Welcome to the Anheuser-Busch InBev's Full-Year 2018 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, Chief Executive Officer; and Mr. Felipe Dutra, Chief Financial and Solutions Officer. To access the slides accompanying today's call, please visit AB InBev's Web site now at www.ab-inbev.com and click on the Investors tab, and the Results Center page. 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. [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 AB InBev's actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in the forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev'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 19th of March 2018. 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.

Yes. Thank you, Maria, and good morning, good afternoon everyone, and welcome to our full-year 2018 earnings call. Today, I'll be taking you through the results and highlights of this past year. I'll also like to spend some time on our global premiumization strategy, building upon the category expansion framework we introduced to you last year. I'll then spend a few minutes on our better world initiatives before handing over to Felipe to discuss our earnings, cash flow, capital allocation, and our 2018 reference base. We'll then be happy to take your questions. So let's start with the highlights. 2018 was another stewp forward in our company's transformational journey. We had many successes to celebrate, though the year was not without its challenges. We achieved strong volume, revenue, and market share growth in many important markets led by Mexico, China, Colombia, Western Europe and many African countries, especially Nigeria. We are pleased to see our market share trends in the U.S. improving, driven by our commercial strategy and focus on premiumization and innovation. This resulted in our best market share trends since 2012. Premiumization continues to be a key focus for our company, and as a result, our high-end company grew revenue by double-digit, our global brands had another outstanding year, and I'll go into more details on our premiumization strategy later in this call. ZX Ventures, our growth and innovation group delivered robust revenue results, contributing 10% of our global revenue growth, with strong commercial momentum allowing us to engage with consumers more than ever before. Our global sponsorship of the FIFA World Cup enabled us to execute the biggest and most powerful commercial campaign in our company's history, with Budweiser leading the way as the most "Talked About" brand on digital and social media. The top line growth…

Thank you, Brito. Good morning and good afternoon everyone let's start with an update on our synergies. In the fourth quarter we delivered $217 million of synergies bringing the total for the fiscal year 2018 to just over $800 million and total synergies captured to-date to over $2.91 billion. Our total synergy guidance remains at $3.2 billion which will be delivered by the end of 2019 earlier than we originally anticipated. As a reminder these synergies do not include any top line or working capital synergies. We continue to expect the synergy capture to require approximately $1 billion of one-off cash costs to be incurred in the first three years after closing and of which $623 million has been spent to date. Net finance costs in the year were over $6.7 billion compared to over $5.8 billion in 2017. This increase was entirely due to higher mark to market losses linked to the hedging of our share based payment programs of more than $1.7 billion compared to a loss of $291 million in 2017. We saw year-over-year reduction in most of other items we didn't add finance cost. Our normalized effective tax rate for the fourth quarter was 32.9% up slightly from 32.1% in the fourth quarter 2017 and bringing our full-year tax rate to 27.8%. Excluding the impacts of the gains and losses related to the hedging of our share-based payment program our EPR this quarter was 25.1% bringing the full-year tax rate to 24%. Our effective tax rate guidance for the full-year 2019 is between, 25% to 27% excluding any gains and losses related to the hedging of our share-based payment programs. Moving on now to earnings per share our underlying EPS this year defined as our normalized EPS excluding the impact of mark to market related to…

Thank you. The floor is now open for questions. [Operator Instructions] Our first question is coming from Olivier Nicolai of Morgan Stanley.

Hi, good morning, Brito, Felipe. Got one question regarding the pace of the leveraging, and then one follow-up on the working capital. So regarding the pace of the leveraging, you've indicated in the past that ABI can reduce its net debt to EBITDA by about 0.5 per year assuming no significant [indiscernible] in EM currencies. Is it reasonable on a constant currency basis to assume that it could be the case for 2019? And then regarding slide 31, on working capital as a percentage of net sales, what are the difficulties that you are facing to bring SAB to the level of ABI and do you expect this to offer [ph] at some point? Thank you.

Okay. On the face of the leveraging, so as we said in our outlook that we are committed to be below four by 2020, and coming from 4.6, that very much implies a pace that is in sync of what we said, which is what we believe can be achieved under normal circumstances. So we are fully committed to that number. On the core working capital, we have some impact here in terms of zone mix as well as the timing of certain changes. There is no reason why we should not expect the former SAB territory to get to similar or comparable levels to former ABI and therefore coming back to our path of continuous improvement as from the high watermark achieved in 2016.

Thank you very much.

Thank you.

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

Hi, Felipe and Brito. Two questions from my side. The first one, Brito, in Colombia, I gather there's a new entrant and the brewery has just opened, I was wondering if there was any early indications yet about what the commercial strategy might be, or what the impact could be on the beer market in Colombia. And the second question. I don't expect you to comment directly on this, but there were press reports about a potential listing of the Asian operations. I'm sure you won't comment directly on that particular story, but do you think there's a possibility that there are [indiscernible] organization that could be partially listed and what would be the logic behind that?

Hi, Trevor. So on the first question, I mean Colombia, I mean, it's all very knew. Yes, it is true that we'll have CCC that built the brewery, we'll have local production. Some of their brands are already present in Colombia. That's important to say, because they've been important brands now for many years. Like global brands on their side and some other U.S. value brands. But there will be local production. It's too early. There's nothing really to report at this point, but what I can say is that ABI, we have a very solid position in Colombia. We have a very strong portfolio core and premium brands in those two segments. We'll continue to grow and invest in Colombia by serving consumers and our part, developing our brands. Last year, for example, we renewed the [indiscernible] and that contributed in a huge way for the quality perception of the brand bringing to life the easy drinking aspects of this brand. And it is also true that the Colombian market has shown loyalty to our brands given the long time we have been present in the market. And again, we are very committed to Colombia. It's one of our top five markets. And if you look at the results for this year, we have very good momentum. So Colombia had a very positive revenue growth in the full-year by 8.4% out of which 3.2% was volume, 5% was [indiscernible]. In the beer category, importantly enough expanded. So we gained share within total [indiscernible] in Colombia, and so this is all very positive news. And we continue to drive premiumization. So our global rent portfolio grew by more than 75% in the last year, 2018 in Colombia led by Budweiser. And our local brand portfolio continues to do very well, including Club Colombia, which is a local premium.

Trevor, on the rumors about Asia IPO, of course, we cannot speculate on that. If we ever considered such a thing I think the merits are more in terms of creating a platform for future M&A, establishing a local champion. Yes, that could potentially help the leveraging too, but given the pace of leveraging at the current liquidity levels, that would never be the rationale for such a thing.

Thank you very much, gentlemen.

You're welcome.

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

Great, thank you very much. Two questions, so Brito, great presentation on the premiumization strategy and I just want to push on that a little bit. Historically, your strength has been more in the mainstream. I think you've recognized with the high-end company that you need somewhat different skill sets, and perhaps different incentives to maximize the value of your global brands there and you've done a very good job obviously in Europe and China. How would you rate where you are in other regions of the world to be able to execute the premiumization strategy? Are you there yet? Are there certain skills that you need to develop and capabilities? So that's a question for you Brito. And then Felipe, kind of follow-up on the last question, you know, if you had the ability to buy Castel, would you be able to finance it, how would you look to finance it? Thank you.

So Robert, on the first question, I think what you said about the high-end company, it's not something of a foreign concept and non-concept to us. When you look at ZX, we did the same thing. So we took some things that we thought could be grown in a much faster fashion and decided to dedicate a group for those things like e-commerce, specialty brands, brand experiences, brewpubs. On soft drinks, you might remember, many, many years ago we did the same. We created a separate business unit in the company. We did the same now with a high-end company ten years ago, recognizing the premiumization trend around the world in all sorts of maturity levels -- level markets. And so we decided to form this business unit that today is present in 22 markets. And I think you could proxy, it should be hard for me to rate where it stands, but I think a good proxy for where it stands and what it's doing for us is the global brand performance. I think global brands really need to go parts of what the high-end company does, but also the craft and the specialty brands. If you look at all those three sets of brands, I mean, it's growing. And the high-end company also reflects our view that the game today to be played given where consumers are in occasions in the way they're fragmenting is a portfolio game. So we believe that global brands should be tackled with the portfolio brands, not one brand, at least three or four that crafts -- the craft opportunities around the world should be tackled with a portfolio brand, the thing [ph] for specialties. In the high-end company, there's a group of very experienced owners that are really driving and exchanging best…

So, on the cash flow side, Robert, we are really focusing on bringing our relationship to the next level, exchange of best practices, making our portfolio of global brands available for the Castel territory as a way to face competition as you know there is this premiumization trend in, in many markets getting to know each other better and if we ever reached the conclusion that our business should get together there are many ways of structuring there.

Thank you.

Our next question comes from Eamonn Ferry of Exane BNP Paribas.

Hi guys, two questions from my end. The first one is you're pointing to, I think the word user strong revenue and EBITDA growth for FY, '19, just wondering if you could give us a give us a bit of help on what strong means. And second question on volumes noted that you now want to better balance within your top line growth more volume, it's good to know how you exactly plan to do that on, what regions, what strategy will price mix be sacrificed et cetera. Thanks.

Well, I don't want to sound cute, but I'm in strong really means you know it's something that you write home about, so I think that's the best way to define this. Other than that, I'll be giving explicit guidance and we are giving a qualifier given, things we've seen some markets and I'll give you some examples. But for example, first time in the fourth quarter besides some acceleration we saw momentum building towards the end of the year in general in our business. So that's already a good start for '19, then if you go country-by-country. I mean, look at the U.S. and the U.S., we had a 40 bps you know, declining market share. But in the second -- in the last quarter of the year, we had a 30 bps and in December the results was much better than that. So I mean, you see some sort of acceleration in terms of our strategy work. Now go to Brazil our second biggest country, we had an important election. And if you look at Brazil last year, I think there were two years in one. The first year was before the election with the, trucker strike and the whole thing about the very acrimonious environment with the election leading up to the election. Consumers were not very happy with the front pages of papers every day and the confidence was low. After the election, confidence of consumers went up, people are optimistic. And you saw a much better end of the year for example, in our case our volumes is to negative but we do share, so we were performing better than the industry. Then you go to Mexico. Mexico had an amazing year last year, so very strong growth. And on top of that now we're…

Okay. Thanks.

Thank you.

Our next question comes from the line of James Edwardes Jones of RBC.

Yes. Hi, guys. Given the currency fluctuations and you're hedging policy. Is there anything material we should be aware of to the margin outlook? I'm particularly thinking of the president to Brazil a couple of years ago?

Well, there is no margin outlook. You know, margin is not part of our outlook, we refer to the strong top line and EBITDA growth, what is embedded in our outlook is impacting cost of goods sold. And there are two references in there, cost of goods sold and SG&A should be below inflation and cost of goods sold by itself should be in the mid-single digits' territory despite the significant pressures in FX and commodity price.

For Felipe, and couple of years ago we see there was that shock, which people weren't expecting when margins in Brazil in the third quarter. I think we are way below expectations and you say, can you give us any sort of steering whether there's going to be something similar happening again this year?

Well, I appreciate the point. But our outlook refers to ABI consolidated and we do not break down particular references for country although in the -- on that press release, you can read that there is an expectation for cost of sales for particularly just to be in the meeting. And there's a combination of commodities and FX and despite the cost pressure and based on a more balanced top line growth, it is also expected EBITDA to grow faster than 2018, but I have no references for margins there.

And if I could compliment, James, I think your question referred to 2016.

Yes.

I think 2016. Yes, 2016, since 2016 the big surprise we had in Brazil was really the taxes at both federal and mainly state levels that really was something that was really hard to pass enterprises and we had to observe that during the year on top of the Cass increase, so I think that was the big difference. This year 2019, yes there will be pressures on the Cass. But you know, though, for now, there'll be no tax. We don't see any tax increase or anything. And in 2016, let's remember we had the current situation in which the company was being sold and was very promotion in the market that added to the whole situation and made the pass through very hard. So I think we're in a different world now.

That's very helpful. Thank you.

You're welcome.

Our next question comes from the line of Andrea Pistacchi of Deutsche Bank.

Yes. Hi, Brito. Hi, Felipe, I have two questions please, the first one on your Cass outlook mid-single digit per hectoliter now. With aluminum prices that have been coming down quite a lot since May last year. And obviously you hedge about a year out, is it fair to assume that Cass pressures will be quite significantly more weighted to H1, but should start to ease probably quite substantially in the second half? And the second -- the other second question please on Brazil. I appreciate there's probably not much you can say about current trading, but with the consumer confidence improvement that we're seeing, would you say this is starting to feed into better be a volume growth for the industry in Brazil? And would you be optimistic that this year you can at least the industry could grow volume in Brazil?

Well, the first question on Cass. Felipe, do you want to take this one?

Yes, well. We see very much across the board. I just want to not break down specifically for quarter. Yes, I think that is no indication of that.

Yes, we stick with our guidance for total company.

Yes.

Yes. On your second Andrea, I think let me step back and talk a little bit about how we prepare I mean you're right I mean you read a lot of things about consumer confidence about macro getting better just all public information. But I think more importantly than that, I think our guys in Brazil use the year 2018 to really made -- they made some transformation investments in our portfolio in Brazil with innovation, your liquids and packaging, preparing for time when Brazil would really reignite in terms of consumer confidence and spending. So for example, our plan 2018 or now plan for 2019 that was supported by things we did in '18 is that, we have now robust unique portfolio that will allow us to play in all segments of the Brazil Olympian market. So not only we are now in super premium that we've always been in core, but now we have initiatives, strong initiatives on the various segment as well. So that's something that was not there before. Now it's in place, our distribution continues to increase throughout the country. For two years ago, we identified areas of the country that for different reasons we are being under service and that will continue to increase the distribution in some rural areas. Another one is we have some exciting innovations that are in the pipeline, things that we launched at the beginning of January like Skol pure malt and things they were still bringing to the rest of the country like Skol hops and other initiatives like new packs or a premium brands, global brands and things of the sort and also we have commercial investments that are targeted for customer experience that we're also seated during the year 2018 stating that 2019 could see an increasing confidence in consumers and when that happens, we think we stand to benefit from any proof consumer environment.

Okay, thank you.

Our next question comes from on Simon Hales of Citi.

Thank you. Hi, Brito. Hi, Felipe. A couple of questions, I wonder if you could come back to your comments around Mexico. And firstly, around the OXXO opportunity you've got there. Can you tell us a little bit about how the penetration will build over the next sort of two to three to four years into that OXXO not 17,000, strong OXXO channel? Clearly some of those markets opening up in April. But, you know, how do we think about that built over the next couple of years and just generally related to that and Mexico more broadly, how you're thinking about the wider premiumization opportunity in that market. And then secondly, just as broader question, I was interested to see recently another acquisition that you made into the spirits industry in the U.S. How was your thinking evolving there with regards to the broader alcoholic beverage segments?

Okay, Simon, so first question, OXXO again very exciting to be now beginning on April 1 part of the OXXO chain, they've been expanding a 1000 plus stores per year. We are the number one convenience chain operator in Mexico and Latin America, a chain, which we had no sales up until this point. So we're going to be introducing products in a sequence fashion throughout December 2022 and let's be clear there was no other way to do it. I mean, with this amount of stores and the amount of sales that we are counting on who would have to prepare in terms of production logistics and Christmas or not we are integrating our new brewery next week in Central and with additional capacity. So we're going to be ready with capacity. But we also need to be ready in terms of service levels depots. So we can start this partnership on the right foot. The good thing is that we are starting this partnership a year prior to the existing contracts ending, which would be only next year and yes, we're doing it in a phased approach. But starting a year before because we have to be in a phased approach any way, you don't all of a sudden go to 18,000 stores overnight, you have to build that. But the good thing is that we are starting in regions that are very important to us, right? And that's the Mexico City area, which is a huge area where most of the consumption in Mexico is in and we were over in that big time, you know, share. So we're going to enter a channel in a region where we over index our national share big time in the Guadalajara region as well which is important to us.…

Got it. Thank you, Brito.

Thank you. Simon

Our next question comes from the line of Richard Withagen of Kepler Cheuvreux.

Yes, good afternoon. Thanks for the question. I have two, first of all on Mexico, on the new brewery, could I assume that the 12 million hectoliters becomes available immediately. And also, perhaps you can comment on what impact the brewery will have on efficiency and your total Mexican brewing infrastructure? And then the second question that I had was on CapEx in 2018, you spend slightly more than your guidance. Did you put forward some projects or what's going on there?

For Mexico your brewery as with new, any of your breweries, doing a phased approach, so you do Phase 1, Phase 2, Phase 3. I'm not sure we're willing to give all the numbers for the different phases for competitive reasons. But it's a brewery that was needed capacity, that was needed not only for the domestic market, but also for export markets. So we are very happy to be able now to open it up next week in Mexico, in terms of CapEx, yes.

We net CapEx for '18 was about 4.6 billion. And we are looking to arrange a 4 billion to 4.5 billion for 2018.

Yes,

All right. Thanks.

Our next question comes from Sanjeet Aujla of Credit Suisse.

Hi, guys. A couple of questions please. One technical one, when you're talking about inflation in your outlook, what inflation are you -- what inflation rate are you assuming and I've got a follow-up after that.

It's the weighted average CPI for the markets we operate, which is based on economist forecasts is between 4 to 4.5.

Got it. And then just a follow-up on the soft drinks performance, it continues to be quite a drag. Clearly, there's some reorganization taking place there, but can you just talk a little bit about some of the initiatives and to what extent do you expect performance to improve in 2019?

Well, I think if you look at soft drinks, the main drag in our performance last year was Brazil. I mean it is a more elastic category. And when consumers under pressure they know they will buy less soft drinks before they buy less beer, the soft drinks tend to suffer more than beer in tough economic times. And it's also true that consumers within soft drinks in Brazil, they traded down and in trading down they went to segments in which our brands are not very prevalent not very presence. And that is on returnable packaging and more cheaper beer brands and local brands. So that's not the way we build our business. So those were the two reasons, I think our existing consumers feeling pressured and trading down to segments in which our presence is very small.

Got it. And just on Argentina specifically, I think your volume performance deteriorated there in Q4. Can you just talk a little bit about the media outlook? Are you seeing any signs of stabilization or do you still expect it to be quite challenging?

No, I think what happened in Argentina last year is that the economists of the government they forecasted at the beginning of year, inflation that was around 25 or so percent and at the end it was more than 45%. So throughout the year given the cost pressures and everything we had to continue to correct prices every two months towards the end of the year and that of course put us at a big disadvantage give that competition had a different way of looking at things. And so, we believe that for next year that situation could be a bit more streamlined. But again in Argentina, what I have to say is that we're very excited about Budweiser back. We're going to reposition the brand to it belongs in a way it was being poorly managed. That's one of the reasons why we were excited about getting the brands back. We continue to gain share throughout, beer category continues to do well despite everything because other categories are more negative than beer. Our premium portfolio was stellar to our Corona but they're going yet. Local premium continues to perform very well. And we have also launched new affordable packs for Quilmes and Brahma to offer consumers some more accessible options during these tough times on the micro side. And last but not least we launched also [indiscernible] from Mendoza province, Mendoza is very famous for wine. That's why we launched this in that region because we want to compete with for that real occasion by offering not only the regular [indiscernible], but also different liquids and files so people can pair with food in a easy way. So it's doing very well. We feel so in 2018 in tough economic times in Argentina, what we did was again make sure our portfolio is ready or when things would normalize a bit but what really disturbed our business to your question Argentina last year was the frequency and the amount of price increases we have to implement towards the end of the year every two months or less given the acceleration of inflation which people think again this year would be a bit less of a problem, will still be high but not as high.

Thank you.

Thank you.

Our next question comes from the line of Carlos Laboy of HSBC.

Yes, good morning everyone. Brito, you've spoken at length about liquid differentiation about with your core brands in every market and about having differentiated occasions like you just did. Are you comfortable in Brazil with your mainstream liquid differentiation, are there opportunities still there? And can you comment on the line extensions in Brazil. You mentioned pure malt and how differentiated are its occasions and how you avoid cannibalization with it?

Well, that's a good point. I mean in Brazil what we saw in the last few years is that pure malt emerged as the new segment. And as always, we utilize a portfolio approach because again consumers goes to different occasions and they require different taste, different profiles, different styles and in 2016 for example we launched three varieties of Brahma Extra right which is a pure malt line extension of Rum, then from Brahma Extra we went to Skol in the second quarter of last year, we had Skol hops that was an innovative beer line extension for Skol with fragmatic very light fresh flavorful inspired by IPA but an easy drink in IPA. The Skol Hops grew to be almost the size of Brahma Extra. So demonstrating how powerful the Skol brand is. And then based on that, now on January 2nd, we launched the Skol Pure Malt which is a Pure Malt beer but using an innovative brew process which makes it very easy drinking even being a pure malt option. So these two brands Skol Hops and Skol Pure Malt, this two line extensions that is same are really being beneficial and will continue to be this Skol Mother brand since they give Skol more brewing credentials and reinforces Skol innovative DNA as an easy drinking liquid but also as an innovative brand. So we believe that the portfolio approach has been starting to working well for Skol. We also have been lots with Brahma. Brahma is very healthy growing very fast and we also did a lot on expanding our portfolio in a possible way to more affordable liquids. So we took the idea from Africa. We had not much happening in terms of our brands in that segment and with the Africa idea of local cereals, we went state by state in the Northeast to north and the Pan Handle states also in the Western side of Brazil depending on the cereal that was grown in that state and there's a different we proposed a local recipe with a local name that's relevant for consumers in that state and I'd say very surprised by the acceptance at a lower price point but with very good margins the same we did in Africa, we learned from our new colleagues. So again, that's what we're doing in Brazil. So again preparing Brazil always for the time after the Elections when consumers show better and this time seems to be here at least that's what we read in the paper.

Thank you.

Thank you.

Our next question comes from the line of Caroline Levy of Macquarie.

Good morning. Thank you very much. A couple of questions, just the ANM was down substantially in the fourth quarter, if I read that correctly, and was that all to do with the way your spending ran in a very high in the second quarter around World Cup. And do you expect to raise ANM in line with sales growth next year like it will be plenty Spencers is the question. And then just secondly you talked about having very good margins on the high-end company above the core margins. Can I just clarify that that's at the bottom line? It's not a gross level and it's despite the fact that there must be less operating leverage when you're growing small brands versus driving volume growth on the Bud Light for example? Thanks.

Right, Caroline, I think it's interesting. Let's go first for the ANM for the quarter. We always say that to follow ANM quarter-by-quarter is not the best way to do it. You're right. Last year we had the World Cup which concentrated lot of investments around Q2, Q3. So of course that's not a normal year. So I would look at the total year. That's precisely, I mean, you answer the question. And the second one on ANM for next year, I don't recall exactly what the question was?

Just are you planning to spend at a similar percent of sales like will you support your brands aggressively again?

Yes, we'll continue to support our brands of course we're not going to give any guidance from ANM because that's competitive sensitive but we'll continue to support it's our number one priority in terms of capital allocation is to support our organic business. And only then de-leverage. So we'll continue to support it. And if Brazil, if consumers feel better as I said to Carlos in the question before, we have a portfolio that we invested a lot in 2018 that's ready to take advantage of any growth in consumer confidence we see in the market. So we feel that if the growth is coming back to the industry in Brazil and it's not guidance. I'm just saying if that's the scenario, we feel we're best positioned to take advantage of it.

And then I just asked about margins on the high-end company at the EBITDA level?

Sorry, yes, yes, you're right. So you have three questions. On the high-end company, I think the beautiful thing about the high-end company is that it does the whole operation on a focused basis but at the end, it takes advantage of the scale of the core company. So I think that's the magic of it. We have two magics there, first when we take for example Kraft Brands and we get Kraft Brands that we that are partnering with us and we have them to access our supply organization and our procurement organization. The costs are much more streamlined than they were when they were an independent company. The products are the same. It's just that we buy and produce at a much better cost and the distribution is done in a much better way. So yes those brands require more investment, but on the other hand even for global brands, once they start going and scaling they not only take advantage more and more of our machine but they also start paying back a lot of this investment. So for sure, it's margin accretive. I'm not saying for example you find me introducing Budweiser in Nigeria of course, I mean for the first two years or so, I am investing ahead of the curve but that's an exception. Most places our global brands have been there now for a couple of years and they are at scale, when you look at the total of our global brands. They can grow much faster but they're already let's say they have already some critical mass and they are accretive.

Thank you.

Thank you.

Our next question comes from the line of Edward Mundy of Jefferies.

Good afternoon, everyone. Two questions please; Nigeria, first of all that's been a huge success for you, other than just improving the amount of capacity you have, what is it about being a challenger in that market that's enabling you to gain so much share. And then the second question is around your low and no strategy to ambitious targets by 2025. How important is it to really get low alcohol, your alcohol growing within the U.S. as part of that?

You mean the U.S.?

In U.S. parts.

Okay. Sorry, I missed the last part. Well Nigeria has been amazing story, I mean Nigeria, our colleagues, new colleagues had done already a very good work in terms of base. They identified some consumer insights given that in Nigeria had some different consumer groups in different regions of the country. They matched that with some brands we had and but they had capacity constraints. And when we came on board, one of the first decisions we made was to really invest in a new brewery in Nigeria and also to fix some bottlenecks in Onitsha and Port Harcourt, there's some existing breweries. And then once we had capacity then it was just all upside. And on top of that last year with the World Cup which was just Budweiser which is an amazing success Nigeria, Nigeria Nigerian consumer they're very open to American brands very open not only to beer but American brands in general. And Budweiser is the -- so we made it kind of in the bottle right. I mean from sports to music to just the imagery of the U.S. that it projects to the iconic brand. I mean it's really very powerful brand and a growing premium segment. So there is everything to be done in the Premium segment in Nigeria. You go to Lagos, you see that consumers are looking for ways to express their middle class express that they yes we can buy more expensive stuff and the demographics in Nigeria is very compelling, right. Lots of young people, young adults and the Pyramid is very favorable for the next many years. So we see lots of opportunities, we have big momentum, we have a great team, great leadership and yes consumers love our brands and now we are in Lagos because now…

Just on that, I mean in Europe you mentioned that you're in Belgium, now you're seeing that the big are getting boosted by Nigeria alcohol, I mean can you see some local currency within the U.S. for this [indiscernible] develop?

Yes, I think the U.S. where we're now testing Budweiser 00 in some markets that we tested in Canada went very well, so we're testing out in the U.S. and we'll see. I mean I think for sure the U.S. will also follow that trend. Low alcohol is also an interesting opportunity around the world. So it's not only about non-alcohol but also local alcohol beer, so -- but yes, the U.S. part of our plan for sure.

Okay, thank you.

Thank you.

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

Hello. I've got a question on South Africa. Can you just confirm that the supply disruption from Q3 is over? And I appreciate it's a very challenging macroeconomic environment. But if I look at 4Q versus the nine months, your volume growth is better. Your pricing is weaker and your margin contracted quite a lot in the fourth quarter. I think it was down 300 basis points in the release, can you perhaps comment on what's driving the shape of that growth. And then one completely unrelated follow-up and I appreciate you're not going to guide by the quarter but last year you got off to a pretty slow start which you highlighted on the 4Q call, would it be wrong to assume that the shape of this year will be opposite way around? Thank you.

Well, as you said, Mitch, out of stocks was a problem for us in South Africa together with the macroeconomics. In the fourth quarter, we saw better numbers in terms of volumes because the out of stocks was in a better situation. The form of margins going down has to do with increased supply chain cost because to alleviate the out of stock, we had to bring beers from different points in the country. So the beer average mileage increased because it's also peak period end of the year summer. So that's something that we see as a one-off but it was there in the fourth quarter, but we thought was better to incur those costs and have products in a peak time. So, out of stocks have pretty much solved with the exception of some very specific products that have a different production process that we're still solving some bottlenecks, but in preparing of course when the summer kind of teams down now in February, March then we have April with Easter which is for South Africa very important, very important season. So we don't want to -- we want to be totally ready for that season.

So, does that mean the margin contraction from Q4 could continue into 1Q until you get to the low season, and then obviously next year you probably will have fixed it?

No, what I said in the fourth quarter, I'm not giving guidance for the next quarter. What I said for fourth quarter is that there was a supply constraint in the fourth quarter that I had to bring beers from afar, because the premium brands are going very fast, and that's not yet available everywhere. So I had to bring it from afar. So the mileage that [indiscernible]. So it was not optimized, but we decided to do that as opposed to lose sales in a big period. So that's why the bottom is better, but at higher costs, but I would see that at least this for the year 2018 as a one-off, but again, no guidance. The guidance we have for cost that our company, right, is on a companywide global basis not for market.

Yes.

Thank you, Mitch.

And then the shape of this year, given last year, got up to a relatively slow start, would it be fair to assume at the group level that this year could be the other way around?

Well, again, we are not giving guidance at this point. It is true that the second quarter, especially last year when volumes contracted big time, that's all public, but at this point -- at this time, we not -- we also have phases [indiscernible] Easter and all, that price increases, so many things. And at this time, we are not giving guidance in terms of phasing of comps for 2019 in South Africa.

Okay, understood. Thank you.

Thanks. Thank you, Mitch.

And ladies and gentlemen, we have time for one more question. Our final question will come from the line of Nik Oliver of UBS.

Hey. Thanks guys for the question. And just one final one for me, and in Brazil, you mentioned market share being down 40 bps for the year. Could you remind us just where share is overall in that market? And how important is it for you to get back to the previous share levels, or is it more just about maximizing profitable growth? Thanks very much.

Yes, Nik, one thing to be said to paint the total picture is that in 2017 we gained 60 bps of share and then in 2018 we lost 40 bps of share, just to give the total picture. And at this point, we are not, like in the U.S., we are not giving the base for share number because the sources are moving, and these are company estimates. So for now, we are -- like we do in the U.S. we give the deltas, but not necessarily the base because these are company estimates.

Okay, that's very clear. Thanks guys.

Thank you, Nik.

And that was our final question. I would like to turn the floor back over to Brito for any closing remarks.

All right. Well, thank you Maria, thank you everybody for your time. In summary, 2018 was another step forward in our company's transformational journey. We had many successes to celebrate, though we face some headwinds too. Our focus this year was to continue to drive the organic growth of our business, while de-leveraging towards our optimal capital structure. Today we are a stronger, more diversified company, applying our learnings across our global business. While there is always more work to be done, we are confident in our strategy to deliver balanced, sustainable top and bottom line growth in 2019 and beyond. Thank you for joining the call today, and enjoy the rest of your day. Thank you.

Thank you. This concludes today's earnings call and webcast. Please disconnect your lines at this time, and have a wonderful day.