Heineken N V S/Adr

Good afternoon, everyone. Thank you for joining us for today's live webcast of our 2024 first quarter trading update. Your host will be Harold Vandenbroek, our CFO. Following the presentation, we will be happy to take your questions. The presentation includes forward-looking statements and expectations based on management's current views and involve known and unknown risks and uncertainties, and it is possible that the actual results may differ materially. For more information, please refer to the disclaimer on the first page of this presentation. I will now turn the call over to Harold.

Thank you, Federico, and welcome everyone. Thanks for joining us today. And again, I refer to the fact that we don't want to make it a habit to host conference calls with our trading updates. Here again, we wanted to give some additional context and offer you the opportunity to ask some questions. Let me take a few minutes to give you a summary of the quarter and importantly, how we are thinking about the performance relative to the rest of the year. The first quarter marks an encouraging start to the year, with all four regions returning to volume growth as we continue to focus on our evergreen priorities. Volume trends are sequentially improving across the majority of our markets, And in the majority, we are gaining or holding volume share on a year-to-date basis. The top line delivery was well balanced between volume and value, and our underlying premiumization trends remain strong. We are not changing our full year expectations. We have noted consensus estimates converging within our range, and we remain comfortable with that position. Let us now look at some key highlights. Group net revenue buyer was 6.8 billion euros, an increase of 9.4% organically, with net revenue buyer per hectolitre increasing by 4.9%, mainly driven by pricing in line with inflation, with Africa Middle East ahead and Europe and America somewhat below this inflation point. Beer volume was up by 4.7% organically, driven by a premium beer portfolio, which grew by 7.3%. Brent Heineken was up by almost 13%. The volume performance this quarter was boosted by calendar effects like an earlier Easter and cycling negative one-off effects from last year, such as the destocking in Vietnam and the shortage of bank notes in Nigeria. Adjusting for these effects, beer volume grew around 2%. Looking at the first three months, we posted an organic growth of 600 million or 9.4% net revenue buyer. Total consolidated volume on an organic basis was up 4.3%, with all regions contributing to growth. The underlying price mix on a constant geographic basis was up 6%, and this is ahead of net revenue buyer per hectolitre because of the dilutive geographical mix impact. as net revenue per hectolitre on a BEA basis, for example in Brazil and in India, are below the Heineken average. Mix was broadly stable in the quarter, as the positive contribution from premiumisation was offset by net first channel mix versus last year, with the on-trade softer compared to the previous period last year. The translation of foreign currencies had a negative effect of 294 million euros, or 4.6%, mainly driven by the devaluation of currencies in Africa, particularly the Nigerian Naira, and partially offset by a stronger Mexican peso and the Brazilian rail. Consolidation changes in net revenue Bayer contributed 164 million euros, driven by the integration of the Stella Namibian breweries and partially offset by the sale of Fremona in the Netherlands and our exit from Russia. Let's have a closer look at the volume trends with an updated chart we used at our full year results. As a quick reminder, it shows the volume organic growth rates for our beer portfolio and separately the beer and premium beer portfolio, excluding Vietnam and Nigeria. You will recall that after the full impact of our pricing actions took effect in the second quarter last year, we saw a moderate sequential improvement quarter by quarter as inflationary pressures mitigated and our pricing tapered. In aggregate, these trends continued into the first quarter, with more markets returning to growth and gaining or holding market share on a year-to-date basis. Premium beer also continues to outperform in total and in the majority of our markets. As a reminder, Nigeria and Vietnam now cycle the significant negative one-off effects in the prior year, hence the effect also this quarter, as you can see in the chart. Furthermore, the quarter was boosted by the calendar effects, including an earlier Easter period, an extra day in the leap year, and the later timing of the Lunar New Year. Therefore, we believe this growth should not be simply extrapolated for the remainder of the year. Let's now take a closer look at the regions. And let me start with Africa Middle Eastern. Net revenue Bayer grew 32.9% organically with total consolidated volume up 5.6% and the price mix on a constant geographic basis up 26.7% driven by strong pricing across the region to offset inflation and currency devaluations. Beer volume increased organically by 3.5% as some markets cycled these significant disruptions from last year. And we operate in a context of continued economic volatility and challenging consumer conditions across the region. Premium beer volume grew by a low single digit, driven by desperadox. In Nigeria, consumer purchasing powers continue to be under severe pressure due to inflation and the impact of recent structural economic reforms. Nonetheless, total volume grew close to 20%, benefiting from cycling of the prior year disruptions I've spoken about, which impacted also at that time significantly consumer purchasing behavior. Our volume is close to 10% lower. The premium portfolio grew by a high single digit led by Desperados, and in April, Nigerian breweries announced a rights issue, taking a step to strengthen its balance sheet given the current economic challenges. Heineken will take up its full right in the forthcoming recapitalization, as we believe in the longer-term future of the business. In South Africa, the beer volume was up by a low single digit, recovering further in the market or being still behind the total alcohol market. Revenue grew by a high single digit, driven by pricing and positive mix effects. The non-beer portfolio grew near revenue by close to 10%, driven by a strong performance of Savannah, Bernini and Four Street wine. This is relative to the historical baseline of the Distel portfolio. Let me move to the Americas. Net revenue buyer grew 6.5% organically, with the total consolidated beer volume up 5% and a price mix on a constant geographic basis of plus 3.4%, led by pricing and the continued premiumization of the portfolio. Brazil, Mexico, Panama, Ecuador had strong growth in the quarter, and our premium portfolio grew by a high single digit, led by Heineken. In Brazil, the growth again was led by Heineken, but also Amstel. And in aggregate, our value share is in line with the market as our successful portfolio and route to market strategy continues to deliver. We are proud that Heineken became the number one brand by value in the market. In Mexico, growth was in line with the market led by Tecate and Dos Equis. And we continue to see share gains during the quarter in the USA. with Heineken growing in brand power and performing ahead of the market, aided by the launch of Heineken Silver and the continued momentum of Heineken 00. In Asia-Pacific, net revenue Bayer increased by 11.3% organically, with consolidated beer volume up 9.4% and price mix on a constant geographic basis up 3.1%. The premium portfolio was upped by low teens driven by Vietnam, India and Laos. In Vietnam, we estimate that the beer market declined by a mid-single digit, given the continued soft consumer environment and the stricter enforcement of the zero tolerance whilst driving regulations. We outperformed the market during the crucial TET festive period and maintained market leadership in aggregate and in the premium segment on a year-to-date basis, according to our data source. However, there is more to do in this very competitive market. Our net revenue Bayer was up in the mid-teens, driven by volume growth in the low-teens on a sell-in basis, cycling the destocking effect from last year. Heineken had a strong performance, driven by the momentum of Heineken Silver. The APEC volume performance was supported also by a very strong performance in India, with beer volume up in the low-teens ahead of the market. You will recall that last year we suffered somewhat from route to market changes. And finally, a word on Europe. Net revenue, Bayer grew 0.4% as beer volume increased 1.6% organically, with growth across the majority of the markets supported by an early Easter. Price mix on a constant geographic basis was up 1.7%, mainly driven by moderate pricing, partially offset by a net first channel mix and a normalized level, of our promotional activities. The growth was driven by the off-trade up by a low single digit, as on-trade volume was down by a low single digit. Net revenue buyer for the region was impacted by lower intercompany exports, mainly to the US and South Africa. Let us now move on to discuss the Heineken brand performance in more detail on a few words. The Heineken brand continued to show great momentum and grew volume 12.9%, with double-digit growth in more than 30 markets. The brand saw its strongest growth in China, up in the low 40s, and Brazil, up in the high teens. The growth was supported by a strong performance of airline extensions. Heineken 00 grew close to 19%, double-digit growth in all regions, and Heineken Silver grew by more than 50%, led by Vietnam and China. Moving on to the last slide with some final remarks. Our Evergreen strategy aims to create long-term sustainable growth and value creation, and a quarter is a short time period to assess our progress. We remain cautious in our outlook as we continue to see economic environment as challenging and uncertain. We will continue with the structural changes under Evergreen to set us up for more balanced growth this year and beyond. We will continue to invest in future growth, the continuous renewal of our portfolio towards premiumization, non-alcoholic and beyond beer, and our ambition to become the best connected brewer. We will also invest behind sustainability and responsibility objectives. Barring any unforeseen significant disruption to our markets, we expect a more balanced delivery of operating profit buyer than we had in 2023. with growth in both halves of the year, albeit skewed towards the first half. All in all, we continue to expect operating profit buyer to grow organically by a low to high single digit, and net profit buyer organic growth lower than the operating profit buyer organic growth. With that, I'd like to open the line for Q&A, and thank you for listening.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. We ask you please unmute yourselves to one question and one follow-up. Our first question today goes to Edward Mundy of Jefferies. Edward, please go ahead, your line is open.

Good afternoon, Harold. Afternoon, Federico. So, first question and then a follow-up is on Vietnam. I think the bear market was declining high single digits in 2023, but that rate of decline seems to have moderated a little bit to mid-single digits in the first quarter. Howard, can you share a little bit of color on what you're seeing on the ground that's driving that sequential improvement and perhaps how the market evolved during the first quarter, you know, through January, February, March, and what that exit rate looked like? And then my follow-up is around that statement you just made, Howard, around seeing balanced delivery with growth in both halves from an EBITDA growth perspective, albeit skewed towards H1. What I'd love to understand a little bit more is sort of the reinvestment decision. In particular, if you're going to have a really good, strong year and all the stars are aligned, how much flex is there? for you to bring forward investment while still delivering on your guidance framework of low to high single digits.

Ed, thank you very much for these questions. And indeed, very understandable questions as well. So let me make it a bit more personal rather than what I've heard and what the Vietnam business tells us. I was in Vietnam earlier in the year. And the reality on the ground is manifold, actually. So I'm happy that you invited me to paint some color on the ground. So first, let me congratulate the Vietnam team to really give it all they've got in order to focus really on the key competitive battles. And this is, I think, very important. Because what we see is we saw a better than expected test season. And what was very important for us to see also is that the premiumization during that continued, was more robust than the trends that we saw in the back half of last year, when you remember us talking very much about the consumer moving from premium occasions to more mainstream brands. So to your point on how the market evolves, we saw quite good sales and quite good market shares in January and February, but we also saw in March two things that made us pause to celebrate too soon. The first one is that the market is still in negative, right? So mid-single-digit negative momentum is what we still see, despite a relatively better-than-expected debt. And that means that the caution going forward is that this market is not stable, this market is declining. And what we are trying to assess is at what point in time will this market stabilize and then hopefully with better economics and a better consumer confidence start turning to growth. Because when I look and talk to other industries as well, everybody is absolutely convinced that in the medium term, this is a place to be. And there is a lot of potential in the Vietnam market. But at this moment in time, the market is just more subdued. So we see those dynamics still playing out. That's why we have really been focusing on compartmentalizing, if you like, our portfolio. And you hear us talking about holding share in premium and actually gaining share in mainstream. And that's a little bit early to see how that is panning out, given the distortion of the debt season, which really is a premium occasion. The second thing that we note is that both our main competitors, have made very determined inroads into the Vietnamese markets. We also spoke about that last year. We see that continuing, but we're ready for it. And this is also linked to your second question, about how do I think about balancing delivery and at the same time stepping up investments. We are very, very clear that the call to action is to restore balanced growth, and that's where it starts. And that means driving consumer penetration, going after volume growth, but at the same time managing pricing and mix. This is also the case for Vietnam. So we will invest in defending or actually expanding our competitive position in Vietnam. And we're doing this on a quarter by quarter basis. There are a few of those. And as a result of those, we do expect actually over the year that our marketing and sales expenses might actually be growing faster than our revenue expenses in order to really be quite clear on where the competitive battles lie and to build growth and market share momentum during 2024. Great.

Thank you.

Thank you. The next question goes to Simon Hales of Citi. Simon, please go ahead. Your line is open.

Thank you. Hi, Harold. Hi, Federico. So a couple for me then. Firstly, Harold, can I just sort of go back to the full year guidance? I think you said in your remarks that you were happy with where consensus is sitting for the year within your low to mid single-digit guidance range for EBIT growth. As I see that, I think consensus is around the 7% level. I appreciate that you flagged the number of one-offs that we've seen that have flattered the Q1 range. growth rates that you delivered this morning. But with consensus not extrapolating those growth rates already going forwards, I wonder why you're still holding on to that low single digit potential growth expectation in the range rather than being willing to potentially move that up a little bit at this stage. So that was the first question. And then secondly, I wonder if you could just talk a little bit more about Europe. Again, general performance through the quarter. Have we seen an improvement as we exited? in March, the Q1 period, particularly with regards to the performance of the on-premise and any comments you can make generally consumer confidence, whether it's sort of improved through the period as well.

Yeah. Thanks, Simon. Happy to do. Look, the reason why we leave the full year consensus unchanged is very simple. I try to give two elements thereof. The first is that there were a number of one-off factors in the first quarter. And hence, it's careful to extrapolate. We should be careful to extrapolate. But secondly, we also believe that if we look at the number of surprise events that may still happen in this year And we're talking about the Nigeria devaluation, Egypt, Ethiopia. There are many things on the horizon that could be surprise events to us. And as well, as I just tried to answer Ed, is we also see a number of competitive steps that we're keen to make. And we will be investing behind those. So rather than steering to a fixed number and already narrowing the guidance at this point in time, with a whole summer season still ahead of us, and I don't know about you, but my Easter was pretty cold and rainy, it just seems premature. And therefore, I think the careful language that Dolph chose in his CEO statement of encouraged But at the same time, we remain vigilant and watchful of what may happen, I think is a little bit the sentiment that we want to convey. And that's why we kept also the low single digits, because we don't know at this moment in time what we don't know. So that's it. And I think during the half year, we obviously will have much more information and we'll do our homework back then. What is also an important factor, just before somebody else asked that question, is that the refinancing that we do in Nigeria is still not done. We've announced it. And that means that volatility is still possible in a number of these markets. And also that will remove quite a bit of uncertainty when we have refinanced the balance sheet as we intend to do. So that perhaps gives you a few pointers about why we're actually happy with consensus, but also feel comfortable with the range that we've guided earlier. On your point on Europe, this is a story of two halves. We are indeed seeing consumer confidence slowly but surely improving. But at the same time, if you look at the absolutes, it's, to be honest, quite sobering to see that we're just above the 2008 crisis in terms of consumer sentiment. So you wouldn't say that when we go out and I'm trying to book a reservation in a nice restaurant because the restaurants are full, but this is not our general public all the time. Consumer sentiment is still subdued and we're hoping to see the impacts progressively in quarter two as wages and the wage increases really start to come in into people's pockets. So we will have to see how that unfolds. We're very happy with an increased performance of our European business and market shares and volumes are edging up. The majority of the markets are actually improving. But the on-trade is still a little bit subdued. So there is still a negative channel mix unfolding in Europe. But importantly, we are pleased with our results in Europe and do see the sequential improvement coming in. Now, what I also just said to close, we're very pleased with the pricing that we've taken last year. And it was necessary because you also see that the promo spend is normalizing now. So it is important to keep the balance between volume and price mix growth really in check in Europe in order to sustain the levels of profit that we need from the European business.

That's very helpful. Thank you.

Thank you. The next question goes to Sanjit Adula of UBS. Sanjit, please go ahead. Your line is open.

Yeah, morning. Sorry, afternoon, Harold and Federica. Two from me, please. Firstly, just on Nigeria, you know, appreciate a lot of volatility in the ground, but we've seen a pretty significant FX appreciation over the last month or two, and just love to get your kind of take on the potential implications of that on your input cost guidance for the year, which I think had moved from flattish to a low single digit between December and February, really due to the transactional FX headwinds coming out of Nigeria. So just love to get your updated perspectives on that. And at the same time, just on the volume picture on the ground, clearly Q1 distorted quite significantly by some of the comps there. But if you try and normalize for that, are you seeing the industry stabilize at this point?

Thank you.

Okay, sorry. I was just writing some apologies. So in Nigeria, your reference to input, let me just zoom out a little bit about how we see the situation on the ground in Nigeria. Now, clearly our Nigerian team is managing very volatile times as do the consumer. And as a result of these huge levels of inflation and devaluation, we've been adjusting across three different levels of strategy in Nigeria, starting with the commercial strategy. You'll hear us talk about premiumization led by Desperados, but what we also do is really look at regional emphasis as well as all the price points, so that we're starting to build and emphasize the right portfolio for the consumer's pocket in Nigeria. So we really do see that we're not blindsided by premiumization only, and actually our mainstream and lower mainstream economy brands are doing very well. And this is one thing that we're really trying to get right, because ultimately we need to protect volumes and share of consumer as much as that we need to protect our business and our balance sheet. The second thing that the Nigerian team is very focused on, and I called that out last year as well, is to lower the break-even point. And that also means cost discipline, but also letting go of some of the breweries that are no longer feasible to be part of our network. And we just separated from one of the breweries in Nigeria in order to make sure that we don't carry unnecessary costs. The third element of adjustment is a structural change to the balance sheet with this refinancing that I was talking about. Now, important to know, because your point on the input cost might well be right. And frankly, Sandeep, I did not recalculate the input cost guidance. I did not prepare for that in this call. But what, of course, we're trying to do is put input and pricing actually at the same level. So if input costs start to come down in Nigeria, it simply means that we don't have to take as much pricing because the consumer cannot carry it. So we're really trying to balance volume and value and balance sheet and profit protection in that Nigerian market. Now, in terms of normalization, we wondered ourselves as well, because this volume growth with this level of pricing seems to be a bit of a surprise. And therefore, I'm also not going to give you data at this moment in time, whether we are competitive or not, or what is happening to the market share, because we really don't know at this moment in time. and we're waiting for our peers to publish their results to get a better read on the market. For now, I think we're not dissatisfied with how the Nigerian business is unfolding in this first quarter, but much more work to do.

Thanks, Harold. Just a quick follow-up on South Africa, please. We'd really appreciate an update on Distel and any early developments

market share dynamics you've seen with the returnable launch yeah so I meant to close but I thought it too late with something that I said to the team in Nigeria as well when I was there which is perhaps also good to keep in mind here there are 240 million people in Nigeria if they start to consume one more beer per year we're talking a very different game So I just also, you know, this is a resilient up and down long-term bet that we're trying to play. And therefore, I really believe in the long-term potential of this market. And we're working very hard to make this structurally better. And it was just a good image in my mind that I just wanted to leave you with. On the South Africa one, We're pleased with our performance, but you will have also noted that we're not yet outcompeting the alcohol industry. And there are basically three things that we're very much focusing on. The first one, and this is a big one, is we've just introduced a returnable bottle of Heineken. And this takes time to build, but the initial uptake is actually quite positive and the team is very confident. but a bit cautious to call it too soon, right? This needs to be built in the network, and therefore it takes a few weeks to see the churn coming through. But we're very pleased with how things are evolving so far. And this is a big deal because, as you know, the market is already in returnable, just we were not. The second one is competitiveness in beer. And we do also see slowly but surely restoration of our market share performance. That is not yet where we want it to be, but at least it's starting to get into the competitive zone. And the third one is to really fully leverage the part of the Distel portfolio, which, as you saw in quarter one, has grown very well. All of the synergy plays that we've talked about before, which is really good to market, It really is portfolio management and it is really about back office synergies. This is really fully on track and therefore not the cause of concern. We really do want to support the South African business to win in the market because we know that the rest is on track.

Thank you.

Thank you. The next question goes to Andrea Pistacci of Bank of America. Andrea, please, the headline is open.

Yes, good afternoon. Thanks. So two questions, please. The first one is on Brazil. If you could, Harold, please provide a bit more color on Brazil, which had a good quarter, better than Q4. And at Q4, you'd called out Petropolis coming back as a factor. Is this still a factor? And how are you dealing with this? Is it affecting your pricing strategy in Brazil, if at all possible? I appreciate it's at the low end of the market. The second question, please, is on pricing in Europe. So revenue per hectolitre in the quarter was a bit soft. I think there's a few moving parts there. You put through pricing, but also promotions are back to normal. So if you could go maybe through some of the moving parts there and more broadly, what kind of pricing environment are you seeing in Europe? Maybe it's early in the year. But when you look at competitors, is it all rational? And is that your expectation? Thank you.

Yeah. Andrea, thank you for your question. So first, let me give some color to Brazil, indeed. Starting with the market, the market was actually flat to slightly negative in the quarter. And in that context, we are actually very pleased with how our business continues to perform. Heineken is doing great. Amstel is doing great in the upper part of mainstream and net revenue grew organically in the low teens, right? And this was driven by volume growth, both pricing and premiumization. So if we're talking about the balanced growth strategy, you see it in action here. The beer volume for us grew in high single digits. So there is a bit of a gap between market and our own growth. there is a sell-in that is really a bit ahead of sell-out, because there was, of course, the carnival, the Easter, and all of these things, and our business is really trying to compete in that market. Our value market share is in line with the market, and indeed, to your point, what do I see? I do see Petropolis, after their refinancing strategy, they are really driving for volume share and are really holding the lower end of the market at really low prices and actually starting to reduce prices in this in pursuit of volume growth. Now, this is really the economy part of the segment. What it does is it basically puts an anchor to pricing and up-trading, but we are actually quite pleased where our price positioning is at this moment in time. It just prevents further premiumization or pricing to be taken. So that's that part, but it's not eating share from our base necessarily. The second thing that we see is that also Ambev is starting to reposition some of their brands to the lower mainstream part, which is effectively directing competing with Amstel. Now, in aggregate, that basically means that, in my view, there are healthy competitive dynamics in Brazil, because the market in aggregate is still shifting towards premium and And we are really continuing to lead the market with Heineken and Amstel in the premium and upper mainstream segment. And this is what we are really zooming in on. So we're happy with our performance. We do see these pricing and portfolio dynamics coming in. And this is something that we pay close attention to because we obviously feel precious about continuing the momentum that we're building. If I then move on to the pricing in Europe, I was not surprised. So I knew that in quarter one, and I think I also said that in the first half of last year, we significantly lost promo slots. And of course, in the earlier stages of the year last year, it takes time for pricing to land. So it's not like the full pricing in Europe was already visible in January, February. So you're going into a slightly softer comparison on quarter one and you normalize your promotions and that's the result of what you currently see. What we do perceive in the market is generally there are no price rollbacks But what you do see is an increased price intensity, because obviously what people want is volume momentum to recover from the lack of volume that all of us saw in 2023. So nothing unexpected here, but these are some of the dynamics. And therefore, I think you can also expect us to compete where the market goes. So don't call too soon too high revenue per hectolitre in Europe. I think this is a trend that will continue and we will continue to drive volume as well as value market share and invest behind that.

They're very clear. Thank you.

Thank you. The next question goes to Richard Wodegen of Kepler. Richard, please go ahead. Your line is open.

Good afternoon, Harald and Federico. I want to go back to Vietnam, if that's okay. The market seems to be improving somewhat, at least compared to the second half of 2023. What are your main concerns regarding beer consumption over the next few quarters in Vietnam? The second part of the question is on... Harald, you're mentioning that you're gaining some market share in mainstream. What is driving that? Is that pricing or geographic expansion or is there more brand support? So if you could give some more details on that, please.

Yeah. So let me start with a few main concerns on Vietnam. When I was in Vietnam, also I was in Vietnam earlier this year, as I said, they have this phrase like slow, slow, fast. And I think that's a little bit what's going on at this moment in time. We don't see a fast recovery of the Vietnam market. Although some macro indicators seem to be pointing upwards, it's still in the slow, slow phase, not in the fast phase. We also believe that that has to do with, let's call it uncertainty in the market. If you follow the news, real estate, corruption practices, stability of the political system, are all not in place. So there is a level of caution in the market that makes people hesitate and actually start saving some money or spend their money differently. And an expression of that also is this driving regulations which actually make it more complex for people to go out to the bars. Because I mentioned it last time, the fine that you have to pay is like a month's salary. And Federico anecdotally told this last time around. One of our workers has a 45-minute drive on the bike to work, and he was stopped five times in the morning. So... This really is something that has an impact at the moment about how people behave and consume and celebrate life. As a consequence of that, the off trade is down minus 4%. The on trade is down mid-teens. And that equation, of course, doesn't help. And that is a bit of a concern in Vietnam. I know it will get to fast recovery at some point in time. I just don't know when. And also in March, it wasn't there. It was still a negative decline. And that is a bit where the mind is at. So team is fully focused on share and winning competitive battles, but the underlying market dynamics, I fear, will be a bit of a continuation, that people are still starting to shift from premium to mainstream, and from on-trade to off-trade, and that is what we currently see. And unfortunately, the two combined is not good for our portfolio. What we also see, as I said earlier, is that competition really sees the longer-term potential, and is investing in this, and so will we. So that's the point about the main concerns in Vietnam. Now, I do want to correct something because she said we're gaining share in a mainstream. I think what we're a bit careful about, because what we currently see is very much distorted by these first two months of debt. And therefore, we really look at our mainstream versus premium shares over a longer period of time. And there, the job to be done is very clear. It's hold share in premium, gain share in mainstream. But frankly, this is not yet a consistent success. It was last time we spoke. It's a bit less visible now, but it is distorted by that at the same time. So I don't want to mislead you. It's on our radar screen. But the data points today is that we have more to do on mainstream.

Thanks, Harald.

Thank you. The next question goes to Lawrence Wyatt of Barclays. Lawrence, please go ahead. Your line is open.

Morning, Harold. Morning, Federico. Thanks very much for the questions. Two for me as well, please. Firstly, India, you delivered a very strong growth, 20% growth. You sort of mentioned some route to market changes that you benefited from. Is there anything else that's sort of structurally changing in India? And I think there was some hopes of a bit of regulatory change. I was wondering if you had any updates there. on what might happen in India over the next sort of quarters and years. And then secondly, just following up from an earlier question on Europe, you mentioned a bit of a weakness in consumer confidence. And I think in the release, you highlighted both Spain and the Netherlands as suffering from channel mix shifts. Are there any other major markets that you're also seeing that or is the channel mix really limited to just those two countries? And if there are others, could you tell us which ones they are and sort of which ones are getting worse? Thank you.

Thanks, Lawrence. And let me answer the second question first so I can end on a high here as well. No, is the answer to the second one. We're calling out Netherlands and Spain. Those are predominantly the markets where we do see consumer confidence still a bit affected. Not really worthwhile calling out others. And in India, I think it is really quite astonishing to see how much momentum India is building. And this is not only in the beer industry, but this is more as a nation. And the confidence that they have, the investment in prosperity for all, the industry, the facilitation of industries to blossom and attract work to India, I think is quite remarkable. And what you therefore see is that there is more pull for the brands. I also believe that our UBL business has really found a model with a management team that is rejuvenated with a portfolio that now starts to see the benefit of an international premium portfolio with the local hero portfolio with Kingfisher. We're starting to see how we put perfect branding and market execution closer together. But I'm also very cautious all the time because, of course, India is not one market. It is state by state where this needs to be built. But we do see consumer normalization, which means that acceptance of alcohol is starting to happen in a number of states. We do see governments state by state, so not all, but emerging in some of the more progressive ones, starting to have more fruitful, longer-term conversations with us as an industry. And therefore, we always say that India for us is a very long-term bet, probably not for our children, but maybe even for our children's children. We might be surprised that this becomes a little bit quicker so that really our children can benefit. But that's what you see happening. So we are... pleased to see the progress, but it will take a long term to build this to scale. Over the next quarters, therefore, we remain, yeah, quite optimistic.

That's really helpful, Harold. Thank you very much.

Thanks, Lauren.

Thank you. The next question goes to Olivier Nicolai of Goldman Sachs. Olivier, please go ahead. Your line is open.

Hi, good afternoon, Aaron Federico. Two questions, please. First of all, a very broad question on Brazil. Since you have close to 30% market share today and you dominate the premium segments, so what's the next step for the strategy and the role that Brazil could play in the Heineken Group going forward? And then just a follow-up, which is, I apologize in advance, a bit of housekeeping questions, but as we think about Q2, which one-off will reverse, aside from Easter, of course, and what should we take into account in terms of also impact from potential current trading or shipment stating? And second part to that, the consolidation impact was certainly a bit different from what some people have expected. Would you be able to give a broad guidance in terms of consolidation impact for Q2 or for the full year? Thank you very much.

Yeah, Olivier, these are super good questions, but frankly, I would prefer them at the half year rather than now at the trading update, because indeed they are very much linked, particularly the Brazil one. What is the next step? Look, the way that our Brazil team is talking about this is don't change a winning team too quickly. We do believe that there is significant more mileage to be gained between the brand portfolio that we're currently having. And it takes also time to build the next one. So don't expect too much surprises too soon. And you will recall that during the full year results and also a bit the guidance, for example, on gross savings that I gave at the full year results. that we are doing a lot to build structural improvement in Brazil as well that will make us more robust as a company. And the easiest example to give is we now stop importing one billion bottles because we really have created that local sourcing ecosystem around Brazil. Obviously, this gives scale, this gives ammunition, this gives agility much more closer to home. And therefore, the way that we think about Brazil is continue the growth momentum, keep on investing in the brands and the portfolio, the big ones, Heineken and Amstel, seed some of the new ones, but also build the infrastructure around that in order to make Brazil also more profitable. This is another conversation that we had. And I often remind the Brazil team of that fact as well. So that's what we're doing. Strategy not fundamentally changing, but making it more robust. And the quarter two, which one of will be first? Well, there are two. The first one is that you will not only hear me speak, but also Dolf. And the second one is that I hope that the dip that you saw in that graph in Europe predominantly with that impact will no longer be there. Because hopefully we're enjoying a beautiful spring season. We have sporting events where people enjoy a beer or two and the continuing momentum of Europe will carry that. Now, I also don't want to sound too positive because there's a reason why we put the outliers in the outlook statements, right? From low to high. And that is that the uncertainty in the world will also still be there. We live with wars, we live with currency devaluations, and some of these things I'm trying to manage at the same time. So I cannot answer the one-off that I don't know yet, but hopefully this one will reverse the European one.

Thank you, and thanks. If I can address the point, Olivier, around the consolidation changes. There are many moving parts in there regarding the deconsolidation of Russia, the deconsolidation of Ramona, the consolidation of the stealth of Namibian breweries. You also have in there the hyperinflation adjustment in a few markets like Ethiopia and Haiti. it would be very difficult for us to provide a proper guidance without providing extensive disclosure on all of these items. But I hear you, and let's see what can be done.

Thank you very much, and thanks for hosting this conference call today as well.

Thank you.

Thank you. And the final question goes to Trevor Sterling of Bernstein. Trevor, please go ahead. Your line is open. Hi, Trevor. It appears your line is having some issues. I will just move on to the next question from Mitch Collett of Deutsche Bank. Mitch, please go ahead. Your line is open.

Thanks. I've got one question, but it's got a couple of parts, if that's okay. So, Harold, you very helpfully said that beer volumes, excluding the Easter benefits, the Vietnam and Nigeria comps, and I think you said leap year, but maybe you didn't, was 2%. So that suggests that those combined effects were 270 basis points of tailwind in Q1. Are you able to split it not between the individual factors, but really between the calendar effect, which effectively borrows from Q2 and next year and the comparator effects? And then given that 270 benefit, it suggests that there is an underlying rate of revenue growth that's high single digits. Would that be a reasonable expectation for the balance of the year? And in that scenario, given some operating leverage, would you expect to be able to deliver organic revenue operating margin expansion? Thank you.

Yeah, so happy to answer the first part because the calendar effects are about 1%, Mitch. On the other side of that question, I just don't feel comfortable to go into that decomposition right now. I'm looking out of the window and it starts raining again. I just don't think that the reason why we said encouraged, but let's wait a little bit, is for what I said a couple of times today. And I'd like to leave it at that, Mitch. I hope you appreciate that and can understand.

That's fine. Thank you.

Yeah, I don't know whether Trevor is still able to get to his vote.

I can see if Trevor's line is better. I will just open up his line now. Trevor, please go ahead. It appears there is still some issues with Trevor's line.

Okay. Apologies, Trevor. I tried. I think it's time to close the call.

Thank you everybody for your time.

Thank you and see you in a couple of months.