Welcome to the Anheuser-Busch InBev Second Quarter 2015 Earnings Conference Call and Webcast. Hosting the call today from AB InBev is Mr. Carlos Brito, Chief Executive Officer. To access the slides accompanying today's call, please visit AB InBev's website now at www.ab-inbev.com and click on the Investors tab. Today's webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. [Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, please see Risk Factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on 24th of March 2015. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Carlos Brito. Sir, you may begin.

Well, thank you, Jackie, and good morning, good afternoon, everyone. And welcome to our 2015 second quarter results conference call. I will start with the highlights. The second quarter was challenging, with tough comps from the FIFA World Cup last year and weak economic conditions in a number of our markets. Unfavorable weather, especially in the U.S. and China, added to the pressure. Nevertheless, our strong portfolio of brands and our geographic diversification enabled us to withstand these headwinds and deliver solid revenue growth. We entered the second half with momentum behind our brands and commercial initiatives and have strong plans in place to accelerate revenue growth. Total revenues grew by 4.1% in the quarter, with strong revenue per hectoliter growth of 7.1% on a constant geographic basis helping to offset the decline in total volumes of 2.2%. Volumes of our focus brands were down 2%, but our three global brands grew by 6.4%. EBITDA grew by 4.6%, with EBTIDA margin expanding by 17 bps, to 37.6%. Normalized earnings per share decreased to $1.21 from $1.60, due to unfavorable currency translation, one-off items, and higher net finance costs, all of which Felipe will explain in more detail later. Each of our three global brands performed well in the quarter, with combined volumes up more than 6%. Corona volumes grew by 7.8%, driven by great performances in Brazil, Canada, U.K., and our global export markets. Corona is being rolled out globally, with a consistent position and execution. We're very excited about the growth potential for this unique super premium brand. Global Budweiser grew by 6% this quarter, on top of 6.7% growth during the World Cup last year, led by China and a very encouraging performance in the U.S., which I'll talk some more later. Finally, Stella Artois grew by 4.9%,…

Thank you, Brito, and good morning, good afternoon, everyone. Slide 15 shows the EBITDA breakdown by zone for both the second quarter and the half year. Total company EBITDA grew by $207 million or 4.6%, in the quarter. However, as Brito mentioned earlier, the second quarter results last year included a one-time benefit of $57 million relating to the reversal of medical expense accruals in the U.S. This one-off last year has the effect of reducing underlying EBITDA growth for the total company in the second quarter this year by 1.3 percentage points. Sales and marketing investments increased 1.3% in the first half on top of a 13% increase in the same period of last year driven by the World Cup. We're continuing to invest behind our brands and we are maintaining our guidance for full year growth in sales and marketing of mid to high single-digits, implying double-digits growth in the second half in support of the total revenues acceleration. I would now like to quickly review our EPS and the below-EBIT results before we move to the Q&A. Normalized earnings per share decreased to $1.21 from $1.60 in the second quarter last year. This decrease was due to an improvement in EBIT of $0.14 per share being more than offset by unfavorable currency translation, particularly the Brazilian real, the Mexican peso, and the euro, negative scope changes, and higher net finance costs. The main item included in the scope changes relates to a one-time accounting adjustment of $223 million which was reported in the second quarter last year following an actuarial reassessment of future liabilities under our post-retirement healthcare benefit plans in the U.S. This adjustment was included in the results of North America last year as a positive scope change in non-operating income and therefore, excluded from…

The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up. [Operator Instructions] Thank you. Our first question is coming from Mark Swartzberg with Stifel Financial.

Thanks Jackie. Good morning Brito and Felipe.

Good morning.

Really, two questions. One is pertaining to Brazil and one is pertaining to cash returns. In the instance of Brazil, obviously you've been dealing in an inflationary environment for some time now and your experience dates to periods when today's inflation would be considered low compared to some of the things you've seen. And you're adapting well. But I wonder, as you think about the multi-year strategy for that market, if you could share a little bit more than we've heard so far about what the multi-year strategy there is, given that we are in this no-growth, increasingly inflationary environment? And then, on cash return, I appreciate the reiteration of the targets here. What I'm still scratching my head on is the choice not to have some additional share repurchase as a target, appreciating that a target is not the same as a commitment. But you completed the $1 billion; I know that was for incentive purposes to reward people. But I'm still not quite following why we haven't heard more about your share repurchase intentions from here.

Hi Mark, Brito here. Thanks for the question. In terms of Brazil, our team in Brazil at the beginning of this year decided once again, because we've been through tough macroeconomic situations before and the team has experience with that, that we would not be part of the crisis. So, by that I mean that we would focus on our programs, try to out-execute competition in the marketplace, out-think in terms of strategy and how to adapt programs given the macro in terms of doing what we can control. So, we've been in Brazil now operating for 26 years and we know that in a market like Brazil or some others in Latin America every five years, or so, you'll have a period like this one, in that things kind of go sideways or even backwards. But then again, the math is very positive. It has always been. And we say that because it's not going to be a year or two of turbulence that will change the fundamentals in Brazil that are very clear. When you look at demographics; when you look at beer culture in Brazil; when you look at the core brands that we have that are very strong and that we can continue to grow; when you look at the premium that finally in the last two years have kind of woken up and now it's time to grow; when you look at the premium -- when you talk to consumers, 20% of the total preference of consumers manifest all linked to premium brands. And today, we're gaining share in the premium segment, but premium is only 8.5% of our mix. So, you see lots of room to grow with better top line and macro. When you think about, near beer is another big opportunity. You…

That's great. That's great. Very helpful. Yeah.

Hi Mark, Felipe here to address your second question on cash returns. Our capital allocation priorities remain unchanged. When we announced the $1 billion buyback program, we made it clear that it would be driven by our share delivery commitments, more than capital structure allocation. And as the first $1 billion was completed, the shares acquired fulfill our immediate commitment under the stock ownership plan. There will be future commitments and the Board will be constantly evaluating capital structure and taking into account these delivery commitments which will drive decisions going forward. But at this point, we didn't feel necessary to launch a new program.

So, is it reasonable to think that come the October release or early November release when you have a Board meeting that that's a more reasonable time to get an update on the amount of dividend and repo from that point forward? Incremental to what's already been put out there?

We will see. We manage it very closely. We monitor it very closely. And if the Board concludes that makes sense to do anything, a decision will be made. But I cannot speculate on whether or not the decision will be made at that point.

Fair enough. Okay. Thank you gentlemen.

You're welcome.

Thank you.

Our next question comes from the line of Edward Mundy with Nomura.

Hello everyone. From recollection, about 40% of your COGS in Brazil, I think, are hard currency denominated. I was wondering whether you could provide some color on the various levers, both on the commercial side and cost side, you can pull in Brazil to offset the negative transactional risk on this hard currency generated input costs into 2016, given the recent devaluation of the Brazilian real?

Well, I guess, we have -- as you said, part of our cost of sales is dollar denominated, 40%. We've had a longstanding policy of hedging the transactional piece of the business, not the translation. So, for this year -- why do you do a hedge? Not to second guess the market, but to give us time to react in case of a devaluation or a commodity movement or volatility and that's the whole idea. So, we continue to do that. And what we try to do is we try to look at the inflation and we try to be realistic when we balance the way we go to market in terms of share, volume, and price to reflect in the marketplace the kind of pressures we have on the cost side. That has been -- again, we've been in Brazil for 26 years. It's not the first time that we have currency impacts or commodity impacts. And that's why we have the hedge program in place to give us time to re-shift gears, adjust plans, and go to market in a way that makes sense and that we pass not overnight, but in a period of time that to consumers in a rational way. But also give us time to give more support to returnable bottle growth, for example, so we don't need to burden consumers too much, because we have a much better margin on the returnables. So, that's the mix of things that we trigger every time we have this thing. The other things we do is that we constant review our cost efficiencies. So, every time we have this kind of pressure or volatility, we go back to our [indiscernible] engineering files, to our footprint analysis of where we have brewers, and all that. And so, that's another driver. And the other thing add, to have in mind, is that some of the costs that you are seeing -- our cost of sales going up is the result of our premium mix going up, because the premium mix is mostly sold on one-way packs with very good margins. But when you look at the costs only, as opposed to the total business, you'll see the cost going up, because if you sell Budweiser, Corona, and Stella mostly in one-way packs, but with very good margins, you see the topline will go up, costs will go up, but the net in terms of macro will be very good. But having said all that, we expect cost of sales per hectoliter to increase organically for the full year, by low single-digits. In other words, we're keeping our outlook, based of course on constant geographic mix.

Great. Thank you. And just as a follow-up, I was wondering your outlook statement implies that you expect the Chinese beer market, Chinese industry volumes, to go back into grace in the second half. I was wondering whether you could provide some color that gives you optimism around that. And as a second part to that question, the number one leader, China Resources Snow, reported some very strong revenue per hectoliter in the last quarter, plus 9%. Are you seeing a more rational industry in China at the moment?

I mean our numbers for China continues to be very exciting. When you think about the half year in which industry declined, by our estimates, by 4.5%, our volume increased by 1.7%; so, a six percentage points difference between what the market is doing and what our volumes are doing. And more importantly, our revenue per hectoliter increased by 6.5% at the same time. So, very good balance there. And we feel good about the balance of the year for two reasons. First, because the summer has not yet arrived in China and that's a reality. You look at the numbers that are public and you see the temperatures and precipitation and all that. It's not the typical summer that we normally have. So, that's one thing. We believe that that's going to get better now in the third quarter. And second, because in a market like this, when you look at the industry decline, what's really declining more than anything else is the core and value segments. And because we have an amazing leadership position in the premium segment, we will just put more fuel on the fire in China, and there are many programs to do that. And on top of that, the super-premium segment, that's new to our business in China. So, our business used to be a lot about premium in China, with Budweiser mainly. Now, we have Corona, we have Stella and those brands are growing at a price point above Budweiser which, again, provides amazing growth opportunities and amazing profit opportunities. And by the way, in a month from now we're going to have a China trip in the first week of September with some of our investors, and it will be an amazing opportunity for us to showcase what and the way we built our business and the momentum our business has in China, not only in the premium segment but now in the super-premium segment, as well. So, thanks for your question.

Great. Thank you.

Our next question comes from the line of Olivier Nicolai with Morgan Stanley

Hi, good afternoon. Just two questions, please. First of all, on the U.S., revenue per hectoliter growth in the U.S. is definitely below historical trends. Do you expect a negative mix from the retail to last for the rest of the year? And secondly, in Mexico, volume growth accelerated in Q2. Is it fair to assume that you are getting share?

Well, I'll start with Mexico. In Mexico, our volumes grew by 4.1% and [indiscernible] did particularly well, growing 6.1%. We don't have share numbers, Olivier, because we only get share numbers at the end of the year. So, we have some estimates that we do internally. We try from other competitors as they announce numbers. But we don't make it public. So, it's a yearly share communication that we do to the markets, given that we don't have other sources. So -- but we're very happy with the development in Mexico, in terms of volume, the way the portfolio is evolving, the way our pricing is evolving, and also with Bud Light that's growing in a very healthy way. Your first question on the U.S., can you repeat it, please?

Well, basically you have this negative mix effect from the fact that the retails are declining and that's creating some negative mix on your revenue per hectoliter. Could we expect this to continue? And do we basically expect still around 1%, 1.5% of revenue per hectoliter growth in the U.S., compared to --?

Okay. Okay, got it. We're not giving guidance on that specific metric, but one thing you can infer from what we've said this quarter is that brand mix will play a key role. So, this quarter a lot of the 1.2% was influenced down by the underperformance of the Ritas. So, had Ritas performed better, that number would be higher. So, there was a big impact there in terms of what we get net revenue per hectoliter in our brand mix.

Perfect. Thank you very much Brito.

You're welcome.

Our next question comes from the line of Robert Ottenstein with Evercore ISI.

Two questions. First, can you give us any more sense of some of the potentially timing issues that are affecting your COGS line and your distribution costs, such that you'll be able to maintain guidance for the year despite what was reported this quarter? So, that's the first question. And then the second question, you've now had a chance to see a little bit more firsthand the kind of potential that Corona has globally. Perhaps you could maybe revisit with us your assumptions on the potential of that brand long-term outside of Mexico? Thank you.

Hi Robert, it's Felipe here, taking the cost of sales and also distribution expenses first. If you recollect last year, cost of sales per hectoliter growth was essentially a 2.2% decline in the first quarter, essentially flat in the second quarter, then 5.6% growth in the third, 6.7% growth in the fourth quarter. So, net-net, we are getting to easier comps as we recycle the third and fourth quarter. The first half of the year was negatively impacted by the $57 million, both in the cost of goods sold. Moreover, we also said Corona or Modelo synergies were back-loaded in the year, and a lot of the synergies at this point are kicking in the cost of goods sold line rather than admin expenses. There is a component of freight rates that also impacts positively cost of goods sold, but also distribution expenses. On the distribution expenses, you basically saw the same trend last year, an increase of 1.7% in the first quarter, 7.6% in the second, 11.9% in the third, 12.7% in the fourth, which means, again, as we enter to the second half of the year, we're getting easier comps and we feel comfortable in keeping the current guidance for both cost of sales and distribution expenses.

Is there anything else going on, Felipe, besides easier comps?

No -- well, there is the Modelo synergies, as I said, that are more back-loaded. There is the thing on the fuel prices that is positively impacting not only cost of sales freight overall, but also distribution expenses. And there is the $57 million that was a kind of headwind in the first half will not be there on the second half.

Thank you.

You're welcome.

Robert, when you talk about -- Brito here, when you talk about Corona, this is an amazing positive news on our side. Global Corona, as you saw in the release, is up by 7.8% this quarter. But if you look at global export markets, it's up by 9.1% in the second quarter. And more importantly than that, revenue is growing even ahead of that, because as we got the brand back in main markets, we repriced it up to really reflect the fact that we want to position it as the most super-premium brands in all markets where we operate, and that's what the brand deserves. So, very early to say what the potential is, but it has been only surprises to us. Even in market where we have a high share, it's adding to our share. And in China, it's showing us a new, different world of super-premium brands. It's giving us access to channels in China. For example, you see a month from now in China that we had very little access to, like, the restaurant bars. It's growing rapidly in China. And just redefining what the price of super-premium brand is or should be in any markets. Redefining what a high-priced beer is. So, great to our overall business.

Thank you very much.

Welcome.

Our next question comes from the line of Chris Pitcher with Redburn.

Good afternoon Brito and Felipe. My two questions. The first one -- I'd like to go to a different market and Korea looks to have had a very tough second quarter, indeed a tough year. Are you still suffering from the production problems around Cass last year and the brand perception there? And margins do look to be a lot weaker in Korea than certainly I was looking for. Now that you've got the business back from private equity, does it need more money than perhaps you originally thought? And then, my follow-up question is on U.S. inventory levels. You talk about shipments and depletions matching each other for the full year. Is there still short 1 million hectoliters to go through the shipment line in the second half, just to check I've got my numbers broadly right there?

Yeah. In terms of Korea, in a way it's a new market for us. We have been absence of that market for five years. Now we're back for one year. So, -- and you're right. Total volumes declined by high single-digits in this second quarter. I would say half of that is industry decline, mid-single-digits, and half of that is market share loss in a very competitive environment. So, I can also say that we're still transitioning the business. It came from a private equity type environment, with some of the ways of work are very different. So, we're going back to basics and going back to our culture, and we're building our plans for the future. So, that has lagged a little bit because of some of the things that have to change. On the other hand, we have a very motivated team. And they now are back to a brewer. We're in this business forever, not for five years or six years. I think the other guys, the private equity, did an amazing job, but of course, their scenario in terms of years to hold the business is different than ours. So, we're having to readjust as we transition the business. The new thing in Korea from five years ago when we sold the business is that Cass is now the number one brand in the country. Yes, it suffered a little bit with production issues last year, but share is stable now, but down from last year for sure. And there is another big difference from five years ago, is that the imported brands are just booming. And that's great news for us. We're still underrepresented because -- again, it was not so much high on the agenda of the last administration, imported brands. But now, with our global brands we have a big opportunity there to make an impact and with our leadership position. So, again, we're very happy to have that business back, a very motivated team. But we're transitioning the business and we have some issues, as you mentioned last year that we're cycling through.

And just, while we're on Korea, in terms of when you acquired the business and you talked about the potential to take synergies out, do you think some of the quality assurance issues perhaps mean that there are dis-synergies now in Korea, that actually you net need to put more money in than perhaps when you bought it in or is it tracking according to--?

No, no, no. I mean we never really justified Korean reacquisition based on synergies. The multiple we bought was an amazing multiple. So, it made sense by itself. And -- so, we're very happy. We know the business. It has changed a bit. We have to transition a couple of things because the other administration did some great things, but how they did it and some of the cultural aspects we're transitioning back. We're back to basics, investing in people again, rebuilding some of the teams, going back to some of the basics in market execution. And looking a lot at import brands, import segment, and we're trying to get Cass back -- again, number one brand in the country -- back to the momentum it had last year. That got affected a little bit by some production issues; you're right.

Okay. Thanks. Just on U.S. shipment levels?

U.S. shipment levels?

Okay, hi Chris. The first half of this year, STRs were down 1.9%, while STWs were down 3.5%. Like in previous years, we believe STRs and STWs should converge, which suggests that STWs, meaning shipments to wholesalers, in the second half should perform better than the STRs.

And is there anything you can comment around -- I know you won't directly mention it, but the whole SEC investigation that's going on around your major competitor in the spirits side? Have you been approached by the SEC around the whole stock level issue in the United States?

We have no information on SEC, the active investigation, apart from we've read in the papers. And--

We have not been approached.

No, we have not been approached. And again, more than that, we believe our sales practice and reporting are compliant with any applicable regulations. So, that's all we have to say at this point.

Thanks. Very clear.

Our next question comes from the line of Sanjeet Aujla with Credit Suisse.

Hi, thanks for the question. Most of mine have been asked, but can you just give us a bit of color on how many more shares do you need to acquire to fulfill future commitments on the stock ownership plan?

I don't have the number in front of me. But over time, it's fair for you to assume that what we report as share forward-swap agreements outstanding, which is part of our hedging, should at some point be converted into shares being acquired as a way to fully fulfill the share delivery commitments. But that is over time. So, that number is likely to be around 55 million shares for the period in total.

Got it.

The biggest chunk of it is the Modelo -- the shares to be delivered to former Modelo shareholders, which was a five-year commitment since the closing of the transaction in 2013. It's coming in 2018. Of course also, the Board reserves the right of issuing new shares because economically that would have been neutral.

Got it. Thank you.

Our next question comes from the line of Trevor Stirling with Bernstein.

Hi Felipe and Brito. One question from my side. U.S. gross margins were down 300 basis points in the quarter and it roughly seems about 160 of that was the non-recurral of the medical expense. But that still leaves about 140 basis points of underlying gross margin pressure. What areas are you going to look at, Brito, to try and address that?

First, you should look, as we said before, in terms of brand mix. We expected a brand mix that is start increasing in terms of the Ritas, for example in that. So, we lost representation of Ritas within the portfolio and that was a very good gross profit enhancer. And in terms of operational leverage, we're also investing more in terms of marketing because we see some good opportunities in terms of Ultra, high end brands, some of the craft brands we acquired. So, all these things are going well, and we're putting more fuel to the fire. So, -- I mean we're trying to rebalance our portfolio in the U.S., in that Bud and Bud Light remain priorities, but the high end needs to step-up and grow faster. We're also investing in the Mexican segment. So, all those things are part of this remaking of our portfolio, given the new market and consumers. And this is all good news, because this remaking of the portfolio, as we said in 2008 when we got here, we like the share position not the share composition, and we thought we had too much reliance on value brands, or sub-premium brands. And we wanted our people to look up and get things like the Ritas and the Stella to grow faster and the Ultra to grow faster and all those things that are more accretive and in terms of future, more promising.

Thank you, Brito.

Thank you.

Our next question comes from the line of Mitchell Collett with Goldman Sachs.

I wanted to ask about innovation in the U.S. You've obviously had some innovations over the last two or three years that have been very successful initially, but then have tended to be less successful in the second or third year. I wondered how you were thinking about innovation, going forward. Is it worth the investment to push these innovations out for what is a relatively temporary gain?

Yeah, hi Mitchell. I think innovation is part of it. The other part is really focus on the things that are working. So, we don't need innovation only, to grow the business, but that's part of the growth equation. When you think about Bud Light Platinum or the Ritas, they went up, then down a bit. But they have a very good residual. Platinum have a 0.5% share; come up from nothing. Rita is 0.9%, [indiscernible], Bud Light Lime glass bottle was relaunched in terms of a new bottle this April and has been very successful, reverses some negative trends. So, it has had the best trend since 2009. On the other hand, Bud Light Black Crown has failed. And again, when you innovate you have things that are success and failure, and that's important for the learning. You only learn if you -- it's like learning to ride a bike; you have to fail to learn it. On the other hand, we also have some package innovation that have been very successful. The 25-ounce can, the aluminum bottle, recloseable aluminum bottle. All these packs have been very successful. We also have different flavor variants for the Ritas and here we need to do a better job. We came with lemonade already, for example. That's doing well, but not as well as some of the others. We also have Mixx Tail in the F&B category and Oculto. So, in F&B, it's something that when you think about it, Mitch, is we had zero share in that category three years ago. They were the number one player. And the Ritas this year are not performing well, disappointing. But that doesn't mean that the equity behind it, it's gone; quite the opposite. It means that this segment attract a lot of new players and we need to up our game to compete and to continue to grow and keep the leadership position in the F&B. But it's very profitable at the F&B and highly accretive to the beer business, with most of the volume coming from outside of beer. So, extending the price. So, we're very committed to it.

So, you say you're happy that the level of investment you're making is generating an adequate return, even though sometimes they tail off a bit after a year or two?

Yeah. Well, innovation is like this. But again, if the residual of a brand is 0.5% share, 0.9% share, and profitable, I think those are good returns residuals. And yes, we'll have some failures, but I think it's part of the equation. Another part of the equation is continuing to invest behind the big brands that make up most of our business, like Bud, Bud Light, Ultra, Stella, Goose Island more and more. So, these are important brands for the make-up. And this year, we're very bullish about the second half of the year in terms of total company, because if you look at our guidance in terms of sales and marketing investments, we kept the guidance for the year mid to high single-digits. But in the first half, because of some calendarization and FIFA World Cup last year, we only grew our sales and marketing by 1.3%, on top of a 13% growth last year. So, if you do the math, you get to a double-digits sales and marketing growth spend or investment spend, in the second half of the year, and that will be great to support what we said in the press release about the revenue accelerating in the second half. And I'm talking about the global company, not the U.S., necessarily; the U.S. being part of it.

Okay. And if I can ask one, unrelated follow-up? In Brazil, your market share is -- I think you said 67.6%. That's at the bottom end of your historic range. Normally, it's somewhere between 67% and 70%. Would we be right therefore to assume that you're likely to perhaps push a bit more on volume on market share in the second half, to restore that back towards the upper end of the range?

Well, Mitch, our range has been from 67% to 69%. It's down this year quarter-over-quarter because, if you remember, last year with all the FIFA World Cup sponsorship and activation, we had an amazing market share during that period. So, it's a very tough comp. But 67.6% with the kind of pricing we're having this year, I think again in a year like this you have to balance very carefully how you get your volume, share, and price going or revenue initiatives going. And I think our guys in Brazil have been able to navigate that really well. You look at their results. Despite the comps of the World Cup and the macro, I think it's a very good balance. So, we'll continue to try to strive for that right balance.

Great. Thank you.

Our next question comes from the line of Ian Wood with Bank of America Merrill Lynch.

It's actually Andrew Scott. Thanks for taking the question. Going back to China again, if I do the math on Q2, your core three brands have grown by 3.5%. Your volume overall was flattish, slightly down. So, that tail -- I think you said about 30% of it is the tail -- is obviously down, with the market broadly. You mentioned yourselves, 6.5%. Two questions, really. What do you see for the second half in that tail of the brands you have in China? And what is the longer term plan, not to preempt what you may say in September? Thanks.

Well, our strategy in China has been the same for the past five, six years, in that especially after the Sedrin acquisition in 2006 and after the Budweiser combination in 2008. We wanted to develop our brands in the premium and super-premium segment. Of course, we have a lot of brands -- still 30% of the business in core and value, less than 30% and less and less every quarter. And the market is not growing this year. It's negative, as I said 4.5% for the first half of this year. But our volume grew by 1.7%. So, a six percentage point difference between what the market is doing overall on average and what our portfolio is doing, because it's skewed more towards premium and super-premium. So, our strategy will remain the same to try to increase the importance of those premium brands or our focus brands, which today sits at 72%, try to continue to increase that because they're more profitable and because the dynamics of the industry is more favorable to them, even in tough times. And that's our game plan and has been for many years. The other good thing to know in China is that, different from some years ago, today more than 90% of our business is in our hands. So, the whole thing about joint ventures is going down fast and because they're mostly based on core and value. And when you talk about profitability, it's around 96% to 98%, around 100%, controlled by ourselves. So, you put a portfolio that's right positioned, you put the momentum we have, the fact that we have 90% plus now in our hands, I think that builds for a great future. And that's why on top of that if you put Corona, Stella, I think that it's even more exciting, because up until some months ago, Budweiser was the top in terms of pricing. Now, you put Stella and Corona on top of that, and you again raise that ceiling and you start building that super-premium segment in which there was a pent-up demand there that now is being out-care because now we have products to offer. So -- and because our route-to-market is a premium route-to-market, it's great to put those brands on top of that premium route to market which we have established there throughout the years. So, very excited about China, as we've been in the past few years. We remain excited.

Can I just follow -up on that? Because you mentioned an SG&A acceleration in the second half. If I think about that regionally, I'm guessing a lot of that is to China? But I just wondered what other regions are going to see a big push on SG&A?

Say it again? It's really bad, the connection. If you could talk a little louder, please?

Yeah I'm sorry. Sorry, hope that's better. The question was around the second half, the comments you made about picking up on SG&A investment, a double-digit increase in the second half. And whether most of that -- or the majority of that, is going to China? Just give me an idea of where that investment is going regionally?

No, no, no, no. What I said, again, is this. Because we're keeping the guidance on sales and marketing for mid to high single-digits for the year and in the first half it was only 1.3% on top of a very high base last year for the World Cup; but that's a fact. The math tells us that there will be double-digits, year-on-year growth in sales and marketing for the third and fourth quarter. So, that's great news for rapid acceleration, which we said. But we said that on a company-wide basis; we didn't split by region or anything. But because there is so many initiatives that are very promising that we're working, we want to put more fuel on that fire so we have an acceleration of revenue moving towards year end.

Okay, got it. Thank you.

Our next question comes from the line of Tristan van Strien with Deutsche Bank.

Good morning. Its Tristan here. Two questions. A bit more on China, if you don't mind? The first one, just can you give a bit of color on your provincial market share gains, if you had any, particularly northeast versus the greater Guangdong area? And then, second, I saw that you intend to increase your shareholding in the Po River Breweries to 30%. But my understanding that you guys were always restricted from doing that according to the 2008 MOFCOM decision. So, I was wondering what has changed that allows you to do that? Thank you.

Felipe will take the second one. I'll go back to the first one.

Well, the second one, it basically depends on the MOFCOM approval for us to get there. And we are going to work together with the Zhujiang Brewery and the province in order to enhance our already very strong strategic partnership into that business, which is a partnership that's been there for 30 years. But the increase is subject to MOFCOM approval.

Okay.

And Tristan, on your first question about China regional market shares, we don't give those out. But we're very happy with our share performance in China, going to 18%, 100 bps improvement. And that talks again to the strength of the portfolio and the momentum of the brands.

Okay. Just to follow-up on that, your EBITDA margin is obviously increasing on a very good clip. Is that happening at the same pace on your EBIT margins as well? Or is your D&A expense, because you're investing quite a bit, is that increasing faster?

Well, that, I'll have to get back to you. Graham will get back to you, because I don't have it here in front of me. I know that our EBITDA margin went to 26%, which is a very good development, 26% yeah.

Thank you.

Thank you.

Ladies and gentlemen, we have time for one final question. Our final question comes from the line of Andrea Pistacchi, Citi.

Hi, thanks very. It's actually on Vietnam and your Greenfield initiative, because you recently opened a brewery in Vietnam, if you could just say a few words on that? And in terms of ramping up the brewery, if you expect this to be a pretty fast process of getting to the 500,000 hectoliters you have there? And should we expect more Greenfield brewery initiatives like Vietnam in other markets? Or, will your expansion to new markets be mainly asset light? And again on this asset light aspect, you said it would be a focus for you a few quarters ago. Are you -- I imagine you're looking at situations. Have you gone into new markets yet with sales people on the ground where you weren't present before?

Yeah sure. I mean in Vietnam, we're very happy with the way our business is going. As you know, we used to have -- we've had imports in Vietnam, especially Budweiser for many years. It's a very promising market demographics, the scale of the market, the beer culture. So, we decided to have more of a presence. We built -- we just opened our 500,000 hectoliters brewery, Phase I; can expand to another million hectoliters -- up to 1 million. The products we have there is really our global brands and some of our international brands. So, we have Budweiser, Corona, Stella -- focus on Budweiser, and we also have Leffe, Hoegaarden, and Becks. So, it's a very promising market and we're very excited about it. I was there last year. We have a great team in place that really wants to make a Vietnam a second China for us in the region. So, that's great. And a lot of the best practices that we developed in China in terms of brand building are being copied in Vietnam and that provides a faster growth we believe. So, we're experiencing very fast growth of our brands in Vietnam.

And is this -- sorry, should this lead to maybe other Greenfield projects in other countries maybe in the region?

Well, it depends -- sorry, that was your follow-up question. It depends on the market. In China, we have Greenfields. If you take the last three years plus what's been under construction with that, 11 Greenfields. And in India, because we're at capacity -- at some point brownfield, maybe but we'll have to expand capacity. But then, in other markets we're adding people to the field in an asset light model, for example, Australia, for example, Japan. Just to give two examples. And you start seeing some results because you have people, ideas, young people. We're sending trainees to those markets, millennials. So, that's good.

Thanks.

Thank you.

That was our final question. And I would now like to turn the floor back over to Carlos Brito for any additional or closing remarks.

Yeah, so thank you, Jackie. So, in summary, the second quarter was challenging, but despite tough comparables, some economic headwinds in a number of our markets, we were able to deliver revenue growth of over 4%. We started the second half with momentum behind our brands and commercial initiatives and expect to accelerate revenue growth for the remainder of the year, remembering that double-digit sales and marketing growth, given our guidance for the second half. So, we look forward to speaking to you again on October 30th, when we report third quarter results and thank you for your time today. Have a nice day. Bye, thank you.

Thank you. This does conclude today's teleconference and webcast. Please disconnect your lines at this time and have a wonderful day.