Welcome to the Anheuser-Busch InBev First Quarter 2016 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 Results and Filings Center in 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 open for your questions following the presentation. 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 the 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, see Risk Factors in the company's latest Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 14, 2016. 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.

Thank you, Jackie, and good morning, good afternoon, everyone, and welcome to our 2016 first quarter results conference call. The first quarter saw a strong performance in Mexico as well as improving volume trends in the U.S. and Europe. However, Brazil faced one of its most challenging quarters in many years due to the weakening macroeconomic conditions in the country and a tough comparable. The industry in China was also soft due to economic headwinds. However, before we get into the detail of the results, I'd like to give you an update on the proposed combination with SABMiller. When we made the initial announcement in November last year, we said we would be proactive in addressing any potential regulatory considerations and we have made good progress in all four of the markets where regulatory clearance is a precondition to making the formal offer to shareholders. We have announced the sale of SABMiller's interest in MillerCoors in the U.S. and in CR Snow in China, as well as the disposal of certain of SABMiller's premium brands and related businesses in Europe, including Peroni and Grolsch. Also, last week, we announced our decision to divest of SABMiller's Central and Eastern Europe business and brands. Of course, all of the disposals are subject to the closing of the main transaction. In South Africa, we are pleased to have reached an agreement with the government on the public interest conditions to be presented to the Competition Commission and the Competition Tribunal, and have also completed a secondary listing of ABI on the Johannesburg Stock Exchange. From a financing perspective, we have essentially completed the pre-funding of the transaction following a series of bond issuances in the first quarter, allowing us to cancel, as of today, $55 billion of the committed senior acquisition facilities put…

Jackie, yeah, we can start the Q&A session, please.

The floor is now open for questions. Our first question comes from the line of Trevor Stirling with Bernstein.

Hi, Brito and Felipe. Two questions from my side, please. What is it that gives you the confidence? You've had a soft start to the quarter. You mentioned that April's slightly better in Brazil, but what gives you the confidence to maintain your full year guidance?

Hi, Trevor. I mean, we have to understand – Brito here. We have to understand that the first quarter in Brazil, as anticipated, would be a tough one because of some tough comps, given the Carnival timing, which in Brazil is a key date, because it's – for most people, it's when the summer ends, and the holiday period. So that's key for us, and this year, it was earlier; that's one. Second one is that we had to implement price increases to mitigate taxes at the federal level and state level and, of course, inflation. So you have the macro, which is not helping consumers; you have the calendar also not helping a lot. It is true that Easter was earlier, but Carnival is way more important in Brazil than Easter, and you had a price increase. So, I mean, you put all this together, we knew we would have a tough first quarter. April, as we've said, way better than the first quarter; and we have our strategy, which is unchanged. I mean, the reasons we have to believe and the reasons why we kept the full-year guidance on Brazil is that the five pillars of our strategy remain unchanged. First one is elevate the core, so we continue to see our brands performing well. We have great campaigns, innovation coming up and affordability agenda on those brands. We have the Premium, you know, growing double-digits. It's already more than 10% of our volumes coming from 5% or 6% some years ago. And if you look at the preference for those brands, it's still above its market share; and again, with very good margins and very good top-line. Near Beer, again, very good margins, accretive, great top-line, great margins, Skol Beats senses plus Spirit, Brahma 0,0%; so, very…

Okay. My follow-up question, Brito, refers to the U.S., it looks as if the input cost savings in the U.S. are more than offsetting increased A&P, but your price mix has also slowed down a little bit, sequentially. Are part of those savings from input costs being recycled into slightly higher promotional activity?

No. I mean, our promotional activity – I mean, when you look at our net revenue for the quarter growing at 1.3%, that's pretty much in-line with what we thought we had prior. There has been some noise, I know, in terms of pricing and discounts in the marketplace. What I can tell you is that despite the noise, our pricing strategy remains unchanged. In other words, the level of discount is in-line with historical levels and – but every year, we'll be always looking for better ways to invest the same envelope of promotional dollars, right? So – and 1.3% is what our revenue management – or revenue – net revenue per hectoliter grew. The other thing is that Stella shipments – we had a slight phasing on Stella shipments. A year-plus ago we had an issue with Stella being frozen because of weather patterns crossing the ocean. And this year, 2015 to 2016, we decided to anticipate some shipments to avoid the harsher part of the winter, which never came by the way, but we didn't know. So Stella STRs for the first quarter is ahead of the STWs, which, of course, impacts the overall number. So those would be the comments on the U.S.

Yes. Thank you very much, Brito.

Thank you.

Our next question comes from the line of Andrea Pistacchi with Citi.

Yes. Good morning. Thank you for taking the questions. The first one is on Brazil, where you've historically wanted to stay in the 67% to 69% market share range. Now, you ended fiscal 2015, I think, very close to that level and possibly you've dipped slightly below that in Q1. I'm not sure, but the question is, first, what is driving, would you say, this market share losses, if any region in particular, any brand in particular? And secondly, about this 67% to 69% range, how important is this to you? And whether – in the current environment, how do you think of market share versus profit? And the second question, if I may, is on Europe, where you've seen a significant turnaround in volume growth since 2H last year. What is driving that, if it's Corona in your portfolio making a lot of the difference or is it also other things?

So, let me start with Europe. I mean, on Europe, I mean, Andrea, what we did is in a strategic review some two years ago, we decided that given consumer trends, given all our footprint in terms of brands and countries, that we should really pivot more and more towards premium brands and global rents, okay, and that's what we did. So, we took money from countries and we reallocated money within segments, within countries, within channels, within brands and we're now harvesting some of that decision and the consequence of it. So we're very happy, because Europe was always a place that we saw high margins, but no growth, even declining industry; and you said, okay, how can you make the best out of Europe? And as we started having more global brands, you know, with Budweiser, first, Corona, second, and even the recognition that Stella, Hoegaarden, Leffe could play more of a pan-European role, we looked at our footprint in Europe, where money was being allocated. We look at margins. We look at consumer trends, segment-by-segment, region-by-region, brand-by-brand, and decided to do a big reallocation of money; and that has proven to be the right thing. So we're very happy with Europe. We think that's something that's sustainable, and it's based on brands and choices about resource allocation and great people. We also changed some people there; so, great leadership. In Brazil, in terms of share, our commitment – or our range that we work within remains 67% to 70%, as measured by Nielsen. It is true to say that, as we said, our market share was pressured in the first quarter because we had to increase prices to compensate not only for inflation that on an annual basis reached more than 10% in March, but also federal and state taxes that were implemented in the last few months. So we had to pass that on to prices plus inflation. So, of course, consumers felt that. And because Brazil is a very competitive environment, you can imagine that there was some share repercussion given our decision to increase prices. So that's the thing on share. And as you know, in Brazil we've always said that. I mean, that's why we have a range for share because we always try to balance, like in any other country, this equation of market share with profitability, okay, both short- and long-run. And some years will be more one way; some other years will be more the other way, depending on consumers, on the macro, on the competitive environment. But you can be sure that that's our range; there is no change there.

Thank you.

Thank you.

Our next question comes from the line of Sanjeet Aujla with Credit Suisse. Sanjeet S. Aujla - Credit Suisse Securities (Europe) Ltd.: Thanks for the question. Can you just elaborate on your craft acquisition strategy in the U.S.? You've made some further acquisitions there recently. How big is craft as a percentage of your U.S. business, and do you see any further gaps in your portfolio there?

Well, I mean, in terms of craft, I mean, we think we made a lot of progress. The idea that we have on craft is a simple one. I mean, we are the market leader in the U.S. Craft is a growing and very profitable segment. It is one where we are under-represented. So it's a two-fold strategy. First, we have crafts of our own, like, for example, Shock Top, just to give one example. Second, we acquired some; very few, if you think that there are 4,000 craft brewers in the U.S. and we acquired less than 10, if you put it all together. But it's important to have some of those because, first, you bring some amazing craft partners to join us and to continue to help our brewers to continue to create the very best beers and styles in the marketplace. So that has been great. We have had some – connected some amazing craft people from those brands that we got associated with, plus they have very strong brands in their regions. So we're very happy to be able to offer our wholesalers options within our own portfolio of brands also for craft. Shock Top, for example, which is one of our own crafts, are gaining share – is gaining share organically, now, since February. We put a big effort in terms of going back to its positioning of living life unfiltered. And so, we're very happy with our craft development in the U.S. Sanjeet S. Aujla - Credit Suisse Securities (Europe) Ltd.: Just a follow-up on Brazil there, just back to the market share point, you mentioned that you don't expect to continue to see market share losses. Can you just elaborate on what will change that?

Well, again, in the first quarter, because of the price increase that we had to implement, market share was disturbed because of that. But as in any price increase, what you do afterwards is, as in any competitive market, you adjust a little bit here and there. And then, you'll find the optimum point for your brands, and that's one of the reasons why April was way better than the first quarter. So with the programs I just described on the five pillars in Brazil, be it to elevate the Core, Premium Near Beer, In Home occasion and Out of Home occasion, we feel that we have the plans and we have the necessary resources and the brands are doing well, and our guys are used to having to re-plan in tough situations, so that's why we feel confident about keeping the top-line guidance for the year, despite the first quarter. Sanjeet S. Aujla - Credit Suisse Securities (Europe) Ltd.: Many thanks.

Thank you.

Our next question comes from the line of Anthony Bucalo with HSBC.

Hi, there, Brito. How are you?

Hi, Tony.

Hello. All right, the decision to sort of offer up the European franchises here for possible sale, one thing that sticks out is, when you sold the European businesses back in 2009, you kept Russia as a bit of a strategic piece to hold on to. Poland sort of is a similar market in the sense that it is a strategic piece. It's a big profit pool. There's high levels of consumption. There's a Super Premium market there to be had. Why would have you included Poland in that – with the other four markets that you're putting up for sale?

Well, Tony, as you know, from day one, we said we'd be very proactive with the regulators from day one. And that's what we've been doing. So in the U.S., you know about the divestiture; in China, the same thing. In Europe, we decided to offer, day one, to be proactive and come with the Peroni and Grolsch, in meantime, divestiture and related business. And we followed that with the SABMiller assets in Central and Eastern Europe, including all five countries: Hungary, Romania, Czech, Slovakia and Poland, for divestments. Those assets include a number of top brands, as you said, in those markets, and we expect to attract considerable interest from potential buyers. So – and in line with our ambition to close the overall transaction during the second half of 2016, as I said before, we've made this commitment in Phase 1 of the European Commission enquiry. So now we expect the Commission to review the proposed transaction, including our proposal, thoroughly, and we'll maintain an ongoing dialog with the case team to answer their questions, and continue to work proactively to address any potential concerns. So, again, this is all in the same realm of us being very proactive, and this is exactly within that same context.

Is Poland the market that ideally you'd like to hang on to?

Again, at this point, Tony, what I can say is that we offered those assets, together with Peroni and Grolsch, for disposal. And we expect now the Commission, of course, to review our proposals and – all in the Phase 1environment and, again, we're trying to be very proactive in dealing with regulators, and keep an open channel with them.

Okay. Great. Thank you, Brito.

Thank you.

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

Great. Brito, a couple of questions related to incentive compensation, please. First question, as you look to set the targets for the various zone leaders and how that cascaded down this year, can you talk about any shifts or tweaking of the relative weights between top-line measures, whether it's volume, price, market share, and more bottom line measures? Any sort of tweaking that you could give us some color on in terms of this year, please?

No, Robert. As I – we've said before, our targets are always balanced. We have checks and balances in there. So they are all in the realm of top-line, global brands, cash flow, EBITDA targets. So – and market share. So those are the targets that, we believe, are for the big – in terms of big ideas for the company, in terms of checks and balances. We have some there that are more top-line driven, commercial driven. We have some there that are more financially driven. We believe that's how we've always managed the company. So top-line efficiencies, cash flow, market share, we believe that those are good checks and balances to have. And then, as you know, we have a three tier system; so those are for the company as a whole. Then you have the BU targets, the business unit targets, which are pretty much a combination of those same targets. And then you have the individual targets, which is what we expect from each individual in the company, to work towards those big umbrella targets. So that's how we work; that's the balance we try to achieve.

So I may – understood; it's always a balance. So no particular tweaking one direction or the other this year?

No. I mean, it's not this year, but it's fair to say that top-line has been growing in terms of importance, top-line growth, in the past few years. Not this year necessarily, but in the past few years. Yes, it's fair to say that.

Great. And then as a follow-up, there was an interesting long-term incentive program geared towards a $100 billion target – revenue target – for 65 top managers, but those below the EBM level. Is there anything analogous to that in terms of long-term revenue growth targets for you and the EBM level, please?

Yeah. Yeah. We have different incentives in the company, Robert, as you might know. I mean, they're all in the 20-F, so you see that we have different incentives. This one is just one of them. We decided to link it to a target that we have internally. This is not a company guidance or anything, in terms of 2020 or anything. We have all sorts of targets and dreams that we have for different business units, for different lines of the P&L inside the company. And from time-to-time, we connect some of those incentives to some of those dreams. So it's something that, again, to your first question, is in line with our increased weighting on top-line growth; on a profitable way, of course, not at any cost. And that's how we look at it, yes.

Is there is any specific number – long-term number, that you and the EBM are going to be incented on?

Yeah, we do have, but it's not public. So, again, in the way we do targets – I mean, targets are internal, budgets are internal, and that's the way we run our company. We like to dream big. We have a kind of culture in which we are comfortable, or not totally uncomfortable, in living with dreams and targets that we don't know 100% how to get there – that our culture is to put – stretch targets always that we know 70%, 80% how to get there. Some other companies wouldn't feel comfortable living with that kind of uncertainty in terms of the gap to the target year in, year out. We are – that's how we built our company and our lives. I mean, we always put targets and dreams via yearly or multiyear in which we know 70%, 80% how to get there. And we feel that that's the way to build the company, because then it gets people to be creative. It gets people to use their best as part of their brain (44:59) to try to bridge gaps, and that's how we've always managed the company – that the one we mentioned is just one more example of that stretched target.

Thank you very much.

Thank you.

Our next question comes from the line of Eddy Hargreaves with Canaccord.

Yes. Morning, thanks for taking the question. This is really on the U.S. You mentioned in the statement about the continuation of the winning together initiative with your wholesalers, driving it to a different – or new level in 2016. I wonder whether you could just briefly tell us what you see there is still left to do in that relationship? What do you want to change this year? What are your sort of specific deliverables, if you like, from that engagement with the wholesalers?

Well, I mean, since we got tiered, 2008, 2009, we've always recognized and said that the wholesaler system is one of the biggest assets that the AB system, us and wholesalers, have in the marketplace. I mean they really are amazing operators. They are very good at what they do, and if you give them a good idea, a good program, they'll execute the hell out of it. So when we say wholesaler relationship (46:20) very close to the panel, a lot of things we're doing in the marketplace now have been also curated, let's put it this way, by the panel and with the panel. So it's four hands doing it, and we feel that this has been really – has gotten great acceptance and traction from the wholesaler community. And again, we're partners, and the more aligned we are in terms of thinking that this program is better than this, and this resource allocation is better than that one, the more effective we are in the marketplace. So that's the idea of winning together.

Okay. Thank you.

Thank you, Eddy.

Our next question comes from the line of Caroline Levy with CLSA.

Thank you and hello, everybody.

Hello.

My question's on – back to U.S. price mix, because given that you've got the mix shift towards the high-end brands, which are growing rapidly while the lower price are declining, you've got the craft acquisitions in there, maybe some wholesale acquisitions, I'm not sure, but it's suggesting that price realization on your biggest brands could be negative. Am I getting that wrong? Was that – is that what's happening?

No, Caroline, what we said just some minutes ago is that Stella, which is a big brand for us in the high end, a big driver for net revenue per hectoliter growth. We had a shipment that differs from the STR. So we shipped more Stella before the height of the winter, because the year before we had some frozen products and that disrupt a little bit the supply for the U.S. So we decided to anticipate in 2015 to avoid that peak January – December-January freezing period, and that's why now you see STRs are still ahead of STWs, okay. Just because – and that, of course, has an impact on the net revenue per hectoliter growth, okay. So – but again, 1.3% is in line. It could be better if STWs and STRs were more in line, especially on Stella, because that's a big driver, but that's where we are right now; so, nothing more than that.

Okay. So, no decline in pricing on your big brands?

No. I mean, as I said before, I mean, our – in terms of our discount strategy, I mean, the envelope we use is pretty much in line with the envelope and the monies we had before. So our pricing strategy remains unchanged. But, of course, every year we look for smarter ways to use the same promotional dollars, and that's what we're doing.

Okay. And then, just a question about activating volume growth in China, or in Asia overall. I think Korea was pretty good, but in China you got a very difficult environment. What specific plans do you have in place over the summer?

Well, in China what we see is that this quarter was particularly different in terms of revenue per hectoliter growth because our brand mix was favorable, but our regional mix was very unfavorable because the south and the east, especially Guangdong – it is a province – had very cool weather and very poor – or very strong economic headwinds; and that is something that affected a region where Budweiser is very strong. And that, of course, rippled throughout the China numbers. But Budweiser continued to grow throughout China, with the exception of Guangdong, where we gained share on a very weak industry; so volumes are affected despite gaining share. Having said – but that, Budweiser continues to be the number one brand in the Premium segment in China. And we have, now, what we call the Super Premium Company with Corona, Stella, Hoegaarden, Leffe, and Goose IPA that has margins that are nine times more profitable than Core and Value, and even double the profitability of Budweiser. So that's where we see more and more – that 50% of our total China volume is in the Core+, Premium and Super Premium segments, and those segments, we believe, are the ones that will continue to be the most interesting segments in terms of growth and profitability in China. So I think we are poised, as we were before, for bright business in China, but we said in our outlook that industry volumes in China would remain under pressure this year; and the first quarter was in line with that.

Thanks so much.

Thanks, Caroline.

Our next question comes from the line of Brett Cooper with Consumer Edge Research.

Good morning, guys.

Hi, Brett.

When you purchased Modelo, there were gaps for you to close in Mexico. Can you talk about where those stand today, in terms of execution, brand health, brand building, because I'm trying to understand the run rate for performance there and see if there are gaps opening up with Mexico being better than your other regions, such as you can challenge other parts of your business with their performance? Thanks.

Well, I think it's a good point. I mean, Mexico did a very good job in terms of the integration of Grupo Modelo to our company. I think it was the best integration. Every time, we learn a bit more. And we're going to learn, of course, from their tool kit that they added to the existing tool kit that we had from AD. As you said, we've had some very good performance there in that the industry grew – or the category grew. We grew our market share. We grew our margins by double-digits; so double percentage points since the very beginning, like 17 percentage points. And our brands there, Corona, Victoria, Bud Light, are performing very well. Those are our main brands there. And we have, also, lots of activities in the market, in terms of trade activation, in terms of new consumption occasions. And the pillars in Mexico are basically four. It's about growing our global brands. It's about growing Premium, which is still to come because Premium Mexico is like almost nonexistent. So, there is everything to be done on global brands and Premium. Elevating the Core where most of the business is today; but going forward, we're going to be putting more resources behind premiumization and global brands, and developing the Near Beer segment, which is also nascent, but very accretive and very profitable. So we have the key pillars in Mexico, our brands are doing very well, and the country is doing very well as well. We also had some craft acquisitions in Mexico, Tijuana and CerMex. So we – of course, craft in Mexico is very small, but like in any market, it's a segment that is growing with very good market shares, very good – sorry, very good margins, and we would like, of course, to be present and active in that segment as well. So Mexico has a very focused team with very good momentum and – after a very good integration; so, firing on all cylinders, I would say.

Thank you.

Thank you, Brett.

Okay, so, thank you very much, everybody. The first quarter was a challenging one with macroeconomic headwinds in Brazil, as anticipated, weighting on our overall group results. However, as said, we have very good momentum in many parts of our business and remain focused on the things we can impact and influence, as always. We're also making good progress towards closing the proposed combination with SABMiller and look forward to providing you with further updates in due course. So, again, thank you very much for joining the call today. Thank you for your time and enjoy the rest of the day. Thank you, bye.

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