Edward Mundy: Okay, thank you.
Operator: Thank you. Our next question is coming from Jeff Stent with BNP Paribas. Please proceed with your question.
Jeff Stent: Hi. Just one question from me, if I may. There seems to be some quite radical tax changes progressing through the Brazilian Congress. And I was just wondering if you could perhaps comment on those in the context of your business and what they might mean if they go through as proposed? Thank you.
Fernando Tennenbaum: Hello, Jeff. Fernando here. We support the tax reform that will reduce the complexity of the Brazilian tax system, tax reform that can provide for legal certainty. And of course, it does not increase the industry’s tax burden because if you look, we – it’s probably among the highest, if not the highest aggregated tax burden in Latin America. The proposed changes, which have been debated in the Congress for direct and indirect tax, they’re gaining momentum this year. It was listed a top priority from the new government, and it was approved in the Congress in July. And now is that the Senate to be approved or to see how they deal with that? The proposal will simplify a lot, the tax system that we have, which is good it’s to have going to have a dual VAT, which both a federal and a state one.
And this simplifying a meaningful way, the current consumption tax system. And there is an excise tax that apply to some services and good. And this kind of has not been defined it, but it’s going to be defined later on. So this is pretty much the indirect side. On the direct side is still have to be discussed. And overall, I think we need to see they both combine it, but if there is any simplification less uncertainty, I feel net-net should be a positive for the industry and a positive for the country.
Jeff Stent: Thank you.
Operator: Thank you. Our next question is coming from the line of Jared Dinges with JPMorgan. Please proceed with your question.
Jared Dinges: Hi, guys. Thanks for taking the question. If I can come back to Mexico, please. Like, I think volumes came in a bit weaker than expected, and a bit weaker than they have been for a while. I know there’s some phasing that you guys called out, but can you talk about what you’re seeing in terms of underlying trends in that market? Do you still see industry growth there in the second half and as you look towards 2024? Thanks.
Michel Doukeris: Hi, Jared. Michel here. Thanks for the question. So Mexico remains an incredibly exciting market with a lot of energy around the beer category that is both growing and premiumizing. And when you look to the quarter, I think that is always good to focus, but also step back in this quarter we have couple of shift. The most important one is Easter, right? So we had earlier Easter, so some of the volume phased into quarter one versus what was last year, a later Easter. And all the volume was inside the quarter two last year. So the comps here are important. The second component is like two sides of the same coin component, because as the effects appreciates in Mexico, the Mexican peso, we see the remittances from the U.S. to Mexico continue to grow in a health way.
And this is a very important component on the Mexican economy, but because the peso is appreciating which is very good for us in EBITDA translation, of course in local pesos the remittances are not as big as they were last year. So this definitely is bringing in combination with the inflation, a short-term pressure on the consumer purchase power. And then we also saw, as in other regions a little bit colder weather throughout the quarter two, bounced back at the end of the quarter, so the end of June was slightly better. But the beginning April, May was a little bit colder than usually it is if this [indiscernible] transition. But nevertheless, confident with the market, long-term trends in the industry, very healthy premiumization in place.
We are outperforming the industry and the portfolio is very healthy, responding very well very strong demand for our brands in Mexico.
Jared Dinges: That’s perfect. Thank you.
Operator: Thank you. Our next question is coming from the line of Sanjeet Aujla with Credit Suisse. Please proceed with your question.
Sanjeet Aujla: Hey, Michel, Fernando, a couple from me, please. Firstly, Fernando, I think earlier you alluded to some potential tailwinds from the current commodity and [indiscernible] environment. I just wanted to get a sense in that context, what’s your pricing philosophy as we look forward to some of those tailwinds? Would you look to maybe reinvest some of those tailwinds back into pricing to volumes or would you look to continue the price in [indiscernible] geography? That’s my first question.
