We do and we operate in many different countries, we have collaborating with unions, and we are always thinking about what is the best to our employees. There were contingencies in place, but there is now also a tentative agreement. So the agreement is going to be for vote next week, and therefore, we don’t expect any contingents to be activated in March, so it should be like normal life. In the long term, STRs and STWs will always converge.
Fernando Tennenbaum: Chris, on your question on ETR. Our outlook for 2024 is expected normalized ETR to be in the range of 27% to 29%. This includes everything that we know today, including the impact of the recent legislation changes in Brazil. And going specifically on the IOC, it’s good to provide some more context. The reduction of IOC deductibility does have an impact on the ETR of AB InBev. However, when you go to the ABI level, the impact is partially mitigated. ABI, as any other shareholder of AB InBev needs to pay a 15% withholding tax on the IOC distribution. So the next impact on ABI ETR is smaller than what you can see in AB InBev. And if you go one line further, if you go all the way down to EPS, then the impact is further diluted given the minority interest component. So all in all, it’s something that we can manage to deliver the 27% to 29% on our outlook. And when you go one line further on the EPS, it’s even a smaller impact.
Chris Pitcher: And just to confirm because tax is obviously a complex matter, 27% to 29% is a good medium-term range. There aren’t, as I say, in the background, tax losses that will run out to help mitigate it. We can be comfortable in 27% to 29%?
Fernando Tennenbaum: I think this is our outlook for 2024. We are not giving any medium-term outlook. But with what you know today, with the legislation that we have today, with our business today, this is our assessment for 2024.
Operator: The next question is coming from the line of Sanjeet Aujla with UBS.
Sanjeet Aujla: Michel, Fernando. Two from me as well, please. Firstly, Michel, can you just talk a little bit about the health of Michelob Ultra in the U.S.? Clearly, we were used to this brand gaining 60, 70 basis points of share per annum, growing volumes mid-high single digit, it’s been caught up with the Bud Light issue as well. But is there anything underlying above and beyond that on Michelob Ultra? Please, a few words on that. And secondly, can you just talk a little bit about the state of the consumer in the beer category in China. Clearly, things have deteriorated there in the second half of the year in ’23. How are you thinking about the start to ’24 and the outlook there, please?
Michel Doukeris: Sanjeet, thanks for the question. So Michelob Ultra first. This is a brand that has been growing over the years, very healthy, expanding. And as we shared in different occasions, the brand has a lot of headroom in the U.S., basically for two reasons. One, because it’s perfectly aligned with the health and wellness trend; and two, because it has a lot of distribution opportunity and asymmetric relevance in some states, but not in all states in the U.S. The brand has performed well and was performing very well throughout the year. Of course, this whole event from April to the end of the year, calls it trouble not only for Bud Light, but for on house of Busch as a whole. But we see very healthy signs. The brand is already on the positive territory again, Michelob Ultra, gaining share of shelf and we’ll have unbelievable opportunities to activate throughout this year.
Just think about the NBA now phasing to the Olympics and Copa America. So both properties allocated for Michelob Ultra through the year, and the plans and everything that we saw with wholesalers and retailers during summer comp very strong is the year 2024, where we’ve been seeing the highest investment behind Michelob Ultra for our wholesalers because they commit early on in the year and how much they believe on the plans and invest behind the brands. So, so far, everything moving as it should on Ultra and Ultra continues to expand outside of the U.S. So Canada, Mexico, many other markets where the brand is also gaining a lot of momentum because the trend is universal. So we see health and wellness across the globe. And Michelob Ultra has a simple proposition that is scalable and is working across different geographies.
Talking about China, I think that last year had a little bit of everything in China, from the beginning to end of the year. And if I would answer your question like in a very simple way, we continue to see premiumization as a very strong trend. And our brands, both in premium and super premium, they grew double digits, performing very well in China. And we see a little bit of this bifurcation when you take the core with a performance that was a little bit below what we were expecting, let’s say, for the recovery of China. But combined, China had a very decent industry, last year, in revenue and good volumes, not great, but good volumes, led by premium and super premium. Think about this year, I was in China, I think, last week, spent a week in China.
And what we saw was normal, let’s say, Chinese New Year, where a lot of puts and takes there in different categories. But basically, again, premium and super premium performance was very good. Our execution was very strong. I visited 2 different cities, and I saw turnover good, good sales. And we saw again a little bit of constraint in core value brands while premium, super premium doing very well and performing well. This period of the year is important for premium, but it is small overall for the category. I would say that we need to see more of spring, maybe beginning of summer to have a very clear indication on what’s going to be the direction overall for the industry, but it’s clear to this point, I would say that premium, super premium will continue to perform well, while core value we need to keep an eye on and understand the overall sentiment for consumers and how this is going to come.
And that was somehow a behavior that we saw across many categories and different players.
Operator: Our final question will come from the line of Brett Cooper with Consumer Edge.
Brett Cooper: A question and a follow-up on premiumization. And appreciating that may be difficult to generalize across markets, but can you speak to where you’re sourcing consumers or occasions for the premium to your portfolio? Is it beer drinkers that you’re keeping in the category, increasing relevance for new occasions, keeping them in where they may have gone outside? And then the follow-up on a similar topic is, can you talk about the loyalty you’re seeing as you bring consumers in. I would assume it’s coming through a particular occasion. And then are you growing that in new occasions and repertoires of those drinkers?
Michel Doukeris: Thank you for the question. And I find this as a very interesting topic for us to talk about. And I’ll try to take this high level because, as you said, every market is slightly different, right? But the way that we approach this is participation, occasions and servings. And very interesting, premium has the potential and has been working for us as beyond beer does as well across all 3 levers. So we’ve been seeing higher participation and new consumers getting to the category through premium. And very interesting, we shared today this data on the overall share of throat, right? And this is overall. But when you look about premium brands versus premium presentations on the other categories, premium beer is also growing faster than the premium offers in hard liquor and wine.
And premium, as you penetrate new consumers or the current consumers, you see some overlap of occasions, but you also see some very unique occasions for premium beers. I think that 1 great example that we have is France where Leffe created a total different occasion for beer, [indiscernible] occasion and today is a massive brand, very focused on 1 occasion. And as this occasion developed and the brand grew, the brand now is penetrating even more occasions such as [indiscernible] and [indiscernible] in France. So premium attracts more consumers, interesting enough to attract more women and more young consumers. So that’s why the role of our global brands is very important from Corona to Budweiser with the position that we have and each brand is positioned in a different need state.
Occasions are more spread throughout the week, which is very interesting as well. So you have more at-home occasions with premium. And when you think, for example, the role that Corona Cero or Stella Cero are playing now, they are expanding beer to even more occasions. So we see in many places, now Corona Cero being consumed during the day, lunch time, during the weekend, after sports and more consumers, more occasions. In some very specific markets, then you also tap into servings because you can go for multi-packs and convenience packs in different markets that also help us to tap into larger occasions. I think Brazil is a great example of that. China is a great example of that. So I think that is across all 3 levers, bringing more consumers, retaining more consumers, in more occasions and also improving how many times people get in touch with our products.
In terms of loyalty, this is also an interesting question because consumers always have like a repertoire of brands. And that’s again why we have 4 global brands to tap into this premiumization trend. Each of these brands appeals for a different need state meaning different occasions when people go for the energy or for relaxation or to just enjoy a meal with friends. And once they connect well with 1 of these brands for 1 of these different need states, the loyalty is high. Even though consumers, they consume across different occasions and they have different need states. That’s why our portfolio is a big advantage, 1 of the global advantage that we have to play this game, and that’s why we continue to invest behind our mega brands, and they grew 22% last year, which was a very strong driver of our overall growth.
Thank you.
Operator: Thank you. This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Michel Doukeris for closing remarks.
Michel Doukeris: Thank you, Jessie, and thank you, everyone, for their time today, the ongoing partnership and support for our business. Stay safe and well, and I hope we’re going to see you soon. Bye-bye.
Operator: Thank you. This concludes today’s earnings conference call and webcast. Please disconnect your lines, and have a wonderful day.
