Jean Jereissati: Thank you, Isabella. So, yes, our VIC per hectoliter was pretty good in this quarter. Everybody was anticipating FX and commodities, but we have a lot of initiatives in place for us to really be structurally more efficient on overall costs on our company. Since the pandemic, we lost a little bit of efficiencies. In general, the supply chain was confused, the volumes were growing very fast, so we have a part of the past that we grew in a way that we were not that efficient, that we are getting the grip back. So a part of it is really efficiencies. Our pure price outside of FX and commodities is really below inflation with the deals and the contracts that we are doing with our suppliers. And overall, the footprint that we have been working in distribution and in the supply, it is getting much better.
Once that – since 2020 you have been innovating a lot and now we had time to catch up, to really prepare all the breweries, the national footprint of production, of innovation, that when we put all the things together, they are really leading to this performance that goes beyond the FX and commodities impact. So there is a thesis P plus P, the price is better than inflation. There is a really piece that it is capabilities that we are driving, another piece is really overall efficiency in the supply chain, in the distribution footprint, okay. So, this is one thing. When we talk about SG&A, so in the end we are really tight, doing very disciplined across the board. But then when we look particularly into Brazil, one thing that we really changed and we don’t talk that much about it, it is that we have been growing and organized in a company that was designed to be very siloed.
And we have been transitioning this company to be more of a platform, really to work with excellent centers to work more in a way that we would really protect customer and consumer experience with this Zé Delivery, with logistics. But we really reorganized the company backdoor in a way that we could be much more efficient in terms of administrative costs, in terms of structure in the company. So this was – had a big impact overall on our SG&A. This is very structural and it will continue moving forward.
Isabella Simonato: That’s clear. Thank you.
Operator: The next question comes with Robert Ottenstein with Evercore. Please go ahead.
Robert Ottenstein: Great. Thank you very much. Wondering if you could give us some details on the competitive environment in Brazil and in particularly the timing of your price increases, which usually come in kind of August, September, October, which – how much price are you taking and which price pack brands and what the competitive reaction is? Thank you.
Jean Jereissati: Thank you, Robert. So we are really – it’s really important for us, we are very focused on having a sustainable balance between volumes and net revenue per hectoliter really protecting the industry, really organizing ourselves to drive the trade up with our brands. And our medium and long term pricing strategy is unchanged. That we are really looking into disposable income, looking into the consumer more than the competitors to really decide on the pricing, and then try to over deliver with brand mix and with innovation. So this did change – did not change pretty much. But we are in a scenario where CPI is going down and we are understanding how this affects disposable income and we are being more nimble, more flexible to really guarantee that we maximize the top-line, looking at our consumer pocket.
So, having said that, the industry is structurally better, the competitive scenario and competitive landscape, it is more rational in general. And we feel that this will continue. Of course, the Brazilian market was always very competitive, always has been very competitive. And we are more discounted or not at some point in time or not when you look at competitors. But somehow we see more rationality in general in the competitive landscape.
Robert Ottenstein: Thank you.
Operator: The next question comes with Thiago Duarte with BTG Pactual. Please go ahead.
Thiago Duarte: Thank you. Hello, Jean, Lucas, everybody. Yes, I would like to circle back to the beer [ph] Brazil business, Jean if you may talk a little bit about moving parts within the brand portfolio in Brazil. Right. I mean, many years ago it was really about the core and then in the last few years, there’s been this push towards the core plus. A lot of innovation happened there. But in the last few quarters it really feels that the premium and the way you call it premium and super premium brands are the ones that are really pushing the growth and gaining space, right? So just if you could comment a little bit, Jean, if you agree with that, if that’s how we should be thinking about the portfolio going forward and more towards, I would say the premium spectrum of it.
Because it does seem at this point that core plus is the one that is along with value, as you guys mentioned before, the ones that are suffering a little bit more so. And still on this topic, you mentioned one more time this quarter about the brand power improving for the portfolio. So also if you could add a little bit on which segments, premium, core plus core, where you see that brand power improving and whether you feel it’s improving relative to your market share, right? Whether you are in that point where your brand preference is really starting to overcome your overall market share. So that would be the first question and this is the topic. And if I may follow up on the SG&A discussion, I appreciate your comments on the efforts you guys are making and so on, but if I could specifically talking about SG&A and the CAC division, so along with Brazil and Brazil Beer in particular, this was a strong positive surprise.
So if I could – if you could help us understanding a little bit more where you are there and the elements behind the efficiency gains there, that would be great as well. Thank you.
Jean Jereissati: Okay. Thiago, so thank you for the question. Let’s talk a little bit about brand portfolio. So let me look a more long term basis, from 2000 from pre-pandemic levels to today, and we added up the new volume that we grew compared with 2019. So pretty much we grew one-third in the core, one-third in the core plus, and one-third in the high end in the premium. Okay. So when you understand this 15 million hectoliters that we grew, we break it down. It is pretty much growth in all these three segments. Okay, so this is an important information. So, having said that, we had this view of renovating reaccessing our portfolio. A piece of our strategy was to occupy innovate a white space in spaces of the future. And we have been doing this since 2019 and we are very excited and we are very proud about what we accomplished so far.
Okay? So I foresee in the future that this will continue like that, the growth should continue like that. One third, one third, one third. There is not that we’re going to be towards one segment or the other. I believe on that. And what really changed a little bit, this equation in a way that we mentioned, it is that spotting was designed to be core plus, plus like entry premium over there and because it’s really selling more than we expected, we are really being very disciplined on discount. And then it went to the basket of the high end and then we are reporting its volumes on the high end, but it’s really in the entry premium over there. So this is really what changed in the conversation. But for the future, core plus is a relevant segment.
