Latin America South
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Latin America South
• LAS Overview
• LAS Strategy
Agenda
LAS: Latin America South
LAS represents 20% of ambev’s volume and around 15% of its EBITDA…
LAS OVERVIEW
Number one beer producer in Argentina, Paraguay, Bolivia and Uruguay and growing business in Chilean market
Recognized brand-power in all markets, with a solid portfolio
Pepsi bottler in Argentina, Bolivia and Uruguay
Most developed distribution system within the region
Bolivia Beer market (mm Hl): 3.7 Avg per capita (liters): 36.7
Paraguay Beer market (mm Hl): 2.4 Avg per capita (liters): 37.7
Uruguay Beer market (mm Hl): 1.0 Avg per capita (liters): 28.7
Argentina Beer market (mm Hl): 17.2 Avg per capita (liters): 44.1
Chile Beer market (mm Hl): 6.3 Avg per capita (liters): 34.7
… with a successful operation in 5 countries
Source: Internal as of 2010.
LAS Beer industry fundamentals
Low per capita consumption – Potential to grow
High sales mix through independent distributors, principally in Argentina and Bolivia
High proportion of returnable presentations
Small number of players / Few brands with high market share
Powerful local brands, no significant penetration of international brands with a few exceptions
Main competitor for ambev: SAB and CCU in Argentina, and CCU in Chile
LAS OVERVIEW
ARGENTINA 76% Market Share
Quilmes and Brahma mainstream brands Strong regional brands Norte and Andes
Stella Artois leading premium segment
BOLIVIA Paceña and Taquiña mainstream brands
Huari brand leading premium segment
PARAGUAY Brahma brand absolute market leader
Local brands Pilsen, Baviera Stella Artois leading premium segment
URUGUAY Leadership with Pilsen and Patricia
CHILE Growing market share with Brahma,
Becker and Baltica
LAS leads 4 of the 5 beer markets in which it operates…
LAS OVERVIEW
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
Operations in 3 countries
Argentina and Uruguay since Baesa acquisition
Bolivia bottling system acquired in 2009
EBITDA of US$ 121 MM in 2010
...and has consolidated a strong and synergized CSD operation
LAS OVERVIEW
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
MAINSTREAM
90-110%
VALUE
60-90%
LOW
60%
SUPER PREMIUM
400-600%
CORE PLUS 150-%
PREMIUM 180-30%
Exchange rate R$/USD = 1,67
Highlights of latest results in LAS
Volumes growing due to industry performance and market share gains or stability in every country
Increasing inflation, strategic revenue management and premium growth have resulted in opportunities to grow in NR/Hl
In the costs side, inflation, labor costs and raw materials have hit our results but we benefited from better fixed costs absorption and higher efficiencies
Regarding SG&A, higher labor costs have been partially offset by the ZBB control and rationalization projects implemented
Leading marketing strategy with focus on innovation, communication and support of mainstream and premium brands
High performance culture emphasizing ownership and meritocracy
Track-record of consistent margin enhancement driven by economies of scale, global business processes and financial discipline
Highlights of latest performance in LAS
Despite the strong industry slowdown, LAS delivered solid double-digit organic growth rates
LAS OVERVIEW
2008 2009 2010 2008 2009 2010
+15.4%
+16.1%
+21.4%
+15.7%
Revenues EBITDA
2008 2009 2010 2008 2009 2010
US$ 2,3 bn US$ 1,0 bn
Exchange rate R$/USD = 1,67
1.764
2003 2010
EBITDA (R$MM )
257
2003 2010
Exchange rate R$/USD : 3,01 (2003) and 1,67 (2010)
Reaching an all-time record US dollar EBITDA in 2010
LAS OVERVIEW
US$1 Billion
US$85 Million
• LAS Overview
• LAS STRATEGY
Agenda
LAS: Latin America South
o In order to comply with this role, we focus in the following three main initiatives:
o People Engagement is a “must” in order to have a sustainable business
Maximize profitability assuring our leadership position
LAS STRATEGY
Full Brand portfolio Share of Throat
Maximize operational efficiency
Full Trade programs portfolio
External regulatory environment pro-business
Share of Throat
Maximize operational efficiency
Full Trade programs portfolio
External regulatory environment pro-business
o In order to comply with this role, we focus in the following three main initiatives:
o People Engagement is a “must” in order to have a sustainable business
Maximize profitability assuring our leadership position
LAS STRATEGY
Full Brand portfolio
Full Brand Portfolio 2010 Price segment
LAS has a strong mainstream and premium portfolio in Argentina…
Source: Nielsen 2010 * Ex InBev brands (ICSA)
Super Premium
Premium
Mainstream
Value / Low
Low
Guinness
Corona
Heineken Warsteiner
Imperial*
Isenbeck Budweiser
CCU Regionals’
Schneider / Córdoba
Palermo / Bieckert*
Diosa
Río II/San Carlos
COMPETITORS
… and we keep developing our full portfolio strategy through innovation…
Premium Dark
Mainstream
Special Edition Anniversary
Ne
w L
abe
l
Ice Tower
Thermo Sensitive Label
Gift pack 120
Innovation: new liquids, new packaging, renewed communication
TV Spots
Thermo sensitive label & Quilmes line extensions
In Bolivia we have a strong presence in the different regions with solid local brands…
Paceña brand leading in main cities of La Paz and Santa Cruz, and Taquiña in Cochabamba.
Premium segment growing throughout the country with Huari brand.
98% of beer sold through independent distributors.
Among the top tax contributors to the national revenue service.
...in Paraguay we are still enjoying strong growth with our portfolio...
Our portfolio includes mainstream brands Pilsen and Ouro Fino, premium Baviera and our recently acquired Budweiser
More than 80% of sales volume in returnable presentations, mainly in 1 liter
Direct sales accounting for more than 50% of our sales
...we have been delivering high volumes growth in Uruguay, both in beer and soft drinks...
Strong portfolio with Pilsen and Patricia leading the market, complemented by regional Norteña and premium brands Zillertal and Stella Artois
Beer per capita strongly recovering since 2004 after some years of contraction
Returnable presentations accounting for more than 90%, mainly 1 liter
Strong recovery in market shares in CSD and good results with H2Oh!
...while Chile has been consistently growing in market share, reaching an all-time record
Brahma and Becker, our mainstream brands in a highly competitive market
With the premium segment expansion, we enjoyed good growth ratios through Stella Artois and dark Brahma launchings
Strong direct sales force to serve a complex geography
Renovation of images and labels in Bolivia and Paraguay
Share of Throat Full Brand portfolio
o In order to comply with this role, we focus in the following three main initiatives:
o People Engagement is a “must” in order to have a sustainable business
Maximize operational efficiency
External regulatory environment pro-business
Maximize profitability assuring our leadership position
LAS STRATEGY
Full Trade programs portfolio
24
Developing our full trade strategy with programs and targeted activations…
PROGRAMONPROGRAMON
SMK Q SHELVESSMK Q SHELVES
BEER COOLERSBEER COOLERS
SS Q SHELVESSS Q SHELVES
EVENTS ACTIVATIONEVENTS ACTIVATION
Summer
Winter
WorldCup
25
Self Service INNOVATION
Header with Back Light
Bottle Lighting in each shelf
Quality Improvement for price communication
… to be leaders at the POC, shaping beer category profile
Traditional
26
Supermarkets
Quality End of the Isle
Interactive Stopper Touch Screen
INNOVATION
Double Door Cooler with secuential Leds
Investing in state-of-the-art innovative shelves
Maximize operational efficiency
Full Trade programs portfolio
External regulatory environment pro-business
o In order to comply with this role, we focus in the following three main initiatives:
o People Engagement is a “must” in order to have a sustainable business
Full Brand portfolio Share of Throat
Maximize profitability assuring our leadership position
LAS STRATEGY
17,717,217,3
15,914,8
13,913,313,0
12,112,412,612,712,4
98 99 00 01 02 03 04 05 06 07 08 09 10
1.9% -1.0% -1.3% -2.1% 6.7% 2.9%
4.3% 6.5%
MM Hl.
7.5% 8.6%
Source: beer (ex factory volume) and own estimations
Argentina’s beer market has resumed the growth path...
35.4 35.7 35.0 34.2 33.1 35.0 35.6 36.8 P.C. 38.9 41.4 44.6
2.6% -0.3%
44.1 44.1
Beer Market
0
10
20
30
40
50
60
70
80
90
100
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
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1990
1991
1992
1993
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1995
1996
1997
1998
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Per Capita (Liters)
SOURCE: Beer (Ex Factory Volume). Wine: Bodegas Argentinas.
BEER WINE
... while continuing to outperform wine in share of throat...
27
44
113
86 81 8169
6144 38 37 35 29
24
21
27
5 14 26
2
10
94
5
5
4
4
7
0
20
40
60
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GER
MA
NY
VEN
EZU
ELA
UK
USA
Can
ada
BR
AZI
L
AR
GEN
TIN
A
PA
RA
GU
AY
BO
LIV
IA
CH
ILE
UR
UG
UA
Y
Lite
rs
BEER WINE SPIRITS
… but still with room to keep growing in per capita terms
SOURCE: Wine Institute 2009 / LAS 2010
Beer, Wine & Spirits
+40/50 liters
Shinning performance of Stella in the premium…
Source: internal
2007 2008 2009 2010
+60%
+20%
+8%
Volume Growth
2007 2008 2010 2009
…with its globally known attributes
Promising outlook for super-premium brand Patagonia…
Super-premium brand brewed in Argentina,
Great performance since launch , fostering premium segment expansion
Targeted to high-end wine consumers
Patagonia Meals
And innovating through the development of varieties across the zone
o In order to comply with this role, we focus in the following three main initiatives:
o People Engagement is a “must” in order to have a sustainable business
Maximize operational efficiency
Full Trade programs portfolio
External regulatory environment pro-business
Full Brand portfolio Share of Throat
Maximize profitability assuring our leadership position
LAS STRATEGY
Q&A
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