Isabella Simonato: Sure. Thank you very much.
Operator: Thank you. The next question comes with Ben Theurer with Barclays. Please go ahead.
Ben Theurer: Yes. Good morning or good afternoon. Thank you very much for taking my question. Just JJ maybe following up a little bit on the development of BEES and Zé Delivery just on the electronic platforms, you’ve obviously had a very much of a success story here in all markets growing the penetration. And depending on the region, somewhere between 70, 80 if not even more percent of like usage, where do you see the potential to get this even higher? And what do you need to do in order to get maybe those last customers converted as well, just as it feels like you have a better loyalty with those than maybe what you used to have in the past? Thank you.
Jean Jereissati: Thank you very much Ben for the question. So BEES, our focus is to deliver the best solution to our clients and consumers with there, talking about BEES specifically. So the majority of our customers they are out there, but we have to learn that in terms of that, we always have been to evolving in terms of users experience. Okay? So UI and then we are learning customer-by-customer, how can we deliver a better experience. Sometimes the customers has big assortment that they prefer to do in the computer, not in the cell phone. So there is a lot of learning consumer-by-consumer for us to evolve and to set different services, overall products and categories in general. We still have the wholesaler, we still have the sales rep, the business representatives helping the customers overall.
And we are seeing that this, these two things combined, the platform and the business representative, they will help to bring more information to evolve the UI, to evolve services and to get a better usage. But I would say that majority, so BEES is already the platform of our customers and they are majority using it. Thinking about the future and thinking about the growth of it just to add a little bit more from the point we are – we continue to see a huge addressable market that BEES can address. We are going, so there is this opportunity of increasing the number of SKU per clients, per customers increasing overall distribution and frequency. And we are learning a lot with the through BEES partnerships that we are doing. So how can really BEES go beyond the 1P where the logistics and I do all the transaction, but it’s really becomes something that goes beyond and really have alliances on the .
And then other industries have access of their 1.1 million customers that have the cell phone – has the platform on their computers or on their cell phones. This is really something that. And then when we go this directions, it is really about understanding the pain points of the industry, understanding the pain points of customers upgrading UI user experience, upgrading services. And this is, we are just beginning. It’s something that we are very, very confident and when we compare with the other platforms that we have in the market. So we are – we have, we are confident that we are pretty much ahead.
Ben Theurer: Thank you.
Operator: Thank you. The next question comes with Gustavo Troyano with Itaú BBA. Please go ahead.
Gustavo Troyano: Good afternoon, Jean, Lucas. Good afternoon, everyone. So Jean mentioned that the goal for this year was to improve both gross margins and EBITDA margins. I’d like to explore your SG&A expenses for 2023, especially in Beer Brazil. From a COGS perspective, it seems that the upcoming quarter should be better than the first one as commodity prices decelerate, but from the SG&A standpoint, it should expect EBITDA margins to increase ahead of gross margins. And specifically on commercial expenses, I’d like to hear from you about the strategy of the deployment curve of sales and marketing throughout the year. How do you see sales and marketing expenses in this first quarter and relative basis to the upcoming quarters?
If you consider that this quarter was closer to a heavy quarter in terms of investment and sales and marketing. And also, I was wondering if you could share an overall view for your SG&A perspectives as we move into the second half of 2023 and if there are some efficiencies to be captured in this lines. Thank you very much.
Jean Jereissati: Okay. So let me get half of the question and then Lucas jump into the other half. So overall we think what we going to see overall in Ambev P&L, it is that there is an opportunity of SG&A transforming into margins into EBITDA margins. So, we should improve that with time. So we grew a lot in the company, in the previous two or three years. And we have been since last year doing a great assessment on a new way to operate our company, a new way of work. So we really had a company that in at some point in time was very siloed that we have like divisions and the NABs were one and Zé Delivery and the BEES and everybody has their structures. So we really moved into a company that understand itself more like a platform.
So there is a lot of change on our, the way we operate in our structures and how we think the business, how we can integrate more. So there is a stream of value and efficiency that comes from this vision that we’re going to see in the next quarters, that we have been working for six months a year right now. On the distribution part too, so we got a lot of scale and when we think about all these orders and this volumes and the distribution that we could do. So there is an opportunity to be more efficient and to synergize on the distribution to, and we going to see moving forward diesel prices going down. And in sales and market we have been ramping up. So this is something that we want to continue to invest, so to support the portfolio to support our brands.
But it won’t be to the extent of the top-line, the top-line growth, top-line will be ahead. So overall, this is Ambev as a whole, we are going to see a part of the growth and EBITDA margin really coming from SG&A. Okay. So this is a little bit the picture of Ambev. So going to Brazil Beer should be more or less this vision, that should be replicated in Brazil overall. Not Brazil Beer, but Brazil overall that we are looking at NABs and beer together.
Lucas Lira: And just to add, I think looking ahead, Gustavo just to give you a way to think about it directionally. For the reasons Jean mentioned around the opportunities that we see to streamline, to optimize our structure and so far as the technology platforms are concerned, right? Within the three of them, but also with what we call the machine, the legacy business. If we continue to deliver as we did in Q1, this would translate into right into lower year-over-year growth for admin expenses, number one. Followed by distribution, lower growth in distribution for the reasons that Jean mentioned. And then sales and marketing, it’s ultimately going to depend on how we execute our plan for the year. We want to continue to invest behind our brands.
The portfolio has momentum, the health indicators, right? Don’t let me, and don’t let me lie. So we’re not going to compromise on the level of our sales and marketing investment, because that helps the short term and that builds the long term. So that’s the line within SG&A that we protect the most whenever we look to optimize SG&A. But the good news is we’re off to a good start on the admin side. We’re off to a good start on the distribution side. So to the extent we continue to deliver, these should grow at the lower pace than sales and marketing. But net-net SG&A hopefully will help us deliver better margin performance at the EBITDA level this year.
