Jean Jereissati: Okay. That’s a good question, Ben. Let me give you a broader answer on that. So first of all, good to talk about top line brands and the industry. So, industry in Brazil, very resilient, even though we have – and it is structurally better. So in our numbers, industry in Brazil was slightly positive in Q1, and our volumes were record volumes. We never had this volume, so showing that market share gains are there. So the industry is structurally better. So there is no trade down. There is a premiumization trend overall, our core resilient, growing ahead of the total industry. And then we are really trading up with the core plus brands. Now Budweiser is the one, they’re leading in the super premium brands, premium/super premium with Spaten and Corona, okay?
So these are – we are very happy with the shape of these volumes. We are really over-indexing investments on the mega brands, making intentional choices on that. And now we are seeing for the fifth consecutive quarter, we’re gaining market share on the premium/super premium. The core plus that we talked for a while that we lose some steam with Brahma Duplo Malte. So now the combination of Brahma Duplo Malte and Budweiser now, they are back on double-digit growth, and this is an avenue that we really continue to bet. And all this strategy with BEES, distribution and finding the right execution for the core to maintain the core healthy is really paying off because we are having core volumes growing ahead of the total industry. So on top of that, we continue to think about brands of the future on innovation.
And this year, we are pretty much focused on functionality. So we are upgrading our capabilities to do 0 alcohol beer. So Budweiser is doing very well, Brahma is performing. We are gaining market share in this segment. We launched a low-calorie beer, Stella, as the evolution of gluten-free, now it’s gluten-free and low calorie, very – with price very super premium is doing very well and Beyond Beer, so the portfolio that goes beyond the ready-to-drink. So these are our bets on innovation that add up for the total market share that we are planning. So the portfolio strategy, together with the distribution of BEES and Ze Delivery technology, so these are the 2 bets for us to continue to gain market share. And when we go to NABs, really, the trend – this trend of low sugar, no sugar, is really in our favor.
We are well positioned in this trend. And we are – so we distribute the leader – so Red Bull, that is a very important brand on the energy segment that is growing a lot, so there is market share gain coming from the energy side. And Gatorade, there is hydration. That is a very healthy category and that we are very well positioned, again, okay? So these are pretty much the initiative. I could go over here the pack assortment that we are bringing to premium and super premium. I could go over here the returnable 300-ml bottles that give affordability to core. But overall, it’s a portfolio strategy that is really working and intentional bet on brands of the future, innovation on white spaces and a lot of technology to make these things happen.
Operator: Next question from Renata Cabral with Citi.
Renata Cabral: My question is a follow-up in terms of discussions on volume, specifically on the core portfolio. We saw that on this quarter, you grew above the industry. And it seems that the third player is seeking for growing volumes. So it could mean that we could have a more promotional environment in this segment from now on in the market. So my question is about the competitive environment, specifically on the core portfolio. If you’re feeling already this pressure in terms of pass through pricing and how are you perceiving this continuation of the growth on the core portfolio, not only volumes but also in pricing?
Jean Jereissati: So thank you very much for the question, Renata. So what we are seeing is really an industry that is on the positive territory and more rational overall when we think about the whole industry. Of course, that we have the first player, the second player and the third player trying to find ground for some of their brands. It’s more like a brand strategy that everybody is trying to put the brands on the right places and have the right proposition in terms of value for consumers. But what we saw as overall industry is really more rationality on what’s happening. So I don’t see this thing about our – the portfolio and something different on the competitive landscape. And we are happy with our strategy. Talking specifically about the core.
We still have a lot of room to continue to grow the core. The biggest opportunity that we have in Brazil, in the industry, it is to bring the C class to drink close to the medium income class. There is a big gap over there on affordability and ability to be more intense in this. So there is a huge opportunity for us that even though with this big per capita, the C class still drinks much less frequently than the average middle income population. So bridge this gap, it is something that we are working on to make the per capita consumption solid. So we have strategies for that with our core brands. So the RGB 300 ml for 5 years in a row have been growing. It’s a lower out-of-pocket strategy, a price point strategy that is really paying off, and we want to continue to invest on that.
And that’s really some – a place where great brands with the right price point will really include a lot of consumers that they don’t have like the money to do. And they have great margins because they are returnable for us. So overall, what I could say is that, so the industry is healthy, rational with opportunities on the per capita and our strategy in the core is a strategy that is working.
Operator: Next question from Ricardo Alves with Morgan Stanley.
Ricardo Alves: I have a follow-up on the last two questions that were asked in Brazil Beer. And Jean, I think you just mentioned rationality in Brazil Beer. And actually, looking at that chart that was really helpful on the revenue per hectoliter, it does seem that your pricing on an ex ICMS effect was quite solid. So I think that, that underscores the message that you just conveyed on the rationality. But when we look at your volumes of 3%, 4%, Heineken reporting high-single-digit volumes, that implies really, really tough numbers for Petropolis, right? I think that, that’s just a basic math. And I also think — correct me if I’m wrong, but I think that Jean mentioned specifically in the remarks that Antarctica and Brahma are doing better on the margin.
So I’m curious about the competitive environment, particularly with your smaller competitor. But in particular, again, on the core, it seems that you may be gaining significant share on the margin. So specifically on those 2 brands that I mentioned for you, if there is something more specific you can elaborate on that given the relevance of them for your portfolio? And then just another follow-up on a prior question that was asked on revenue per hectoliter. I’m just curious if maybe there was some impact on the channel mix. I know that I asked this question in the last conference call, but I’m just wondering if besides the tax impact, maybe there was something related to third-party distribution or something that could be maybe a one-off for the quarter and improve down the road?
So 2 follow-ups on competition and then revenue per hectoliter.
Jean Jereissati: Okay. Thank you for the question, Ricardo. Let me try to give some information on the competitive landscape and see if it fits your question. So we are – we have a great intelligence here on trying to put the numbers together on what’s going on in the competitive landscape. So we have a whole area that really reconcile Nielsen with our performance, with Ze Delivery information. So we really try to have a broader intelligence on what’s going on. I think what – some competitors mentioned their performance. So what we’ve heard from here is that some brands, some competitors sell out – selling ahead of sellout. So I think this was something that we saw in our numbers, and it was mentioned. So I think we have to understand how this plays.
I saw some information coming from the industry overall that the first assessment was a negative industry. But in our assessment, the industry was positive. So when we put all this – put these things together in our numbers, Petropolis, the third player is really trying to find its ground and is performing better than the previous year. So you have to put all these things together and try to make your assessment. And in our numbers, we did increase inventories. In reality, when we begin to pass through the VAT changes, it was end of February, beginning of March. So in the end, we felt that our inventories in the market could be lower than the average because we were by the end of February really passing through the VAT. So we have to put all these things together to have the final assessment.
We are confident with our portfolio, with our market share gains. And somehow, this is, I think, what I can mention more. When we talk about channels and the impact on net revenue per hectoliter, so yes, you are right, there is a piece of this happening. There are our dedicated wholesalers. This is an intentional strategy that we have, dedicated wholesalers with BEES going Brazil wide, northeast and north, and this brings – this is good on a narrow eye perspective. So it’s a satellite, there is a lot of reach, but there is some of this distribution cost that goes over the net revenue. When we go direct, it goes in our cash SG&A. So this impact is happening. But we think this is something intentional and structural that we should live with that, it pays off.
There is another part positive. There is the brand mix is really positive. It’s really something that is helping. But when we put all these things together, what really came out, the impact was really taxes that impacted the net revenue per hectoliter.
Operator: This concludes the Q&A session. I would like to invite Mr. Jean Jereissati to proceed with his closing remarks. Please go ahead, sir.
Jean Jereissati: So thank you, everybody, who joined the call for your time and attention. We kicked off the year with a good operational performance. We remain confident in volumes, especially with Brazil commercial momentum. Tax is something that we have to handle. But in the long term, this thing should converge, and we will continue working to deliver consistent sustainable results. We are focusing on margins, volumes and cash flow generation, okay? So thank you very much. See you in August, and have a great day.
Operator: This concludes today’s presentation. Thank you, and have a nice day.
