Anheuser-Busch InBev SA/NV · EURONEXT:ABI
Anheuser-Busch InBev SA/NV — Barclays Capital Back to School Consumer Conference 2015
55 slides from Anheuser-Busch InBev SA/NV's conference presentation, Sep 10, 2015
Slide 1: Asia Pacific
Asia Pacific Graham Staley Global Investor Relations
Slide 2: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 3: Why APAC?
Why APAC? Main countries/regions Pop Mio China 1,367 India 1,260 Indonesia 251 Bangladesh 158 Japan 127 The Philippines 99 Vietnam 90 Thailand 69 South Korea 50 Taiwan 23 Cambodia 16 Laos 7 Others 121 Total 3,638 Source: US Census Bureau, 2013
Slide 4: Why APAC? Population growth
Why APAC? Asia Pacific will account for 46% of world population growth between 2014 and 2025 World population Population growth % of people, 2014 % of growth, 2014 - 2025 2% 8,033 15% 37% 46% Others Asia 7,073 47% Pacific 53% Source: Euromonitor
Slide 5: Why APAC? Beer industry growth
Why APAC? Asia Pacific is the largest region in the beer industry, and will be responsible for 53% of the growth between 2014 and 2025 World beer industry Volume growth % of volume, 2014 Mio HL; % of growth, 2014 - 2025 Africa & Middle 2,164 East 7% Asia 1% 18% Pacific America 34% 28% 32% 53% 1,859
Slide 6: Why APAC? Fragmented market
Why APAC? Asia Pacific is still largely fragmented without a clear leader. There are several untapped opportunities for ABI Graphs: Map: AB InBev ABI APAC USA + Canada Europe operations SAB Miller Snow ABI International Heineken Carlsberg Others Asia Pacific Latin America Africa Source: Bank of Amer
Slide 7: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 8: Journey in Asia Pacific
Journey in Asia Pacific Asia Ginsber and Budweiser entered Harbin Breweries Dafuhao China in 1995 Vietnam Brewery Opened 1995 1998 – 2000 2004 2006 2008 2013 2014 2015 India JV Interbrew buyout entered Shiliang Sedrin AB and InBev Oriental Brewery in China by combination South Korea providing Acquis
Slide 9: APAC Journey
APAC Journey In the last 5 years revenues grew 2.3x faster than volumes, and EBITDA grew 1.3x faster than revenues CAGR 10-14 Volumes (mio HL) Net Revenues (mio USD) 30.0% 2.3x Vol growth EBITDA 82.5 13.2% 65.8 56.0 57.7 50.3 1.3x 38.4% NR growth 2010 2011 2012 2013 2014 Source: ABI internal reports
Slide 10: APAC Dream: #1 in Asia
APAC Dream #1 in Asia • Building strong and relevant premium brands • Accelerating top line growth • Leading super premium & premium segments across Asia Pacific • Building leadership in market share • Constantly pursuing operational efficiencies and EBITDA growing ahead of topline
Slide 11: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 12: Why China
Why China To be the #1 in Asia, we must win in China • China represents 37% of Asia Pacific’s population • Largest economy in Asia Pacific region, representing 43% of the region’s GDP • Largest beer market in the world, accounting for 66% of Asia Pacific’s industry Source: Beer industry: Seema for C
Slide 13: Why China – Beer industry
Why China – Beer industry China has the largest beer industry in the world, by volume, and is expected to account for 31% of world volume growth in the next ten years World beer industry Volume growth % of volume, 2014 Mio HL; % of growth, 2014 - 2025 34% 2,164 Africa 6% 3% 2% 2% Other China 7% 6% 7
Slide 14: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 15: Trends & implications: Industry evolution
Trends & implications: Industry evolution In the long term, there is a correlation between GDP and beer consumption. But GDP alone cannot explain short term variations in industry performance GDP growth vs Beer industry growth % pa; 2006 - 2014 Source: Plato Logic, IMF and LCA
Slide 16: Trends & implications: GDP
Trends & implications: GDP China is rebalancing the GDP from investment-led to consumption-led growth China 5YP Evolution 11th Five Year 12th Five Year 13th Five Year (2006-2010) (2011-2015) (2016-2020) Economic Rapid GDP Sustainable Theme Well-off society growth growth GDP implied growth ~ 10.8 ~ 7
Slide 17: Trends & implications: Industry evolution
Trends & implications: Industry evolution There are other factors that influence the industry in the short term other than GDP Short term KPIs 2014 Going forward GDP Urbanization Real disposable income Employment conditions Weather (temperature & precipitation) FAI – Fixed Asset investment PMI – Pur
Slide 18: China is too big and too complex to use averages
China is too big and too complex to use averages
Slide 19: Looking beyond averages in China to win with the winners
Looking beyond averages in China to win with the winners Geographies Segments Channels
Slide 20: China – A continent by itself
China – A continent by itself Because of its size, averages can be misleading in China Source: The Economist Intelligence Unit
Slide 21: Looking beyond average: Geographies – Beer consumption
Looking beyond average: Geographies – Beer consumption There is still space for China’s beer industry to grow. Provinces with per capita consumption below the China average account for 45% of the beer market GDP vs Consumption Consumption per capita Per capita, thousand USD and liters Liters; 20 lar
Slide 22: Geographical expansion
Geographical expansion We have been expanding our footprint to regions with sizable markets and the highest potential for beer volume growth Footprint - 2010 Footprint - 2015 Greenfields Core Market Expansion Market
Slide 23: China – Urbanization
China – Urbanization Looking beyond provinces, and moving into pockets of growth at city level 2014 2013 2012 2011 2010 2020 2019 2017 2016 2015 Cities / counties with 250,000 or more MACs* Year # of cities 2010 85 2020E ~300 * MAC: Middle and Affluent Class households Source: BCG
Slide 24: China – Consumer development
China – Consumer development The number of urban middle & affluent class consumer (MAC) households will grow from ~102 million (35%) in 2014 to ~299 million (75%) in 2030 2014 2020 2030 Household (mio) Household monthly income (RMB 000s)* Affluent : >23 6 21 60 Upper middle: 12-23 38 77 141 Middle C
Slide 25: Consumers – industry segments
Looking beyond averages: Consumers – industry segments Premium and Super Premium segments are growing ahead of the average and have 5x-9x the profitability of the core & value segment Industry by segment Segment comparisons % of volume by segment Indexed at 100 for core & value segment 2025 industry
Slide 26: Brand portfolio
Brand portfolio ABI is well positioned to lead the way in the Super Premium, Premium and Core+ segments Super Premium Premium Core+ Harbin Ice Core & Value Regional brands
Slide 27: Industry evolution by segment
Industry evolution by segment Super Premium, Premium and Core+ segments are growing at a significant pace, while the core & value segments are declining. ABI has outperformed in the most profitable segments Industry by segment Industry growth by segment % of volume by segment Volume growth by segmen
Slide 28: Channels – Industry by channel
Looking beyond averages: Channels – Industry by channel Modern channels are growing faster than traditional channels. ABI is over-performing the industry growth in all growing channels Industry by Channel Volume growth 1H15 vs 1H14 ABI by Channel % of volume by Channel * % of volume by Channel % of
Slide 29: Winning with the winners
Winning with the winners • China is too big and too complex to use averages • Looking beyond averages in China to win with the winners – Geographies, Segments and Channels • Provinces with per capita consumption below the China average account for 45% of the beer market. Urbanization will drive per
Slide 30: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 31: China Journey
China Journey In the last 5 years revenues grew 2.4x faster than volumes and EBITDA grew 1.1x faster than revenues CAGR 10-14 Volumes (mio HL) Gross Profit (mio USD) Net Revenues (mio USD) 21.7% NR 2.4x EBITDA Vol growth 24.4% Gross Profit 1.1x NR growth 71.4 65.5 9.2% 56.0 57.7 50.3 25.1% 2010 2011
Slide 32: Market share in China
Market share in China ABI has significantly increased market share in China Volume market share in China 18.3% 17.5% 15.0% 13.4% 12.2% 12.3% 2010 2011 2012 2013 2014 2015 1H Ranking #4 #3 #3 #3 #3 #3 Source: Seema and internal reports. Considers full M&A volumes in the year of acquisition
Slide 33: EBITDA pool
EBITDA pool In 2014 ABI became the leader, capturing 29.2% of the EBITDA pool • ABI’s participation in the EBITDA pool is growing fast • ABI is leading the way in EBITDA expansion Share Point • ABI is well positioned to further expand participation in the EBITDA pool Change (2011-2014) Others -3.3pt
Slide 34: EBITDA margin
EBITDA margin ABI’s EBITDA margin is well above the average of the rest of the industry, and growing EBITDA Margin Margin Change (2014) (2011-2014) 18.5% +3.1% 14.0% -2.6% Average industry (ex-ABI) Source: Annual Reports/Seema
Slide 35: EBIT margin
EBIT margin Since 2012 ABI has been increasing EBIT margin at the fastest rate in the industry EBIT Margin Margin Change (2014) (2011-2014) 8.0% -2.3% Average industry (ex-ABI) 5.0% +1.3% Source: Annual Reports/Seema
Slide 36: Greenfield and Footprint Renovation
Greenfield and Footprint Renovation Greenfields and brewery relocations have led to increase in depreciation & amortization (D&A). Going forward, D&A is expected to stabilize Footprint improvements are expected to drive operational efficiencies Category Volume # of Brewery Greenfi
Slide 37: Agenda
Agenda Why APAC? ABI APAC Journey and Dream Why China? China trends and implications ABI China performance China strategy – main priorities
Slide 38: China strategy – Main Priorities
China strategy – Main Priorities • Win consumers in Premium and Super Building Premium • Connect though digital, experiential & multiple winning brands touch points • Do it with speed, relevance and simplicity • Maximize strongholds Building scale with • Sales Machine replicable models • Expansion D
Slide 39: China strategy – Focus Areas
China strategy – Focus Areas PREMIUMIZATION DISTRIBUTION CHANNELS
Slide 40: Two-Engine Growth Strategy to Win in China
Two-Engine Growth Strategy to Win in China Win nationally in premium while expanding and increasing leadership, province by province PREMIUMIZATION Hitchhiker High Road Stronghold China Average Expansion DISTRIBUTION
Slide 41: Two-Engine Growth Strategy to Win in China
Two-Engine Growth Strategy to Win in China Win nationally in premium while expanding and increasing leadership, province by province PREMIUMIZATION Hitchhiker High Road Stronghold China Average Expansion DISTRIBUTION
Slide 42: Premiumization: High Road
High Road PREMIUMIZATION High Road Stronghold 2020: Careful selection of cities with the highest Middle/Affluent Hitchhi ~300 cities Class Population with >250k MAC population concentration… ker China Average Expansion DISTRIBUTION Source: BCG, MAC = Middle/Affluent Class Population
Slide 43: Premiumization as the biggest driver of revenue per HL
High Road PREMIUMIZATION High Road Stronghold Hitchhi Premiumization as the biggest driver of revenue per HL…. ker China Average Expansion % of volume by segment % of volume growth DISTRIBUTION 0.2% 6.3% Industry growth A 26.2% 2012 2013 2014 2015 1H v Super Premium 69.7% 23.1% 35.0% 30.5% Premium 1
Slide 44: ABI over-indexes in Premium
High Road PREMIUMIZATION High Road Stronghold Hitchhi ABI over-indexes in Premium (22%), and outperforms the industry segment growth by 2x ker China Average Expansion DISTRIBUTION % of volume by segment % of volume growth 0.2% 0.2% 6.3% 22.3% 26.2% Industry growth ABI growth 24.6% 2012 2013 2014 201
Slide 45: 1HL of Super Premium = 9 HL of Core/Value
High Road PREMIUMIZATION High Road Stronghold Hitchhi 1HL of Super Premium = 9 HL of Core/Value ker China Average Expansion DISTRIBUTION % of volume by segment 0.2% 0.2% GROSS MARGIN 6.3% INDEX 22.3% 26.2% Super Premium 9.0 X 24.6% Premium 5.0 X 67.3% 52.9% Core+ 1.6 X Core & Value 100% 2014 Industr
Slide 46: Budweiser being a clear winner in Premium
Budweiser being a clear winner in Premium….. BUDWEISER VOLUME 15,400 KHL 12,283 9,426 7,159 +29.1% 11-14 CAGR 2011 2012 2013 2014 BUDWEISER SHARE OF PREMIUM 57.2% 50.5% 43.2% +20.6 pp 36.6% 14 vs. 11 2011 2012 2013 2014 Source: Internal Report
Slide 47: Two-Engine Growth Strategy to Win in China
Two-Engine Growth Strategy to Win in China Win nationally in premium while expanding and increasing leadership, province by province PREMIUMIZATION Hitchhiker High Road Stronghold China Average Expansion DISTRIBUTION
Slide 48: Expansion: Leap-frog growth around new breweries
Expansion PREMIUMIZATION High Road Stronghold Leap-frog growth in areas around our new breweries… Hitchhi ker China Average Expansion DISTRIBUTION 2010 2011 2012 2013 2014 2015 Liaoning Liaoning Hebei Henan Henan Jiangsu Sichuan Sichuan Sichuan Yunnan Yunnan GD Yunnan GX GD Source: Internal Report
Slide 49: Harbin being a strong engine to fuel expansion
Harbin being a strong engine to fuel expansion… HARBIN VOLUME 25,829 KHL 23,888 20,083 18,748 +11.3% 11-14 CAGR 2011 2012 2013 2014 HARBIN T3F among LDA Drinkers 45.9 39.1 31.2 27.6 19.6 +10.4 1H15 Source:Equity vs. 1H14 Tracker, Internal Report 2011 2012 2013 2014 2015 YTD
Slide 50: Two-Engine Growth Strategy to Win in China
Two-Engine Growth Strategy to Win in China Win nationally in premium while expanding and increasing leadership, province by province PREMIUMIZATION Hitchhiker High Road Stronghold China Average Expansion DISTRIBUTION
Slide 51: What a Stronghold looks like
What a Stronghold looks like… Population (000’) Beer Industry (000 hl) Consumption Per Capita (liter) % of Premium & Core+ Industry Fujian ABI Market Share (Yr 2014 ) ABI Relative Market Share High Road Stronghold China Average Expansion Source: SEEMA, Internal Report
Slide 52: Channel Strategy: Managing complexity with Budweiser
Our Channel Strategy is focused on Managing complexity….with Budweiser KTV/Dancing Club Brand Volume Contribution by Channel Traditional Trade/Other Bar/Western/Travel Journey KA/E-commerce Chinese Restaurant Budweiser Harbin Imported Super Premium Source: Internal Report
Slide 53: Channel Strategy: Managing complexity and Harbin
Our Channel Strategy is focused on Managing complexity….and Harbin KTV/Dancing Club Brand Volume Contribution by Channel Traditional Trade/Other Bar/Western/Travel Journey KA/E-commerce Chinese Restaurant Budweiser Harbin Imported Super Premium Source: Internal Report
Slide 54: Managing complexity complemented by Super Premium portfolio
… Managing complexity….complemented by the Super Premium portfolio KTV/Dancing Club Brand Volume Contribution by Channel Traditional Trade/Other Bar/Western/Travel Journey KA/E-commerce Chinese Restaurant Budweiser Harbin Imported Super Premium Source: Internal Report
Slide 55: Summary
Summary • Asia Pacific: largest beer industry, 53% of world industry growth in the next ten years • Dream is to be #1 in Asia • To achieve ABI APAC’s dream we must win in China • Averages in China are misleading • We must look beyond averages in geographies, segments and channels • Winning with the
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