, a different one from last year. And in the back end of the year, FIFA, which is a global event, right? Because more than 40 countries participating, everybody watching football and soccer. So I think that we now are very focused on driving consumer demand, in activating our brands, and in leading and growing the category. So we need to balance. So there will be, of course, challenges as each and every year has its own challenge but i'm very confident on the opportunities that we have to activate them in this year our plans are ready and our team is executing with excellence on the supply chain just to to finish i think that you asked about the the us if i got that i think that uh overall the dynamics in the market continue to be very intense so shifts are happening across the board. But if you think about the last two years, I think that we've been adapting to each and every situation. I'm very proud of our team's flexibility and ownership, and how much they've been working hard to deliver the strong results that we delivered in 2021. So I think that there will be more continuation of flexibility, more adaptation, as we address that. And one point that I might highlight on that is that with the return of the on-trade, we see now bottles, glass packages growing. We see returns of kegs that for us are very good packaging. We have very good spacing lines. Less demand on aluminum because of the off-trade now not pumping at the same speed. that was during the pandemic because there was the only channel. And this helps as well in getting the supply and demand equation better balanced. But it's going to be another year in which we'll need to work very hard to deliver.

That's great. Thank you.

Thank you. Our final question will come from the line of Sanjit Aliaz with Credit Suisse. Please proceed with your question.

Hi, Michel Fernando. My question is just on B2B again. I think a lot of your progress has really been in markets where you have direct distribution. How are you approaching digitalization in markets where you have indirect distribution? Is there also a significant opportunity for you here?

Hi, Sanjit. Good morning. Thank you for the question. And I think that you are addressing a point that's very important. And I would say that we have ways in which the technology will be deployed. And the way that we built the product, that our team from BIS designed their market approach and that expansion strategy, the direct distribution markets are well tailored for us to quickly implement rolling in out country to country. So today we have 16 countries. and having fast adoption and fast retention utilization of the technology with our own teams. But if you think about the next wave, so we are now tackling the U.S., and we have some interesting success cases already, but because of the three-tier system, there is a lot of product development and adaptation that needs to be done. So we have like a bunch of engineers coding and making sure that the product to the U.S. delivers the same benefits for our retailers and the same level of performance for our wholesalers. And also, we are growing in China, so this is also being organized and developed for the three-tier system that exists in China. And so far, growing fast in adoption, very successful. And this is part of this approach of us evolving and transforming to a tech-first CPG, where we have great physical products, Corona, Budweiser, Stella, combined with best-in-class tech products, such as Bees, Z Delivery, and other products that we've been developing. So we are expanding. That's the second wave. And the third wave, is investing in the large key accounts, where you see today very old electronic systems, so-called EDI across the markets, and we are working on BizLink that's already being tested, and is a modern approach to EDI, much more integrated, much more user-friendly, with great technology, that will allow us to tap into the large accounts now in partnership with them to also optimize their business and our interfaces. So first big wave, 16 countries, 50% of our volume. Second wave, developing for wholesalers in large markets such as U.S. and China. And the third wave is then completing the puzzle with the key accounts, where we also have like a huge opportunity in bringing data visibility, service level up, and continue to partner with our main customers.

That's great, Kala. Thanks, Michel. And just a quick follow-up for Fernando. Within your SG&A expenses in 21, I think there was a massive step up in admin, particularly linked to variable compensation. How are you thinking about that into 2022? Is that a a level of expense where we could see some opportunities for that to decline, or is this kind of a new base going forward?

Hi, Sanjit. The best way for you to look at this SG&A increase is if you think that in 2020 was a year with no bonus, and this year it was a year of a strong performance. So rather than give an outlook, I'd rather give the reasons for you to why 2021 is higher than 2020, and then probably You can run the math, and then you can get what is going to be the run rate level that you should be expecting from SG&A. Got it. Thank you.

Thank you.

Thank you. This is 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 Michel Ducaris for closing remarks.

Thank you, Jessie. So in closing, I would like just to reiterate that we are very pleased with the strong performance in our business, with the momentum that we have as we start 2022. We know that we are delivering on every metric that matters to the business, and as a consequence, we achieved this all-time high volumes in 2021. We are well positioned to meet the moment in 2022. Our brands are performing well. Our market share across most of our relevant markets doing very well. Category is growing. Beer is gaining share of truth. And as I said, we have unique opportunities to activate the demand in 2022. And we are prepared with our plans in place. So thank you very much for your time today, for your ongoing partnership and support of our business. And please stay safe and well. Thank you.

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