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Anheuser-Busch InBev SA/NV (NYSE:BUD)
Q1 2019 Earnings Call
May. 7, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Anheuser-Busch InBev's First Quarter 2019 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, CEO and Mr. Felipe Dutra, Chief Financial and Solutions 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 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 these 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 20-F filed with the Securities and Exchange Commission on 22nd of March, 2019. 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.

Carlos Brito -- Chief Executive Officer

Thank you, Maria, and good morning, good afternoon, everyone. Welcome to our first quarter 2019 earnings call. Today, I'll be taking you through the highlights of the first quarter, especially those of our two largest markets, the US and Brazil. I'll then discuss exploration of the potential listing of our minority stake of our Asia-Pacific business before handing over to Felipe, who'll discuss our financials. We'll then be happy to take your questions.

Let's start with the highlights. 2019 is off to a strong start as we accelerate our momentum from the fourth quarter last year into a solid first quarter performance. We delivered healthy, broad-based top and bottom line growth with particularly good results from Brazil, Colombia, Europe, Nigeria and the US. These results were delivered despite the unfavorable turn of a late Easter holiday, which is an important consumption occasion in markets such as the US, Mexico, Colombia, South Africa and Australia. The benefits of this holiday will fall in the second quarter of this year and as such, we expect this effect to normalize on a half year basis.

Additionally, some of our main markets, especially Argentina and South Africa, continued to suffer from difficult macroeconomic conditions that subdued consumers' confidence and spending patterns. We also faced some commodity and currency headwinds as expected mainly due to higher aluminum and barley prices.

With that being said, we have a lot to be proud of this quarter. We're very pleased with our results from Brazil, both in beer and non-beer. We have outperformed the market with double-digit volume growth. We also grew volume across all segments of our beer portfolio. This strong performance was supported by the later timing of Carnival resulting in a favorable comparable. In the US, our topline performance continues to improve as a result of our evolved commercial strategy, with an emphasis on premiumization and innovation. This quarter, we had our best market share trend performance in the past 25 quarters, with an estimated market share decrease of just 10 bps.

Premiumization remains a key focus for our global business, fueling top and bottom line growth with strong results from our High End Company and global brand portfolio. That company grew revenue by almost 20%, while our global brands, Budweiser, Stella Artois and Corona grew revenue by 14% outside of their respective home markets. As we have stated previously, sustainability is our business. It is good business. We're proud to progress toward our 2025 sustainability goals, reducing carbon emissions across our value chain by 4.5% over the past year.

Let me now take you through some of the numbers from the quarter. In the first quarter, our revenues grew by 5.9%, with revenue per hectoliter growth of 4.6%. Total volumes grew by 1.3%, own-beer volumes grew by 1%, with especially strong contributions from markets such as Brazil, Nigeria, Europe, Peru and Colombia, partially offset by South Africa and Argentina and the later timing of the Easter holiday in many of our markets. Non-beer volumes increased by 4.9%, predominantly driven by Brazil.

Solid topline performance coupled with operating leverage, favorable brand mix and continued cost discipline resulted in EBITDA growth of 8.2% and margin expansion of nearly 90 bps. Our underlying EPS decreased by $0.06 to $0.79 as our strong performance was more than offset by the negative impact of unfavorable currency translation effects. Our global brands continued to lead our growth, with global revenue up by 8.5% and by 14% outside of the brands' home markets, where they typically command a premium price point. Budweiser's role in our premium portfolio is to offer consumers a trade-off from core beer. It had great results in the first quarter with revenue growing by more than 15% outside of the US. This success was driven by especially strong performances in China, Brazil, the UK and Colombia.

Stella Artois delivered a solid performance with revenue growing by nearly 8% in the quarter. The growth was from a broad group of markets as the brand experienced double-digit revenue growth in more than 30 countries, including Brazil, South Korea, and Mexico.

Corona, our most premium global brand sustained its strong momentum from last year, with revenue up 15.7% outside of its home country of Mexico. This growth was led by Brazil, Colombia, the UK, China and Canada.

I'd also like to update you on our 2025 sustainability goals. We announced these goals in the first quarter of 2018 and have come a long way in the past year. In only 12 months, we've made strong progress against those commitments. We reduced our carbon footprint by 4.5% across our value chain, reached an average water usage of under three hectoliters per hectoliter of beer we brew and contracted approximately 50% of our purchase electricity from renewable sources.

Moreover, we continue to put strong progress and partnerships in place. We launched the 100+ Accelerator, piloting 21 companies across the world to help solve our biggest sustainability challenges and have already received multiple industry awards and recognitions. We're also leveraging technology to accelerate our progress. We have successfully tested electrical vehicles to be added to our fleets in Mexico, Colombia, and the US. We recognize there's a long way to go to reach this ambitious goals, but we're very excited about the progress we've made to-date in close alignment with United Nations Sustainable Development Goals, SDGs.

Now I'd like to highlight the performance of some of our major markets. Further details can be found in our first quarter 2019 results press release published earlier today. Additionally, I'll provide more detail on the performance of the US and Brazil in the quarter shortly, given their improved commercial results as well as their relevance to our total Company's performance.

In Mexico, revenue and EBITDA increased as a result of growth in our revenue per hectoliter and enhanced by meaningful contributions from our premium portfolio, led by Michelob Ultra and Stella Artois. Our volumes were lower versus last year, truly driven by the later timing of Easter, an effect, which we expect to normalize on a half year basis. Despite this phasing effect, we estimate we outperformed the industry in the three -- in the first three months of the year. We're also very excited to have signed the contract with OXXO, the largest retailer in Mexico to offer superior portfolio of beers in over 17,000 stores across the country. The roll out is under way. It will cover OXXO's entire Mexican footprint by the end of 2022. This important commercial alliance enables us to reach more consumers in more occasions and further grow the beer category in Mexico.

In Colombia, we grew volumes by low-single digits, despite the negative impact from Easter timing. Revenue per hectoliter increased by high-single digits, fueled by positive brand mix as our global brand portfolio grew over 60%. Solid topline growth together with continued synergy capture resulted in double-digit EBITDA growth.

South Africa had another challenging quarter with the later Easter result in a tough comparable and further exacerbated by persistently challenging macroeconomic environment. This environment is impacting consumer demand and driving the continued segment mix shift out of the core, which is more elastic and we over-index. While we're still under-indexed in the growing premium segment, we gained more than 6 percentage points of market share in the segment versus the first quarter of last year.

In China, we continued to drive premiumization, which resulted in healthy brand mix and a solid financial performance. Although the overall volume performance was affected by the earlier timing of the Chinese New Year, Budweiser continued to grow across China by mid-single digits. In our super premium portfolio led by Corona, Franziskaner and Hoegaarden once again delivered double-digit growth.

We continued to improve our US performance through an evolved commercial strategy, focused on leveraging our full portfolio, especially through premiumization and innovation. Our market share trend performance is heading in the right direction as we invest behind the sustained momentum of our above core portfolio and the stabilization of our core and value brands. We have improved our share trend from losing 70 bps in full year 2017 to 45 bps in first half of last year and 35 bps in the second half of last year. During the first quarter of this year, we continued to improve the trend, getting to minus 10 bps. Nine of our brands were among the Top 15 market share gainers in the country in the first quarter according to IRI, reinforcing our commitment to portfolio strategy. This was led by Michelob Ultra as the top share gain in the US once again, now holding that position for more than four consecutive years. We're fully committed to strengthening the beer category in the US in leading future growth. In order to do so, it's vital that we listen closely to our consumers and we use insights that we gain to power our portfolio brands. It's clear that consumers are demanding more transparency in the food and beverage they purchase. Thus, the beer industry needs to provide such transparency to evolve with consumer preferences. As a category leader, we are spearheading this effort by clearly labeling ingredients on the packaging of the Number 1 selling beer in the United States, Bud Light. This is a long-term play for the benefit of not just the brand, but the entire beer category. Bud Light will continue providing consumers with the transparency they demand, and you can expect to see this approach with our other brands down the line.

Furthermore, taking a regional approach is a key component of our US strategy. The beer market in the US is large and diverse and the consumer environment differs quite a bit from one region to the next. Therefore, the closer we get to the consumer, the more we can leverage the effectiveness of our wholesaler network to better meet consumer needs. Big and powerful brands are still very relevant in the lives of our consumers, as long as they remain close and speak to them. Examples of successful executions at a local level include the Bud Light Philadelphia NFL campaign, Philly Philly, the Bud Light Cleveland Browns Victory Fridges and the Michelob Ultra New York City marathon. We'll continue to invest behind local community relevant campaigns, which go beyond traditional media by leveraging social conversations and delivering best-in-class brand experiences.

Innovation is another major driver of our improved performance in the US. We have revamped our approach to innovation by bringing consumers to the forefront and placing an emphasis on rapid test and learn pilots. This enables us to adopt ahead of national -- to adopt ahead of national rollouts testing in a fast and small way. Once the concept is validated, we can then scale it up quickly and efficiently. With our new, more nimble approach, we can speed up time to market to less than 100 days. Last year alone, we launched several new products such as Bud Light Orange, Budweiser Freedom Reserve and Michelob Ultra Pure Gold Organic. These new products contributed to half of the innovation's volume for the entire US beer category in 2018.

In the first quarter of this year, we continued to lead the category. We have ventured into new segments such as with Michelob Ultra Pure Gold as a first beer brand at scale to obtain organic certification from the USDA and into new occasions such as with Stella Artois Spritzer, which offers a refreshing alternative to wine. Furthermore, we are leveraging our global footprint, such as through the US launch of Patagonia, a premium local brand from our portfolio in Argentina. We're then finding opportunity for this brand to meet consumer deals in the US and acted with speed getting the brand on the shelves in selected markets only 60 days after identifying the opportunity.

In line with our culture, we're never completely satisfied with our results and we acknowledge there is still work to be done in the US. However, we're seeing many encouraging signs that our evolved commercial strategy is delivering results. We firmly believe that we have the right people, portfolio, plans and strategy in place to shape and lead future growth of the US beer category,

Now I'd like to discuss our business in Brazil in a bit more detail. Brazil was a leader among all of our markets this quarter in both volume and revenue growth. We achieved double-digit growth in both beer and non-beer, outperforming their respective categories. We're very pleased with the strong start of the year in which we grew volume across all segments of the industry. The favorable result was supported by the later timing of Carnival as well as the lower industry weight of the value segment, even though we have not yet seen an increase in consumer disposable income. We continue to gain share in the growing premium segment with our global brand portfolio growing by more than 50% and Corona more than doubling its volume since the first quarter of 2018. A local premium brand has also contributed meaningfully to our results with volumes up by double-digits. We firmly believe that premiumization is achieved through a portfolio of brands and are confident that our expanded portfolio is best positioned to continue winning in the segment.

We're very pleased with the growth of our core portfolio, which benefited from recent innovations and line extensions, including Skol Puro Malte, which offers consumers a pure malt choice in the core segment. The category expansion framework has given us the tools to better differentiate our core brands, firmly position Skol as an easy drinking lager and Brahma as a classical lager. This is driving improved performance of the entire core portfolio.

Furthermore, we saw the ongoing decline of the value segment in Brazil as consumers are trading up. However, the value segment remains very relevant in certain regions of the country. And for this reason, we have launched affordable brands brewed with ingredients grown by local farmers to profitably compete in this segment. We currently have two regional brands brewed with local cassava, Nossa, in the State of Pernambuco and Magnifica in the State of Maranhao, both of which have achieved very positive results to-date. We continue to explore additional opportunities to expand affordability initiatives throughout relevant states, while achieving margins comparable to those commanded by our core brands.

In summary, we're confident in our commercial strategy, superior portfolio brands and most importantly, our committed and talented people. The transformation investments undertaken in our business even during the times of extreme volatility and a challenging macroeconomic environment have put us in a stronger position to win in the Brazilian beer market going forward.

Moving on, as we announced in our press release this morning, we're actively exploring a potential initial public offering or IPO of a minority interest in our Asia-Pacific business on the Hong Kong Stock Exchange. Proceeding with the listing will depend on a number of factors, including but not limited to valuation and prevailing market conditions. The merits of these initiatives are based upon the creation of an APAC champion in the consumer goods space. Furthermore, our superior portfolio brands and leadership position in the beer industry provide them attractive platform for potential M&A in the region.

We appreciate our minority stake listing would accelerate our deleveraging path. Nonetheless, our commitment to reach a net debt to EBITDA ratio below 4 times by the end of 2020 is not dependent on the completion of such a transaction.

Now, I'd like to hand it over to Felipe, who will take you through our first quarter 2019 financials. Felipe?

Felipe Dutra -- Chief Financial and Solutions Officer

Thank you, Brito. Let's start with an update on our synergies. In the first quarter of the year, we delivered $100 million of synergies, bringing the total synergies captured from the SAB combination to more than $3 billion . Our total synergy guidance remains at $3.2 billion , which will be delivered by the end of 2019. As a reminder, these synergies do not include any topline or working capital synergies.

Net finance costs in the quarter were $363 million compared to nearly $1.6 billion in the first quarter 2018. This increase was primarily due to mark-to-market gains linked to the hedging of our share-based payment programs of more than $950 million, compared to a loss of $242 million last year. Excluding the impact of the gains and losses related to the hedging of our share-based payment programs, our effective tax rate this quarter was 27.7%. This increase is primarily driven by capital mix in the quarter and we remain fully committed to deliver our 2019 guidance of ETR between 25% to 27%, excluding any gains and losses relating to the hedging of our share-based payment programs.

Our underlying EPS, defined as our normalized EPS, excluding the impact of mark-to-market related to our share-based programs and hyperinflation adjustments in Argentina, decreased by $0.06 from $0.85 to $0.79, as our strong organic performance was more than offset by the negative impact of unfavorable currency translations in the quarter.

On the Slide 21, you will see that our debt maturity profile is well distributed across the several years and we maintained roughly $16 billion of liquidity at the end of 2018. In the first quarter, we completed both the US and euro notes offering and subsequent tender offer for notes maturing between 2020 and 2026, allowing us to significantly extend our debt maturity profile and eliminate refinancing pressure for the foreseeable future. These transactions enable us to repay our debt with free cash flow, while facilitating the leverage.

As a reminder, our debt portfolio remains isolated from interest rates volatility, as 94% of our debt holds a fixed rate. Furthermore, the portfolio is comprised of a diverse mix of currencies with 56% of our debt denominated in US dollars, roughly 35% in euro. We use the euro currency as a proxy for the emerging market basket of currencies that are relevant to our EBITDA and cash flow generation. The euro has a strong correlation with our main emerging market currencies and has an advantage of providing access to bond markets with significantly higher liquidity and lower costs. Following the recent notes offering, the tender offer, we have extended our weighted average maturity to roughly 14 years and our debt maturity in any given year is considerably lower than our annual cash flow generation. Finally, we continue to expect the average pre-tax gross debt coupon in the full year '19 to be between 3.75% and 4%.

As you can see on the Slide 24, our capital allocation objectives remain unchanged, deleveraging to around 2 times remain our commitment and we will prioritize debt repayment in order to meet these objectives. We expect our net debt-to-EBITDA ratio to be below 4 times by the end of 2020. And as been said earlier, this commitment is not dependent on the completion of a potential IPO of our minority interest in APAC businesses.

Before we move to the Q&A session, I want to acknowledge that you may be interested in learning more about the potential listing of our minority stake of the APAC business, However, given the regulatory restrictions, we will not be able to provide any information that is materially different from what we have disclosed in our press release from this morning and earlier in this call. We will share more information if and when there is news to share. Thank you for your understanding.

And with that, I'll hand back to Maria to begin the Q&A session. Thank you.

Questions and Answers:

Operator

Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. (Operator Instructions) Thank you. Our first question is coming from Olivier Nicolai of Morgan Stanley.

Olivier Nicolai -- Morgan Stanley -- Analyst

Hi, good morning, Brito and Felipe. Just one question and one follow-up. First on the US, you were almost in line with the market this quarter and you flagged that it was your best performance since end of 2012. Now, could you please give us an update on your portfolio strategy and why this time it is different and that this improvement is more sustainable than to one we've last seen at the end of 2012? And just follow-up on Mexico, I think your margin increased strongly in Q1. Just wondering if there was any one-off here or is it going to be kind of the new run rate since you have new capacity coming up online? Thank you.

Carlos Brito -- Chief Executive Officer

Olivier, hi, good morning. So on your first point, we're very, very excited about the US business, and then we have this evolved commercial strategy and that is not one quarter alone. If you look at the last few quarters, we've seen a trend in market share getting better. It's still negative for sure, but getting better, close to stabilization. So that's very encouraging. And this strategy is based on a portfolio approach as opposed to one or two brand approach. So that's very important to have the core plus with Michelob Ultra, which remains very solid, and is -- remains a top share gain in the US now for four years, more than 24 quarters.

In super premium, our craft portfolio continues to gain overall share and is also growing double-digits. So this is a big potential for us, great margins there. Innovation, also doing very well. So, we lapped the industry last year in terms of innovation and again this quarter, the same thing. And also in the mainstream. if you consider mainstream core value, then this guy did better, mostly because of the better segment performance. And that altogether has enabled us to get from a minus 70 bps in '17 market share loss -- half last year of our net loss of minus 40 bps and minus 20 bps for the last quarter and then minus 10 bps for this quarter 2019. So you see a trend there and we're able to get some momentum. So let me give you the numbers again. So for '17 minus 70 bps, first half last year, minus 45 bps, second half last year, minus 35 bps and then coming to minus 10 bps this quarter.

So -- and your second question about -- what was the second question here?

Olivier Nicolai -- Morgan Stanley -- Analyst

Mexico.

Carlos Brito -- Chief Executive Officer

Mexico. Yeah. So I wouldn't try to analyze margins on a per-quarter basis, because there are so many moving pieces, but what you said about capacity of course is something that will optimize our logistics and supply chain for sure. But again, I wouldn't take one quarter to get any kind of reference in terms of margins. I think we have to take the full year or at least the half year.

Olivier Nicolai -- Morgan Stanley -- Analyst

Perfect. Thank you very much.

Operator

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

Trevor Stirling -- Bernstein -- Analyst

Hi, Brito and Felipe. Two questions from my side, please. Two contrasting countries, I guess. Colombia up low-single digits despite the timing of Easter. It definitely appears that your new competitor in Colombia is having pretty (inaudible) significant impact so far and in contrast, South Africa, where volume is down, revenue per hectoliter flat, margins contracting 600 basis points. Could you talk a little bit about the reasons for the success in Colombia and why South Africa is so weak at the moment?

Carlos Brito -- Chief Executive Officer

Well, thank you. So first, I mean, for Colombia, we have a solid position in Colombia for sure with the strong portfolio of core in the premium segment. We continue to invest in Colombia not only for the global brands that are new to that market, but very strong already, but also revamping some of our core propositions like Aguila, for example where new VBI, new packaging on the easy drink side. So, I think Colombia has shown that our brands are very strong. The country is going through also some much better time in terms of macro compared to South Africa. So that of course benefits everybody in the market. And we've been also investing in trade tools like coolers, merchandisers, and sampling for new brands and stuff. So, I mean, we had a very robust program in Colombia.

The difference in South Africa, where we also have very strong brands and a very strong market position, is that the macros are much worse in South Africa. If you look at unemployment, inflation, ground outs and then elections tomorrow and then lots of things going on in South Africa. And Eastern South Africa of course played a role, but I think what's happening in South Africa is that consumers are under pressure and given all, there is very strong position in the core segment. The core segment and the core consumer tends to be more elastic and more subject to those pressures on the macro side. So there's also premiumization trend going on in South Africa and the premium segment growing fast. Well, we now have brands to compete, before we didn't. And those brands are doing very well, but we under-index and the share in the high-end compared to the core. So there is a mix effect at this point that's against us in South Africa plus the whole macro. So, I think those two things are very different from the Colombia case.

Trevor Stirling -- Bernstein -- Analyst

And Brito, the zero revenue or flat revenue per hectoliter in the quarter presumably had a component of the 600 basis points of margin expansion. Is there no underlying pricing in the mainstream products at the moment?

Carlos Brito -- Chief Executive Officer

Which market are you talking about, you're talking about, are you talking about South Africa?

Trevor Stirling -- Bernstein -- Analyst

South Africa. South Africa, sorry.

Carlos Brito -- Chief Executive Officer

South Africa, OK. So, in South Africa, well, not only you have the price increase that was in the first quarter of last year, so there's a phasing issue there, and you have of course excise tax that went up by 7% plus also in the first quarter this year. So, you put those two together, you have let's say a tough comp there -- right there.

Trevor Stirling -- Bernstein -- Analyst

Okay. Thanks very much, Brito.

Carlos Brito -- Chief Executive Officer

Thank you.

Felipe Dutra -- Chief Financial and Solutions Officer

Thank you, Trevor.

Operator

Our next question comes from the line of Fernando Ferreira of Bank of America Merrill Lynch.

Carlos Brito -- Chief Executive Officer

Hello? I cannot here you.

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Could you hear me?

Carlos Brito -- Chief Executive Officer

Yeah.

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Can you hear me now?

Carlos Brito -- Chief Executive Officer

Yeah.

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Sorry, hi. Thanks for the questions. I have two, please. First one on M&A. Historically, ABI has been focused on controlling the assets that you invested in but I'm wondering if that's still the case or going forward you could perhaps be more flexible than you were historically like the JV in Russia, for example? And then second question, follow-up on your Brazil presentation. I mean, can you -- Brito, can you mention how relevant the value brands were in terms of your growth contribution in Q1? And if you could share some numbers on Nossa and Magnifica, it would be great. Thank you.

Carlos Brito -- Chief Executive Officer

Well, on M&A, I mean, as you know, most of our people in the Company are focusing into organic business. That's what we do every day. 99% of the people in the time are focused into organic business. We do M&A from time to time. We recognize that's -- it's strength as well as the Company as well with on the organic side is on the inorganic side. Each situation is different. So the joint venture in Russia is different. But normally, of course, we would like to have control, because then we can implement our priorities, our global brands and our strategy. So, that's key element, but again, each situation is different. But again if you're referring to the potential Asia IPO, it's a minority stake that we could at some point waiting (inaudible) do it. We remain with the control.

And in terms of value brands in Brazil, it's interesting that the value segment grew in the last two quarters of last year, but now it's kind of retrenched again -- once again. We think it's because consumers are feeling better and they tend to upgrade. But given that the value segment in Brazil was north of 20% at this point, we decided to participate in a more intense way, but of course, with initiatives that can create the price points we need to compete in that segment, but with the kind of margins, they're close to the core business, which are the margins that we feel, we just tried such investment. That's where Magnifica and Nossa come into play. These are brewed with local cassava. So there is a very strong appeal for the local population. It also supports local farmers and because of all that, we're able to have a lower competitive price point, but with margins that are very close to our core business. So, we'll remain -- now we feel we can be more competitive, not only with these two brands but also with some pack price initiatives that we have, mostly on returnable bottles, the 340 returnable bottle, the mini and also the big one liter bottle that provide people more for less or an attractive price point in the case of the minis. So it's a strategy of not only new liquids but also pack price points.

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Thanks, Brito. Would you say that this trade-up is sustainable at this point or is it still early to say?

Carlos Brito -- Chief Executive Officer

Well, what we can say Fernando is that consumers in terms of confidence, they feel better about the future. If you compare consumer confidence compared to six months ago, for example, it's been going up every month pretty much, especially after the elections. I think the elections were the important turning point in that the last three years that have been very tough in Brazil in the macro, political, so many bad news every day in the paper. I think consumers are willing to leap of faith that this new government will be able to pass the reforms. We are cautiously optimistic that these reforms will be perhaps, but of course, that will be very important so consumers continue with this frame of mind.

It's also true to say that this new optimism has not yet translated in more consumer disposable income. So that's also true and is a fact, but confidence is up, which is also -- normally it's a predictor of good things to come. So again, we're cautiously optimistic and we saw a very strong quarter, helped of course a bit by the Carnival timing, but we outperformed the industry, we grew across all segments. So, it's great to start a year like this.

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Thanks, Brito.

Carlos Brito -- Chief Executive Officer

Thanks, Fernando.

Operator

Our next question comes from the line of Simon Hales of Citi.

Simon Hales -- Citi -- Analyst

Thank you. Hi, Brito, hi, Felipe. Just following on, Brito on Brazil. So, clearly a strong performance in the quarter, obviously, lots of moving parts as you referenced in terms of the timing of Carnival, easy comp, etc. What do you think the underlying run rate is for volume growth that you're seeing at the moment with all those factors taken into account? And then secondly, what if you could just talk a little bit about your No- and Low-Alcohol portfolio and maybe update us as to the trends you're seeing there and where you are now in terms of your 2025 targets as a potential revenue from that portfolio?

Carlos Brito -- Chief Executive Officer

Good. Thank you, Simon. So, in Brazil, again, very strong volumes, 11.3% growth, and that was both in beer and non-beer. And it's really hard to give guidance at this point, but what we can say again, growth was broad-based, outperforming the industry for us and across all segments. So, these are all very positive news. I think a lot of those growth also came from investments that we did in transformational initiatives in the last three years when the country was in a tough macro situation, when consumers are not feeling that confident about the future because we know Brazil now for 30 years and we know that the fundamentals are very strong. In the last three years, we have invested in transformational things like global brands, new packs. So we have really enlarged the offerings we have in global brands.

We have invested in new VBI, so a visual identity for our core brands. Also sleek cans came to market, the Brahma family continued to expand, Skol family expanded with pure malt and Skol hops. They're better brands, we have new liquids that are taking advantage of local grain production to be able to compete better and more effectively in the value segment. We inaugurated a new R&D center in Rio, and we continued to make strides throughout the market, reaching more blocks as we go more and more granular in the western side of the country and the north part of the country. So, all these things are investments that are not new, I mean, they are now for three years, because again, we've always believed Brazil, the potential and the fundamentals have not changed. And now we think we're in the best position of all companies in that market to take advantage of when consumers feel better about life and about the future in general.

We have a superior portfolio and we have an amazing route to market and amazing people, and we're cautiously optimistic that this year could be -- with the reforms passed, positive for our consumers in Brazil.

In terms of NABLAB, your second question, today, we are at 8% in terms of volume. So, we make some progress. So we continue to be very committed to it. We have more than 76 brands today around the world in the NABLAB space. We believe it's going to be a portfolio gain, not one or two brand type game. We have already six of our countries that are above the 20% threshold, be it emerging and developed markets. So we have role models for countries and what NABLAB kind of role can play in both kinds of markets, developing AND developed. So then, we feel that we have the tool kit and we know how to get to our target and we are very committed to do it, and those are very interesting propositions, because first, it's go -- it goes along the trend we see in the consumer space in terms of moderation, health and wellness and also premium products, because normally these products are sold at a premium price. Thank you.

Simon Hales -- Citi -- Analyst

Very clear. Thank you.

Operator

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

Chris Pitcher -- Redburn -- Analyst

Hi, good afternoon, thank you very much. Couple of questions. Firstly, your increased confidence on the United States in terms of market share improvement is happening without any change in your mainstream brands, Budweiser and Bud Light. Given the success you're seeing at the super premium end and core plus and also the value end, is this changing the role of Budweiser and Bud Light is potentially playing within the portfolio?

And then secondly, can you give us an update on Zenzele scheme in South Africa, because we believe you're due to deliver shares next year and how that's going to affect your share counts and where they'll be sourced up. Thank you.

Carlos Brito -- Chief Executive Officer

Okay, Chris. So, in terms of the US, yes, we are confident that our evolved strategy is working. And this strategy is a strategy of portfolio gaibers as opposed to one or two brands. So, yes, it's true that when we got here 10 years ago, everything was above Bud and Bud Light, but today, Bud and Bud Light, of course, remain the two most important brands in our portfolio. But if you look at Michelob Ultra, it's already 10% of our portfolio and growing; the biggest share gain in the US for now four years. And if you look at craft, if you look at Stella Artois, if you look at the new line extensions we've had like Pure Gold for Michelob Ultra, the Bud Light series -- I mean, the Budweiser series and the Bud Light Organe line, I mean, all these things are getting consumers to trade up. It is true that there is some cannibalization, because Michelob Ultra, of course, is growing and Bud Light being the biggest win in the US, it's being cannibalized by Michelob Ultra as well for sure, but at a much better margin.

So in a way, it's accretive to the business and it's in line with consumer trend. So, Bud and Bud Light will remain key brands for us in our portfolio, but maybe they will be smaller in size going forward, and other brands will be bigger, but because we are trading up, those that is that in move, that's accretive in nature. So again as a portfolio play and some brands will be smaller, some brands will be bigger for sure.

In terms of Zenzele , the current Zenzele scheme matures next year, 2020, and we have already engaged with government authorities and other stakeholders on an outline for our plans to be adopted upon maturity. So as engagements are still ongoing, it would be premature to provide details at this time. But we'll continue to update you as we have new news on the scheme, but again the scheme will mature only next year.

Chris Pitcher -- Redburn -- Analyst

Thank you.

Carlos Brito -- Chief Executive Officer

Thank you.

Operator

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

Carlos Laboy -- HSBC -- Analyst

Yes, good morning, everyone. Brito, can you speak to how you determine whether a line extension is successful or not as it's rolling along and what criteria guide you to make sure that you're doing it right and optimizing it? And then on an unrelated basis, if you can just give us an update on your thinking how it's evolving regarding brewing capacity rationalization is a room for improvement here in the US, Canada, and Mexico? Thanks.

Carlos Brito -- Chief Executive Officer

Okay. So in terms of your second question, I mean brewing capacity, in Mexico, we continue to invest. I mean, we have just opened -- officially opened in the first quarter our central brewery in Hidalgo, that's going to be very important to rationalize the current footprint we have in Mexico, in which we still import quite a sizable volume from the US, so be more self-contained in Mexico is very important. We also added significant capacity to our grid by naming two new lines in our Yucatan plants brewery, which we also invested some years ago. So, with all this new capacity in Mexico -- in the US, of course we have enough capacity, but we continue to invest in US capacity, because we have craft brewers (inaudible), we have more premium beers, premium packaging, we have more assortment and in the US, we continue to transfer line, shift this line, adapt a new line to new package assortment. So this thing of brewers' footprint is very dynamic and it's always happens; same in Canada. So -- but in Mexico, clearly, we're adding capacity. In the US, we're managing the existing footprint, but we'll continue to invest because of package assortment and new brands.

In terms of line extension, I mean, of course, we tried to do line extension on things that will make the mother brand stronger, things that connects with the mother brand, connects with the brand positioning of the mother brand. So, this is key. So, whenever we do something in Bud Light, it has to do with the easy drinking, the refreshment, the young side of the brand, same we do with Skol in Brazil as we did with Puro Malte. And of course, we have a plan in terms of volume, in terms of distribution, in terms of consumer take out and we also have social listening that today is very active in our Company. So that's a very correct way to look at what consumers are saying, behaving, talking about the brand, sharing with their friends about their news. So, I mean, all those things are things that are there for us to judge line extensions doing well or not but not forgetting the mother brand. So line extension should always not bold, but also add to the mother brand franchise.

Carlos Laboy -- HSBC -- Analyst

Thank you.

Carlos Brito -- Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of Edward Evers (ph) of Investec.

Edward Evers -- Investec -- Analyst

Hi, thanks for the questions. Good morning. First, just briefly going back to South Africa. You've obviously gone through the macro and portfolio positioning issues there. In addition, you have been experiencing some distribution and stock out difficulties. Can you confirm that those issues are now resolved? And then my second question is a broader one. I know you're constrained with what you can say on the potential partial IPO, but it was striking in your statement that you're talking about the creation of an APAC champion in consumer goods being the main merit of this. Can you explain how that would be advantageous for you and surely European and soft drinks Company, you're not thinking expanding into infant milk or noodles, are you?

Carlos Brito -- Chief Executive Officer

Yeah, I think on your second question, you got it right. I mean, it's more about the pursuing of the IPO at this point and the why we're doing it the platform. I wouldn't get hung up on the consumer goods. I mean, it's -- I just said, we're not going to go into infant milk or anything like that. So I think the important thing is the platform. And if you compare to Ambev as another platform that is a champion our growth and expansion in Latin America, that's the kind of parallel we try to drive, not in terms of the percentage that we owe or anything like that, but just the idea of having something that we have a lot of experience with, which is the Ambev platform, replicating that in a new exciting growth market like APAC. So that's the main idea, and that's why we use the word platform.

On your first question about South Africa, in terms of out of stocks, it is pretty much resolved. Of course, when you look at things like Flying Fish, which is a growing brand we have in South Africa, we still have some issues there with expanding capacity, because we still have some cap. So yes, there's still a few brands that are cap. But I mean, the bulk of our brands the out-of-stocks are resolved. They were resolved by the end of last year.

Edward Evers -- Investec -- Analyst

Okay,

Carlos Brito -- Chief Executive Officer

Thank you.

Operator

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

Andrea Pistacchi -- Deutsche Bank -- Analyst

Yeah, good morning. So I have two questions please. The first one is on Argentina, where you had a difficult quarter unsurprisingly but mid-teens or teens volume decline. If you can talk a bit about whether the worst is behind there in your opinion. And then the second question is on Nigeria please. If you could -- you gave us a lot of color on Nigeria at the Investor Day in South Africa in August, where you said that you had about a 22% market share. Could you just give us an update please on Nigeria, what you're seeing in the market, maybe where your share is now and the progress you've made in the past six, nine months?

Carlos Brito -- Chief Executive Officer

Well, first I'd let -- I mean, Andrea, let's go to Argentina. So, you're right, I mean, consumers are in a tough spot in Argentina. Very high inflation, 50% or more on yearly basis. Elections coming up in October, a lot of uncertainty in terms of the future in the political side, currency also devalued. So, I mean, lots of pressure on the consumer. So yes, there's consumption contraction in Argentina as a result of all those things I just described. We believe in our commercial strategy. The premium portfolio amazingly enough (ph) continues to show very strong performance with Stella Artois. Corona and local brand of ours, Patagonia. We're very excited also to have Budweiser back, but of course, it's true that overall volume is suffering.

We also have now some price controls that would not affect our business. We have two SKUs in the price control, one in soft drinks, one in beer, but those represent small percentage of our volume. But just -- it's hard to predict what Argentina will look like. Consumers will remain under pressure we think this year. But we'll try to -- it's not the first time where people -- in a way our people are used to deal with this kind of situation and we have a great team in Argentina that's, of course, always looking at ways to adapt a strategy because we are there to service consumers (inaudible)] right now. So again, hard to predict, but we'll -- it's not a first time we see that in Argentina.

In terms of Nigeria, we had a very strong first quarter. Continued volume and revenue growth, double-digits. So, Nigeria remains a very successful story for us now with the capacity that we haven't had for some years in which we're capped. Now we can tell Trophy and Hero are big brands alongside with Budweiser in a more freely way in Nigeria. So that's why growth continues and growth can be seen across all regions in Nigeria. So, doing very well, very excited now with a portfolio that's also has core but also global premium brand with Budweiser. Budweiser was launched last year during the FIFA World Cup and Nigerians -- our consumers in Nigeria, they're very connected to soccer and very connected also to American brands. So that dual did very well and Budweiser is off to a very strong start in Nigeria. Thank you.

Andrea Pistacchi -- Deutsche Bank -- Analyst

Thank you.

Operator

Thank you, ladies and gentlemen, we have time for one more question. Our final question will come from the line of Robert Ottenstein of Evercore.

Robert Ottenstein -- Evercore -- Analyst

Great. Thank you very much. You're clearly getting some nice progress on the topline and on the margins, and I'm wondering if you could tie that into some of the initiatives that you talked about in South Africa, particularly Felipe Dutra went into some good length on what you are doing with big data, artificial intelligence, machine learning and I'd love to hear how that's helping you both connect to the consumer and be more of a consumer-centric Company, giving consumers what they want as well as driving productivity. Thank you.

Carlos Brito -- Chief Executive Officer

Great question. Well, thank you. I mean, let's talk about two fronts; consumer and customer. But I think the most important one is that technology is all about business transformation first. So, in business transformation, 70% of it is around people and ways of work and 20% or 30% is around technology per se. That's what we've learned as we did it ourselves and benchmarked with other companies that are ahead of us. So in terms of customer, as we showed in South Africa, there's a big effort -- we showed many things, but I'll focus on content strategy. There was a big effort on evolving our content strategy. Our content strategy with the (inaudible) retailers used to be all based on the sales rep. Today, it's much more of a hybrid strategy in which we're evolving from that model with sales rep, they're becoming more of a business development rep to one where we have the business development rep plus a sales support, plus we have our B2B strategy.

So today, we have 40% of our sales are digital sales and we want to get that to 70%. So, 40% digital to-date, 60% to analog with the sales rep. So connected park is also something we showed in South Africa. That's the means by which we'd connect the point of sale equipment of the block and we not only deliver an app in which the park can manage its business, but we also in return get access to data and consumer insights to better service our parks, but also understand consumers on a more real-time basis. So that's getting closer to the consumer via the customer.

On the consumer front, we are of course are trying to get closer to consumers and have a more one-to-one contact with consumers. That's what we showed in South Africa, and also some verticals connected to that. So first, trying to get more insights as you get more consumers and get better consumer records. Second, that can help us in many fronts, including media efficiency, because it can be more tailored and more customized. We also have a big B2C effort, business to consumer and that's expressed in many ways, but I would say that our e-commerce platforms that today are in 20 countries. We will continue to expand that in those countries plus some new countries.

We also have brand-building by tailored content. So, earned media today is 8% of our total media. We will get that to 30% and all that should benefit topline growth because that's -- in the pilots we have, that's what we see.

So again many things happen also in supply chain and logistics in general, production, brewing a beer and all that, but on customer and consumer is that how I would summarize the efforts and those are two important things; content strategy in the customer level and consumers one-to-one on the consumer level. Thank you.

Robert Ottenstein -- Evercore -- Analyst

Thank you very much.

Carlos Brito -- Chief Executive Officer

Well, thank you. And in summary, I think we're in -- summary, in the first quarter, we delivered strong results and saw improved performance in many of our key markets, especially Brazil and the US. We remain focused on driving the organic growth of our business, while deleveraging toward our optimal capital structure and have taken significant steps to improve our debt maturity profile through our refinancing initiatives. We believe that our commercial plans, superior portfolio brands, the diverse geographic footprint, unparalleled operating efficiency and strong pipeline of committed and talented people position us to continue delivering strong results in 2019 and beyond. So again, thank you very much for joining the call today. Thanks for the time and enjoy the rest of your day. Thank you, bye-bye.

Operator

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

Duration: 57 minutes

Call participants:

Carlos Brito -- Chief Executive Officer

Felipe Dutra -- Chief Financial and Solutions Officer

Olivier Nicolai -- Morgan Stanley -- Analyst

Trevor Stirling -- Bernstein -- Analyst

Fernando Ferreira -- Bank of America Merrill Lynch -- Analyst

Simon Hales -- Citi -- Analyst

Chris Pitcher -- Redburn -- Analyst

Carlos Laboy -- HSBC -- Analyst

Edward Evers -- Investec -- Analyst

Andrea Pistacchi -- Deutsche Bank -- Analyst

Robert Ottenstein -- Evercore -- Analyst

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