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Companhia de Bebidas das Americas (ABEV -1.42%)
Q3 2021 Earnings Call
Oct 28, 2021, 11:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning, and thank you for waiting. We would like to welcome everyone to Ambev's third quarter 2021 results conference call. Today with us, we have Mr. Jean Jereissati, CEO for Ambev; and Mr.

Lucas Lira, CFO and investor relations officer. As a reminder, a slide presentation is available for downloading on our website, ri.ambev.com.br, as well as through the webcast link of this call. We would like to inform you that this event is being recorded. [Operator instructions] Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996.

Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstance that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that we'll be discussing during today's call are both organic and normalized in nature; and unless otherwise stated, percentage changes refer to comparatives with third quarter 2021 results.

Normalized figures refers to performance measures before exceptional items which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company disclosed the consolidated profits, EPS, EBIT and EBITDA on a fully reported basis in the earnings release. Now I will turn the conference over to Mr. Jean Jereissati, CEO for Ambev.

Mr. Jereissati, you may begin your conference.

Jean Jereissati -- Chief Executive Officer

Hello, everyone. Thanks for joining our third quarter earnings call. This is our last call of the year, so I would like to do things a little bit differently today. I will cover the highlights of the quarter in a moment, but I would like to begin talking about people.

I have been very vocal about how Ambev is on a transformation journey. Transforming a company like ours, it's hard. It takes time. It's painful.

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There is a lot of skepticism and setbacks. In many respects, we are learning as we go, but we are doing this together as a team. A couple of weeks ago, something happened that personally meant a lot to me. Ambev was recognized by Great Place to Work as the fifth best large company in Brazil to work for.

Just to give you an idea of how transformational this is: In 2020, we ranked 27. A lot of great people built this company, and we are a company of owners. Our people has been and will always be the heart and the soul of Ambev, so I'm very proud to see that my team has been humble enough to face the brutal facts of the last few years and learned from our mistakes; has shown enormous resilience in the face of COVID; made bold bets and delivered results consistently as we recover from the pandemic and, at the same time, has helped the society; has stayed committed to building a better, more collaborative, diverse, innovative and more sustainable company for the long term, and is happier and more engaged along the way. And this is true not only in Brazil but also across the other markets where we operate, so a big thank you to everyone that have been making this transformation happen on a daily basis.

The third quarter was another step on this transformation journey, and frankly, it was another solid step in the right direction. I ended the last call saying that our top-line momentum would be put to test in the second semester. And in Q3, we delivered 20% net revenue growth, with volumes up nearly 8% year over year. Nine of our 10 markets delivered volume growth versus last year, and eight of them grew volumes ahead of '19.

And as a result, we delivered 180 million hectoliters on a rolling 12-month basis, 8 million hectoliters above our peak back in 2015. In this quarter, we delivered another solid net revenue per hectoliter performance, which grew 12% versus Q3 2020. Comparing with '19, net revenue was up 43% on a consolidated level in the quarter and year to date up 31%, versus '19. If we break down this performance by region: Our international operations generally continued to bounce back nicely.

In CAC, volumes grew nearly 9% year over year and are just slightly below 2019 levels. As mobility restrictions continue to ease, thanks to vaccination, our volumes continue to recover, led by the Dominican Republic and Panama, with the core plus and high-end portfolios continuing to gain weight in our mix. In LAS, volumes grew double digits versus 2020 and '19. Argentina, Chile and Paraguay drove this growth, also thanks to our core plus and high-end portfolios.

Bolivia posted strong recovery from 2020 but remains below 2019 levels, and there we still have a lot of work to do. Canada, however, had a tougher quarter in terms of top line. Although it's still above pre-pandemic levels, net revenue in the quarter declined roughly 2.5% versus Q3 2020, with volumes down almost 7%, while net revenue per hectoliter grew 4.5%. The industry was still impacted by mobility restrictions; and we faced some supply chain disruptions, mostly in Quebec.

Turning to Brazil, starting with NAB. Net revenue increased 22% in the quarter versus 2020 and nearly 26% against '19. Volumes were up nearly 10%, compared to Q3 2020 and almost 15% versus '19. This performance was mainly driven by Gatorade, H2OH! and Guaraná Antarctica, all of which grew above 2019.

And last but not least, Brazil Beer top line grew 16% in the quarter versus 2020 and 51% versus 2019. Our step change in volumes continued in the quarter with 7.5% growth versus 2020 and almost 35% growth versus 2019, outperforming the industry and gaining market share. This is a result of a commercial strategy that has consistently continued to work despite COVID, despite macro headwinds and despite competition. It is not just one thing that's working.

It's a combination of a healthier portfolio, at first, with stronger legacy brands plus a strong innovation pipeline which once again represented over 20% of our net revenues. In addition, we increased the number of fans of our brands by 3 million people since 2019. Second, a better service level, reaching 53% Net Promoter Score in the quarter; third, our technology big bets, which have continued to structurally improve how we connect with consumers and solve our customers' pain points. For instance, BEES is now used by 85% of our active customers in Brazil, currently offering over 350 products from 40 third parties of different industries.

In addition to that, yesterday, it was announced that BRF products will be made available through BEES, which is consistent with our desire to offer better service and solutions to our customers. And finally, great execution of our pack and channel strategy, with the 300 ml returnable glass bottles leading the way as the on premise continues to reopen. All in all, year-to-date top line is up 28%, with volumes growing 12% and net revenue per hectoliter increasing 14% versus 2020. When comparing with '19, we are up 31% in top line, 11% in volumes and 17% in net revenue per hectoliter.

During our last three calls, I took the opportunity to focus on how each of our technological platforms in Brazil are enabling our transformation as a company: Ze Delivery in Q4 of last year; BEES in Q1 2021; and Donus, our fintech, last quarter. Today, I would like to spend some time on what I like to call the logistics revolution that is underway to allow these platforms to fulfill their potential. As Ambev transforms itself into a platform with inspiring brands that connects people and the ecosystem, creating shared value, a best-in-class logistics operation is a must. In the '90s, we created our second-tier logistics operations, betting big on direct distribution, with currently more than 100 distribution centers spread across Brazil and making 80,000 deliveries per day.

In the last two years, we have started to set up a third-tier logistics operation. Approximately $100 million have been invested to-date on several footprint and technology-related initiatives to better prepare us for these new operating models. For instance, in terms of creating a delivery footprint designed for growth, we are investing behind small urban distribution centers near high-density regions, making our delivery capabilities more flexible and agile. These urban distribution centers or UDCs, how we call, operate only with small models like bikes, lightweight motorcycles and small vans, which are faster and cheaper for small drop-size orders.

The idea is to provide a better service level for small box using the right model with more efficient occupancy rates and lower carbon emissions, leaving bigger deliveries for bigger trucks. The UDCs integrate B2B, DTC and the marketplace platforms. And we are also piloting offering services to partners, gaining even more efficiency. We currently have five UDCs in operations, three of them in Sao Paulo.

We will end up the year with 14, and we are just starting. To wrap things up, some quick words regarding our journey, the remainder of the year and 2022. 2020 was a very tough year, but we stood our ground. 2021 has also been challenging, but we have continued to improve our performance in a consistent way, led by our V-shaped top-line recovery, so I'm looking forward to what 2022 will bring with its risks and opportunities.

Lucas will go into more detail, but although Q4 will be another tough comp, we will continue to work to bring our nominal consolidated normalized EBITDA for the full year back to 2019 levels. And based on our year-to-date performance, we believe there is room for improving this number, close a better 2021 and be better positioned for the next year. With that said, let me hand it over to Lucas, who will cover our financial performance. Thank you, everybody.

Lucas Lira -- Chief Financial Officer and Investor Relations

Thanks, Jean. Good morning and good afternoon, everyone. I would also like to start by talking about transformation, so I will kick off with climate action, where we also took a transformational step in the right direction during the third quarter. Q3 was marked by the announcement of our first carbon-neutral brewery and malt plants in Brazil.

Our Ponta Grossa Brewery in the state of Paraná and our malt plant in Passo Fundo in the state of Rio Grande do Sul delivered 90% reduction of CO2 emissions versus 2017 and had the remaining 10% emissions neutralized via carbon credits. This process began in 2012 when we built these plants designed to be low-carbon operations, and we're proud to see it come to life. To get here, we focused on four things: heat produced on site from biomass boilers; green energy produced on site from biogas of the effluent treatment system; energy consumption efficiency leading to more than 15% total purchased energy reduction; and 100% electricity purchased from renewable resources, in this case hydro. As next steps, we will implement electrical forklifts, starting in Q4 2021; and build on-site solar farms, starting next year.

And these investments make total financial sense as well. Our decisions to move toward carbon neutrality has not only led to efficiency savings in terms of energy consumption but also allowed us to secure renewable energy sources at more attractive rates than before. Also this milestone is not an isolated event. We're developing a road map to have 100% of our production facilities become at least carbon neutral in the future, which we expect to be able to share in the coming months.

Turning to our financial performance in the quarter. Overall, we saw a similar dynamic to the first half. EBITDA growth, driven by top-line recovery, partially offset by cost and expense headwinds. The difference this time is that, in Q3, we faced much tougher top-line comps than during the first half of the year, but the team's disciplined execution came through once again.

In the quarter, net revenue grew nearly 21% organically, lapping 15% organic growth in Q3 2020. EBITDA grew approximately 9% organically against 1.4% organic growth in Q3 2020. Normalized profit grew about 50%, following 2.2% growth in Q3 2020, while operational cash flow declined almost 10%, lapping 99% growth in Q3 2020. Versus Q3 2019, net revenue grew 43%.

EBITDA was up almost 16% in organic terms, while normalized profit increased 54% and operational cash flow improved 80%. Margin pressure, unfortunately, remains a reality, with gross margin contracting to 50% and EBITDA margin contracting to slightly below 30% in the quarter. However, we did see sequential EBITDA margin improvement versus Q2 2021, which stood at 26% at the consolidated level if you disregard the one-off tax credits in Brazil. We still have a long way to go, but we see this as a relevant improvement nonetheless.

Now let me go through the main cost and expense drivers. COGS per hectoliter increased 18.5% on a consolidated basis in the quarter. We once again saw adverse FX and commodity costs as the main factors, particularly in Brazil, while better mix offset higher unhedged commodity costs. Brazil Beer cash COGS per hectoliter in Q3 totaled almost 16%, which should be the lowest growth for the year.

FX and commodity pressures should still be an issue in Q4, but we continue to expect Brazil Beer cash COGS per hectoliter to grow in the low 20s for the full year. As for cash SG&A, year-over-year growth totaled 23.6% on a consolidated basis. Sales and marketing and distribution expenses grew mid-teens, so below net revenue growth. The main drivers here were the same ones from Q2, albeit at lower levels of growth year over year.

And administrative expenses were nearly 81% higher year over year, which was primarily a result of provisions for variable comp since our performance for the year was once again better than expected. And should our performance remain on track during Q4, variable comp accruals should continue to impact our year-over-year performance. In addition, it's worth sharing that, when we break down our administrative expenses ex variable comp accruals in regions like Brazil, for instance, what we saw in the quarter, and this is also true since 2019, is that overhead packages are growing below inflation, with the exception of two packages: first, our investments behind B2B, D2C and fintech platforms; and second, technology spends to enable our transformation. Despite the near-term impact, we have no doubt whatsoever that these investments make sense given our overall strategy.

And we've managed to find nonworking dollar savings in other lines to fund this transformation to a great extent. And as these platforms scale up and we find smart ways to leverage Ambev's scale and reach, we do see opportunity for more attractive returns in the future. Looking ahead, given year-to-date performance and should the recovery continue in the final months of the year, we feel more confident in our ability to deliver on our two main ambitions for 2021 despite a tough comp in Q4: first, a healthy balance between improved volume and improved net revenue per hectoliter growth as part of our top line-led recovery across markets. Year-to-date volumes are up 12.3% and net revenue per hectoliter is growing 14.1%.

And second, normalized consolidated EBITDA performance for the full year above 2019 levels in nominal terms, which we more and more see as feasible. Year-to-date normalized consolidated EBITDA stands at approximately BRL 16 billion, which is 4.5% above 2019 in nominal terms excluding the one-off tax credits in Brazil. Finally, some quick comments on our financial priorities of protecting liquidity and improving our return on invested capital. Liquidity remains solid given strong cash generation despite the several headwinds we've faced since last year, but the environment does remain uncertain and volatile, so we continue to believe a prudent approach remains warranted.

Our use-of-cash priorities also remain unchanged, reinvest for growth organically and nonorganically and return excess cash to shareholders over time. And in terms of improving return on invested capital, the name of the game continues to be operating efficiency coupled with better resource allocation across the company. Given the evolution of our business such as our bets behind B2B, D2C and fintech platforms, we believe that, when thinking about profitability, we need to look beyond margin ratios and also focus on return ratios. Don't get me wrong: We will always focus on improving the drivers of margin ratios for each of our segments and ventures, but given their different financial profiles, we've been focusing more and more on return ratios to manage our business.

2020 was tough in terms of profitability in both dimensions, but the good news is that 2021 has the potential to deliver better returns than 2020, which is important progress despite sustained margin pressure. Our journey of continuous and consistent improvement is well underway since 2020, step by step. This goes way beyond quarterly performance, and we will stay the course toward creating value over the long term. Thank you, and we can now go to Q&A.

Questions & Answers:


[Operator instructions] Our first question comes from Robert Ottenstein, Evercore.

Robert Ottenstein -- Evercore ISI -- Analyst

Great. Thank you very much. There's -- from what I can tell, there's really been kind of an -- there's a lot of background noise there, an unprecedented kind of change in some of the competitive dynamics in Brazil, particularly in terms of categories, with your leading competitor apparently abandoning a lot of their core value brands and just kind of totally restructuring their overall portfolio. Can you talk about what is going on in the Brazilian beer business in terms of pricing architecture, what the opportunities are as you look at that? You're, obviously, bringing in Spaten as kind of a core plus proposition, but what does it mean when you have such a dramatic change in the competitive landscape; and you have a whole portion of the business, economy or value beers, being walked away from by a major competitor? Thank you.

Jean Jereissati -- Chief Executive Officer

Thank you very much for the question, Robert. The Brazilian market has always been very competitive in general, and it will continue to be for a while, but I mentioned at some point in time that -- just when I arrived, that I would foresee the competitive landscape more with the trends on our side. Since that, we have been working a lot on our plan, learning consumer trends, understanding the competitive landscape. And we are very excited about what we have been accomplishing.

The numbers of volumes that we had this quarter, they show that. If you look at the numbers, it is not just about competition. We are really expanding our reach, expanding the number of consumers [Inaudible] transaction in our brands, so we are really very excited about our plan. Innovation already represents more than 20% of our net revenue, so we are taking the right products in the right places.

So we have been talking a lot about the Brahma Duplo Malte that really came to be the leader of the core plus segment that was a segment that was very underdeveloped in Brazil and has a big potential. So we have been growing new brands consistently [Inaudible] year to date, our high end is growing 20%. Consumers are more and more electing one of our brands as the No. 1 brand they love.

So we have 3 million more consumers that we had in 2019's; all this transformation, technology, the reach, the convenience that BEES and Ze Delivery are bringing for consumers and customers. So really, about -- the performance is really about our plan. 100% of the volumes expanded in the industry came from our brands. And on top of that, we are seeing competitors really moving in some direction that it's hard to really figure out exactly what's going on.

So when we look at production numbers of [Inaudible] of the industry and of competitors, in the end, competitors, they are producing less than 2019 levels, so this is something that we are much ahead of that. And I'm not sure if that's really -- a decision is really something that we are selling, and we are getting it right. We are getting the consumers. And it looks like somehow consumers are more -- and customers more toward our brand.

So we are going to keep looking an eye on competitors. I think, it's a big opportunity for us, anything that happen on the competitive side, but we are really excited about how we are bonding with our consumers, how we are all-time-high relation with our customers in Net Promoter Score and how we have been able really to drive industry expansion.

Robert Ottenstein -- Evercore ISI -- Analyst

Terrific. Thank you very much.


Our next question comes from Marcella Recchia, Credit Suisse.

Marcella Recchia -- Credit Suisse -- Analyst

Jean, Lucas, congrats on the results, and thank you for taking the questions. I have two questions on Brazil Beer. First is about loading. I would like to understand better if, after announcing the second price increase in mid-September, you saw any signs of mismatch between sell-in and sell-out late in the quarter that could have given an extra boost to the 3Q volume performance.

That would be my first question. And secondly, it's about packaging supply. We have seen constraints for both glass bottles and aluminum cans globally. And ahead of the fourth quarter, which is a seasonal peaking period for the industry, yes, I would like to see if you are seeing already any signs of constraints at the packaging industry in Brazil or even if it could become a risk going forward.

Thank you very much.

Jean Jereissati -- Chief Executive Officer

Thank you for the question, Marcella. So we brought that graphic that were -- of the rolling 12-month performance of our volumes in Brazil and Ambev because I think that graphic is really -- on a yearly rolling 12-month basis, it really mitigates any type of inventory change in levels, so I think that it was a good graphic for us to talk about. I am very excited about the Q3 volumes because they happened amid a sequential improvement on our net revenue per hectoliter. So when we compare net revenue per hectoliter of Q3 compared with Q2: There were a lot of efforts in the Q3 to really keep that up with an inflationary scenario that we are living in Brazil that picked very fast, faster than we expected.

And then, we -- it was announced, the price increase, in October. I really don't -- I really feel that, the sell-in and sell-out, they are pretty much in-line in the inventories in the market. They are really -- we didn't see any movement on that. We have been controlling that in a very sharp way because we know that summer is coming.

And heading to your second question, what we are seeing in the supply chain is that supply chain have been under pressure since the pandemic. We were able to keep it up with gains in resolving the availability of canes -- of cans, where we see a more normalized supply chain. When we come to glass, industry is more pressured. We expected to see some normalization more in 2022 on the glass side, but somehow this type of disruptions are in a much lesser extent that we had in 2020.

Lucas Lira -- Chief Financial Officer and Investor Relations

And then just to add there, Jean. This is Lucas, Marcella. I think, when it comes to glass bottles, one thing to keep in mind is that we have vertical, right, bottle production capacity in countries like Brazil. So that also gives us, right, a very reliable source and -- of supply for bottles and more flexibility to adapt to pressure in the supply chain overall, in addition to our long-term relationships with suppliers.

Jean Jereissati -- Chief Executive Officer

And we are leveraging our global footprint, too, on that.

Marcella Recchia -- Credit Suisse -- Analyst

That's very clear. Thank you very much.


Our next question comes from Ricardo Alves, Morgan Stanley.

Ricardo Alves -- Morgan Stanley -- Analyst

Good afternoon. Thanks for the call, Jean. Thanks, Lucas. Impressive numbers indeed.

I had a couple of questions, one follow-up on the competition side. You alluded to this, Jean, but on the main competitor. I think that the first question was one of the main competitor, but when you look at your numbers and we look at the industry numbers that we can track, I mean, your performance is significantly above even -- you're significantly outperforming other smaller players as well. Could you just shed a light on how you're performing relative to them? Are there any perhaps specific categories where you're outperforming or specific regions where you think you're performing better than your smaller competitors? We've seen from the Coke system, for example, different regions performing very differently, so I don't know if that could be part of the story.

That's my first question.

Jean Jereissati -- Chief Executive Officer

OK. So let me try to elaborate more on that. So if you put our numbers together, you're going to see that we are gaining a lot of market share. It's not just a little.

It's a lot of market share, and this is based on our plan. I think, the core plus segment, it was a bet that we did two years ago that is really paying off. The innovation -- there is a lot of innovation there. Brahma Duplo Malte has come -- Spaten has come in very well, too.

So we had this strategy of helping the on trade to transform itself during the pandemic; and have takeaway initiatives with the small format, very affordable, of 300 ml bottles. This is performing very well, too. These brought to us -- from pre-pandemic levels, we had 750,000 customers. Now we are reaching 1 billion -- 1 million customers in Q4.

So our plan is really structural. I think, it's really working. And when we look at competitors, both of them, the two, producing less than they have produced already below 2019 levels, it doesn't seem to me that it's a supply restriction. It really is not because you have a plant that you can sell.

So consumers has to buy. The customers should be in your hands. So I really feel that our commercial strategy is really acquiring more customers and like seducing more consumers. We have 3 million more consumers, so I feel that our strategy is going -- is doing OK.

So we did the right investments on capacity in the last two years to be prepared for this type of volumes. And I just feel that, competitors, they have not been able to really get the transaction right and really to sell. And even this announcement that we are -- listen all the time about competitors increasing capacity, I question myself if it's -- if this is more of an upgrade on capabilities that's really a potential to put more volume in the market. So I think, this is a big question for us.

So having said that: We are selling very well on North, Northeast, Middle East, Middle West. Most of the areas are doing very well. It's amazing how we have been growing all the segments. So we are growing core that -- it was a handicap that we had in the past.

The core was really going down. We are seeing our three brands Brahma, Skol and Antarctica growing. We kind of created the core plus segment where we are really having Bohemia, Brahma Duplo Malte, now Spaten. And our high-end portfolio is really year to date, growing on the 20s, so I'm seeing a very balanced growth when -- in segments.

I'm seeing a very balanced growth in regions that shows that looks like our commercial strategy is really paying off. Besides the challenge that we have on the macro side; besides the competitor, the competitive landscape, I really -- I'm really happy with our commercial strategy.

Ricardo Alves -- Morgan Stanley -- Analyst

Super helpful, Jean, thanks for that. One final question, a very quick one on the revenue per hectoliter, also in Brazil Beer: When you're thinking about the fourth quarter, just wondering what your latest thoughts are because of the price increase. I don't know if there are any major mix of category or mix of channels that we should have in mind when we're thinking about the unit revenue. But even more interested on the price increases, how they've been accepted, so far, so if you're able to share any color on how October is performing on that front, that would be helpful.

Thanks again.

Jean Jereissati -- Chief Executive Officer

OK. So in the end, we don't disclosure that much and do forecasts on the peak. It was public that we did it in the beginning of October. So what we are seeing is that -- so it's in the market.

So the numbers are in the market, and it's pretty much around the same shape that we have been doing for a while. What I can tell you that is really -- is exciting me, it is that the on-premise recovery has been stronger than we anticipated. We are seeing -- because, at some point in time, we help the bars to transform. And then they became platforms to takeaway and deliveries.

Ze Delivery helped them a lot, but now we are seeing the social out-of-home occasion getting traction again. So there is pretty much when you get with your friends and go to the bars and really drink in the bar. So we are seeing this occasion really picking up faster than we expected. And looks like this will help us on this occasion.

This is occasion that is very profitable for us, that we have been always designed for it. And it's really coming back strongly. And we foresee it. For example, the RGB bottles and the RGB mix, really they are growing sequentially more than we expect.

And we foresee in 2022 they're above 2019 levels.

Ricardo Alves -- Morgan Stanley -- Analyst

Thanks, Jean.


Our next question comes from Thiago Duarte, BTG Pactual.

Thiago Duarte -- BTG Pactual -- Analyst

Thank you. Good afternoon, everybody. I have two questions. I will stick with the Brazil Beer discussion here.

The first one is a question on how should we think of Ambev's brands' fair market share in Brazil Beer right now, particularly in terms of the price point relative to the actual market share that you have achieved. It looks like you're capturing a lot of market share, as Jean said just now. Pricing is evolving, but it continues to lag the overall beer inflation and despite the premiumization of the mix and margins and not even relative to basis points. But even in unitary terms, margins are not much higher in nominal terms than they were several years ago.

So Jean, you mentioned in the opening remarks the -- a healthier portfolio, better service level. You mentioned you're reaching 3 million more people, consumers, relative to 2019, so I wonder what -- how that should translate into your -- into the discussion between your actual market share, your fair market share and the price point that you see for your most relevant brands today. I mean, if we look historically, this is a point in time where you guys would probably be capturing a lot more pricing power than we have seen, so far. So that's the broad discussion I was looking to have.

And the second question is on the industry. I mean, even putting the market share discussion aside, I think, ABI, in their conference call they mentioned being gaining share of throat in many markets, including Brazil, but it still for us is striking to see the -- how the aggregate beer industry volumes are growing and in spite of the very tough comps from last year. So if you could comment on how the category growth is sustainable, in your view, relative to other alcoholic beverages. And of course, in terms of per capita consumption relative to where we were before and into the future would be nice to hear as well.

Thank you so much.

Jean Jereissati -- Chief Executive Officer

OK, let me see if I can get this right, Duarte. So yes -- so Duarte, it's true. We are with a market share gaining -- when we put all the numbers together, better than we expected, better than we anticipated. So this Q3, when we compare with what competitors are doing, there is a lot of market share gains over there based on our strategy.

We have been building the high end in the core plus segment. If you remember, at the beginning of the year, we gave a guidance of our VIC in Beer Brazil growing in the low 20s. So we knew that this was coming. It -- so a big part of it, it was because that -- our hedging policies and the impact of the currencies that we had in the hedges this year.

And we are -- really put in our pricing strategy based on the consumer side what consumers can really pay and, yes, to -- maintained our volumes health; and then based on that, on top of that, really work on the mix of innovation, the mix on channels, and overdelivered based on that mix. I think, we have been able to -- we kept our guidance in our VIC numbers. So we are really working on that even though lots of things happening on the commodity side, but this year, we are really maintaining our guidance. And then we have the consumer ability to pay that -- what happened in Brazil with -- was that the inflation picked up very fast.

And that is the reference to -- on our pricing decisions, to really guarantee that the beer in the basket is competitive for us to continue to develop share of throat and continue to develop per capita. And with that type of volumes that we are having and with the inflation picking up, this equation, we are going to follow to really guarantee that our revenue per hectoliter is above and -- what we need. And we believe that, next year, this equation will be more on our side, OK? So somehow, we follow the inflation with rates. On top of that, we have the innovation and premiumization strategy.

On top of that, we have the revenue management. And we believe that we are really getting these muscles right and pricing will get better, yes. One thing that I would like to mention on the transformation side is that we are learning a lot on the revenue management side with our fintech and with BEES. And we are beginning to pilot the trade-off of discounts and cashbacks.

How our customers and how consumers really react to that is a whole new world of possibilities for us. And this is something that I'm very excited is a project that -- it will help us a lot on this revenue management of the future, OK? So having said that, talking about the industry, so yes, we have been very excited about the way we have been developing the industry in Brazil. All the industry expansion is really coming from our initiatives. When we looked Brazil on a granular base, we still have a lot of opportunities from per capita when we compare regions.

Sao Paulo and Middle West, they still have a very different level of per capita consumption. When we looked at frequency, that it was something that peaked during the pandemic, and we looked at U.S. and mature markets, we still have a lot of opportunity, yes, on the consumer side to increase frequency, so we believe that a big part of it will stay. So we are still very excited about the per capita consumption in the -- and the industry expansion moving in the future.

And on top of that, we just put in place, and this is more of a share-of-throat view, our business unit of beyond beer and future beverage that I think is a huge opportunity for us here in Brazil to learn what's going on in Canada. In U.S., we are really working on the Mike's brand. We are bringing RTDs. We are bringing wine in cans.

And I'm really excited about this another avenue of growth that we really -- that is accretive. Its net revenue per hectoliter is higher. And there is a lot of opportunity on share of throat to continue to grow on that side.

Thiago Duarte -- BTG Pactual -- Analyst

That's helpful. Thank you, Jean.


Our next question comes from Isabella Simonato, Bank of America.

Isabella Simonato -- Bank of America Merrill Lynch -- Analyst

Thank you. Good afternoon, everyone, Jean, Lucas. I have two questions. First of all, thinking about 2022, right, I understand that you guys will release the guidance on costs in the beginning of the year, but if you could give us a color on where you're seeing cost pressures and especially your FX hedges given the recent depreciation of the BRL, that would be helpful to understand how to think about next year.

And second of all, Lucas, you mentioned in the presentation, right, about protecting liquidity and the balance sheet. And in the same time, we have a potential tax reform in Brazil. How are you guys thinking about returning cash to shareholders, not only in terms of timing but if we could expect an increase in this year versus 2020? Thank you.

Lucas Lira -- Chief Financial Officer and Investor Relations

Isabella, thank you for the question. Starting with 2022 cost outlook, I think the first important message here is that the scenario, right, for input costs remains, all right, fairly volatile, as I'm sure you've all been following, particularly in Brazil and Argentina. And there's still some hedging to do before the end of the year, right? We continue to work under our hedging policy to give us the predictability, right, going forward. And it will give us time to prepare, adapt as need be from time to time, but what we can say at this point is that, although, 2021, the main headwind was FX, followed by commodities, in 2022 what we're seeing as of today is that FX should be less of an issue, OK, because of the hedge and happening kind of on a rolling basis and how the BRL especially kind of evolved throughout the year as hedging was underway.

So we see less pressure, going into 2022, from FX and more pressure coming from commodities. And again as I said, there's still some hedging to be done, OK? And last but not least, one of the things that has helped us in 2021 and we hope that could also play a role favorably going into 2022 is the mix, all right? As I mentioned in my opening remarks, one of the things that has contributed to our better-than-expected performance is the mix starting to work in our favor. And in case of the COGS impact of the mix evolving better than expected, it -- the mix has helped us offset our unhedged commodity exposure. That picked up, right, in Q2; picked up again in Q3, so I think the mix -- to the extent that the team continues to do a good job on the commercial side as the on-premise recovers, as returnable glass bottles, all right, continue to come back in a healthy way, hopefully, mix will also once again play in our favor.

And then as you said, we hope to be in a position to provide more visibility with respect to what to expect in 2022 at the end of February when we announce the full year results. As for the second question, in terms of returning excess cash to shareholders over time. This is a year-end decision. So we continue to work, as I mentioned in my remarks, under the same paradigm in terms of how we think about capital allocation in the company.

So priority No. 1, all right, remains to reinvest in growth, be it organically, be it nonorganically. So that hasn't changed. And then in addition, we will continue to return excess cash to shareholders over time, but that's a -- that's more of a year-end conversation that we will have with the Ambev Board.

Isabella Simonato -- Bank of America Merrill Lynch -- Analyst

That's clear. Thank you.


Our next question comes from Thiago Bortoluci, Goldman Sachs.

Thiago Bortoluci -- Goldman Sachs -- Analyst

Good afternoon, everyone, and congrats for the results. Just trying to add up your revenue per hectoliter growth in Brazil in a bit more details. You guys mentioned earlier in the call the positive impacts of the on-trade mix into your average prices, right. However, when I see net revenue per hectoliter in Brazil Beer, it is still up but sequentially decelerating.

Can you please break up in more details what were the drivers for the sequential deceleration there? And in terms of overall trends, I know we don't have a guidance for the quarter, but what should we expect for the fourth quarter, bearing in mind that cash COGS per hectoliter should sequentially accelerate? Thank you very much.

Jean Jereissati -- Chief Executive Officer

Yeah, so in the end -- when we started the year, we have always been mentioning that our revenue management strategy will be very agile, nimble for us really to get the best opportunities in the market, to learn with regions. And we have everything. And to be very honest, this June -- yes. So this decision -- or so the inflation picked up very fast, and we were trying to catch up as we move.

So that was something that -- it was not planned in the beginning of the year. And somehow, we were very happy to -- in this context to see the Q3 net revenue per hectoliter really like peaking. So it was better than Q2. And when we look that -- if it's accelerating or not, you have the last-year basis where we have to compare.

What I can tell you, it is that, this elasticity that we saw in Q3, when we compared with H1 and Q2, of the price moving with this type of volumes, it really surprised us. And this equation was an equation that come above our expectations, which suggests that our brands are stronger. We had more volumes to the net revenue per hectoliter increase, so we are very happy with this type -- or with that algorithm and with that type of equation. So having said that -- so what was really planned in the beginning of the year for us is to do right, to do accordingly.

It was really the October move that we announced. It was public, yes. We made it happen. It's in the market.

And I think, this is -- it's more substantial.

Thiago Bortoluci -- Goldman Sachs -- Analyst

That's clear. If I may, just a follow-up on the delivery. You reported volumes essentially flattish quarter on quarter, right? Any early signs of some change in mix or cannibalization with the reopening thus far?

Jean Jereissati -- Chief Executive Officer

OK. So let me get your question to talk about the technology platforms. I will talk about Zé and then I will jump into BEES and Donus. So Ze Delivery is on the right path.

It's really -- yes, we are very excited about it. So we have -- so we stopped a little bit the city expansion for us really to get all the -- all our strategy right. So we spanned less cities than we expected. We did not see that much change on the project, on the plan that we have with Ze Delivery, but Ze Delivery is really thinking more and more to be more omnichannel to really think about not just the convenience piece but all the journey of our consumers.

We are starting back the expansion on the cities. And we are working a lot on the last-mile efficiencies. So these are the three things, major things, that we are doing on Ze Delivery. And Ze Delivery, it will -- it's really a success and it will continue to grow a lot, but we have these three fronts that we are working, omnichannel, expansion city by city and then last-mile efficiency.

That is something that -- to have the business sustainable in the long term. And one information that -- just for you to know: So we were able to get Ze Delivery already that is pretty much focusing, focused on the in-home occasion with the same RGB mix that we have in the average of the company. And that's really something that it happened ahead of time. So 40% of the mix of Ze Delivery is already coming from returnable bottles -- because, the motorbike, it takes the bottles and get it back.

So this machine is really working, so we are really excited about that. So Ze Delivery is in place, will grow. It's really going to the next level in terms of having more occasions; be more omnichannel; restart the expansion; and really get it, with the last-mile efficience, right. So one thing that I would like to mention is that really we talked a lot in many times about BEES.

I mentioned that 85% of our active buyers are already in the platform, that we achieved a 1.1 billion annualized marketplace GMV in Ambev of BEES. So just mentioning the products that are not from Ambev's portfolio. So this is something that is doing very well. And yesterday, we announced the partnership with BRF, and I would just like to mention because this partnership is different from what we are doing.

We have been doing this pretty much the one PL. So we buy. We sell. It goes through our warehouses, but this deal with BRF was the first one that it was really a contract of a Software-as-a-Service, OK? So BEES in the end is really providing a software service to BRF.

And then BRF will have BEES on their sales reps, on their palmtops. And their customers will use the platform of order taking. And BRF has around 250,000 customers that they go direct, and they will have access to a 1 million base of customers and with BEES really providing a Service-as-a-Software, OK? So this is really something that is different from what we are doing. And I'm very excited about it, to have BRF with us.

And the third one is really Donus, the fintech, that is really growing very fast, is -- so we are now with BRL 1 billion of TPV year to date. So just in Q3, we have BRL 650 million in TPV. It's really tripling sequentially. We have 145,000 customers that downloaded the wallets.

And we are really working on the machines, the take rates. We are really doing credits for our customers and really moving into the revenue management and the trade-offs of discounts and cashbacks. So these three initiatives, I'm very excited. They are really getting sizable.

They are really beginning to bring a lot of value for our company.

Thiago Bortoluci -- Goldman Sachs -- Analyst

That's amazing, Jean. Thank you very much.


This concludes today's Q&A session. I would like to turn the floor over to Mr. Jereissati for his closing remarks.

Jean Jereissati -- Chief Executive Officer

So I would like to thank my team again, once again for this quarter. I would -- also want to thank all the analysts and everyone who joined the call, for time and attention. And to wrap up, in the full year, despite the anticipated tough comps in Q4, we'll continue to work to maintain our commercial momentum, delivering a healthy top-line recovery. Also we will not lose sight of the long term and return on the investments that we are doing now.

And we will continue to invest in our portfolio and the transformation through the tech ventures, which continue to grow and become more sizable. Cash generation remains solid even in a year that we invested on the ventures. We invested on capacity. We invested on tech as part of our transformation journey.

And I'm very excited about the relationship and the bonding that we are having with our consumers. Not just here in Brazil that we talked a lot, but I'm seeing brand equity and I'm seeing consumers really toward our portfolio in all the countries that we operate. So thank you very much. See you next year.

And have a great day.


[Operator signoff]

Duration: 69 minutes

Call participants:

Jean Jereissati -- Chief Executive Officer

Lucas Lira -- Chief Financial Officer and Investor Relations

Robert Ottenstein -- Evercore ISI -- Analyst

Marcella Recchia -- Credit Suisse -- Analyst

Ricardo Alves -- Morgan Stanley -- Analyst

Thiago Duarte -- BTG Pactual -- Analyst

Isabella Simonato -- Bank of America Merrill Lynch -- Analyst

Thiago Bortoluci -- Goldman Sachs -- Analyst

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