Welcome to the 2023 first quarter results announcement conference call for Budweiser Brewing Company APAC Limited. Hosting the call today from Budweiser APAC is Mr. Jan Craps, Chief Executive Officer and Co-Chair of the Board, and Mr. Ignacio Lares, Chief Financial Officer. The results for the three months ended 31st March 2023 can be found in the press release published earlier today and available on the Hong Kong Stock Exchange and Budweiser APAC's website. Before proceeding, let me remind you that some of the information provided during this results call, including our answers to your questions on this call, may contain statements of future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions and involve known and unknown risks, uncertainties, and other factors beyond our control. It is possible that Budweiser APAC's actual results and financial condition may differ possibly materially for the anticipated results and financial condition indicated in these forward-looking statements. Budweiser APAC is under no obligation to, and expressly disclaims any such obligation to update the forward-looking statements as a result of new information, future events, or otherwise. For a discussion of some of the risk and important factors that could affect Budweiser APAC's future results, see risk factors in the company's perspective dated 18th September 2019, the 2022 annual report published, and other documents that Budweiser APAC has made public. I would like to remind everyone that the financial figures discussed today are provided in U.S. dollars unless stated otherwise. The percentage changes that will be discussed during today's call are both organic and normalized in nature, unless stated otherwise. Percentage changes refer to comparisons with the same period in 2022. Normalized figures refer to the performance measures before exceptional items which are either income or expenses that do not occur regularly as part of Budweiser APAC's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, EPS, EBIT, and EBITDA on a fully reported basis in the press release. Further details of the 2023 first quarter results can be found in the press release published earlier today. It is now my pleasure to pass the time to Mr. Jan Craps. Sir, you may begin. Thank you, Anna. Good morning, everyone. Thank you for joining our earnings call. Our first quarter results represent a promising start to 2023, which is shaping up to be an exciting year. China is back. During Q1, we saw a business rebound that supported a double-digit increase in revenue and EBITDA, with market share gains compared to Q1 2022. Volume, net revenue, and EBITDA were all above pre-pandemic levels. Our premium and super premium revenues grew by double digits, confirming the premiumization trend. South Korea and India continue to deliver double-digit revenue growth and market share gains. Company-wide, we deliver double-digit top and bottom line growth, with revenue per hectoliter growing in all three of our major markets, led by revenue management initiatives and ongoing premiumization. Let me provide you with more color on each of our key markets. In China, our performance in January was affected by the CNY phasing 10 days earlier than last year and a progressive on-premise recovery from the start of Q1. In February and March, we saw a strong recovery of volumes in all channels and in all city tiers, well above pre-pandemic levels, expanding our market share during the quarter. Our premiumization strategy continued to prove effective with our premium and super premium segments, increasing volume weights, and Budweiser and super premium revenues increasing by double digits compared to last year. Our Budweiser innovations, Supreme and Magnum, grew by strong double digits in the first quarter. We also launched Harbin Icy Genuine Draft, a core plus plus beer that brings instant icy refreshment to our consumers, demonstrating once again how we are catering to rising demand for new product offerings and differentiated drinking experiences. Our B2B platform, BEES, has been expanded to more than 180 cities and accounted for approximately 40% of our revenue in China in March. In South Korea, our volumes expanded by double digits in the first quarter alongside market share gains in both the on-premise and in-home channels. Revenue grew by double digits, supported by mid-single-digit revenue per hectoliter growth. EBITDA grew by mid-single digits with a positive impact from top-line growth, partially offset by commodity cost escalation and increased commercial investments, including in well-received marketing campaigns for Cass and Hanmac. In India, volume grew by strong double digits as we continue to win more market share. Revenue expanded by strong double digits with our premium and super premium segments also seeing strong double-digit growth. Before I pass it over to Iggy, let me walk you through some of our recent ESG progress. On the environmental side, our RE100 coverage now reaches about 50% in APAC. We accelerated our progress by connecting solar energy generated at our breweries to the state grid in China. With our Nanchang and Nantong breweries being the latest to do so in the first quarter. Three of our breweries in China have also received national water efficiency awards from the Chinese government, further demonstrating our water management leadership in the beer industry. On the social side, we leverage our iconic brand, Corona, to create a novel close loop model of rural revitalization, supporting local farmers in Anyue County in Sichuan Province to grow limes with over 235,000 kilograms harvested for the Corona Extra Lime initiative, while also providing Chinese consumers with a Corona drink with lime experience. This initiative has won multiple social impact and brand influence awards, including most recently the Creative Commerce Grand Prix at the 2023 Spikes Asia Awards. On the governance side, in February, we evolved our board audit committee to an audit and risk committee and launched a management level risk committee to further enhance our cross-functional and proactive management of internal and external risks. Finally, we welcome all of you to join our ESG webcast, which will be held at 3:00 P.M. Hong Kong time on the 15th of May. Please refer to the Budweiser website for more details. I will now pass it over to Iggy to take you through our financial results. Over to you, Iggy. Thank you, Jan. Good morning, everyone. In the first quarter, volumes grew by 9.1% as our Bud in China recovered, further supported by our strong performance in South Korea and India. Revenue increased by 12.9%, with revenue management initiatives and premiumization jointly driving a 3.5% increase in our revenues on a per hectoliter basis. Normalized EBITDA grew by 10.4%, driven by the business recovery in China, while our normalized EBITDA margin declined to 34.1%. Cost of sales per hectoliter increased by 5.2%, driven by remaining commodities escalation headwinds that were partially offset by continued cost management initiatives and optimized sourcing. Let's take a look at our performance in key markets. In China, volumes grew 7.4%, with revenue growing by 10.9% and revenue per hectoliter increasing by 3.2%. This top-line recovery enabled a 12.6% increase in normalized EBITDA, mainly driven by business recovery, lower sales and marketing investment due to Chinese New Year phasing 10 days earlier, and ongoing premiumization. In East Asia, volumes grew by 10%, thanks to our continued market share gains and industry recovery. Revenue management initiatives continued to contribute to revenue per hectoliter growth, which increased by 3.5%, and revenue grew by 13.8% as a result. Normalized EBITDA increased by 2.6%, mainly due to cost escalations and increased sales and marketing investment to continue to support volume growth. Overall, normalized profit attributable to equity holders was $300 million. That's it for me today. With that, Jan and I are here to answer any questions you may have. Thank you. Ladies and gentlemen, the floor is now open for questions. Please press star one one only once to ask a question. In the interest of time, we ask participants to limit themselves to two questions, and please ask your question one at a time. Your first question is from Leaf Liu from Goldman Sachs. Your line is now open. Please go ahead. Thank you, operator. This is Leaf from Goldman Sachs. Thank you, Jan and Iggy, for the detailed explanation. My two questions are both about China. I'll ask one by one. The first one is on China recovery. There has been a lot of concern regarding China consumption recovery trend recently. Could you please share with us the recovery momentum that you have observed year to date, especially for premium and above B segment and also the on-trade channels? Thank you so much. Good morning, Leaf. Thank you for your question. Good to hear from you. As you know, last year, the industry was quite disrupted by the COVID restrictions throughout the whole year, really. That was really driven by a combination of both channel closures on the one hand and also consumer traffic reduction. When we look at Q1, you remember we always called it a transitional quarter when we talked about it last quarter. We see that the industry continues to recover throughout the quarter. In January, the on-premise opening rates began to improve, consumer mobility was and willingness just to go out was still impacted by the COVID recovery, which was really during December and January, as you remember. Plus CNY was 10 days earlier than last year. Both these kind of events had quite an impact on the mobility. We saw the channel reopening rates increase. To give you an idea, in January, we said it was about 76%-77% for night live and Chinese restaurants. When we looked at end of March, we consider 100% of the sales channels reopened. When you look at consumer traffic, in-store traffic has really normalized since February. When you talk about premiumization, we see premiumization ongoing. You would have seen in our release and in our talk that premium and above volume grew double digits since the normalization of the channels and in-store traffic. Also we signed more contracts than last year, so we're quite optimistic as well about the year. We're really excited. We see it as a big opportunity to capture a disproportionate benefit from the China reopening in 2023. Thank you for your question, Leaf. Thank you so much, Jan. My second question is about the China commercial investment. We have noticed a trend with some peers giving outlook on increasing marketing investment potentially this year. How to think about Bud APAC's marketing strategy and the commercial investment level for 2023? Yeah. I think when you look at Q1, sales and marketing as a percent of net revenue, you would probably see that it's lower than last year, which is mostly impacted by the 10 days earlier CNY. Because together with some of the premium, super-premium volume going earlier, to December, there's also some of the expenses that move with it earlier to last year. I would say probably Q1 is lower than normal based on the earlier CNY. When you look at full year 2023, we will continue to invest in our business. You know, you also see that we've learned a lot in the past couple of years, really since the COVID outbreak, and we have a much more agile resource allocation system now than ever before. Secondly, as you know, our digitization efforts really allow us to be more efficient than ever as well. When you look at the investment level, we believe our full year commercial investment last year, if you look at the full year of 2022, was about the right level as a percent of net revenue. Obviously, net revenue will increase significantly this year, but as a percent of net revenue, we think probably roughly the 2022 level is a good level of commercial investment for us to have a healthy business combined with the efficiencies and resource allocation that we can drive. Of course, looking beyond sales and marketing, you know that we are constantly applying our cost connect win approach. Any reduction we can do in indirect overhead costs, we will also reinvest the savings into our commercial plans to connect with our consumers so we can drive long-term value for our shareholders. I hope that answers your question, Leaf. Very clear. Thank you so much. Thank you. Thank you. Your next question is from Euan McLeish from Bernstein. Your line is now open. Please go ahead. Hi. Good morning, Jan, Iggy. Just carrying on in China, can you maybe help us understand a bit about the relative importance of channel recovery versus footprint and expansion in driving your Q1 premium and super-premium growth? Can you talk a bit about how you expect that to evolve going forward? Thanks. Sure. Thank you, Ewan. Good to hear you. Good morning. In the first quarter, you would have seen the channel reopening quite significantly and what we consider full reopening by the end of March. As a result, premium, super-premium revenue grew by double digits versus last year, even including or despite the 10 days earlier CNY. You know, the most important driver of the Q1 premium, super-premium growth was really the channel reopening in the first quarter. It highlights how strong the underlying premiumization trend is, and how critical the channel recovery has been for the trends to really come to full kind of impact. Of course, on top of the disproportionate benefit from the China reopening, expansion continues to play a very important role for the premiumization growth, and it will continue to be a very relevant part of the strategy. Actually, both geo and channel expansion play an important role. When you look at geo, as you would remember from the investor date, we disclosed there that we have actually less than one out of 10 stores in China carries a super-premium brand of ours. For Budweiser, even despite the scale that Budweiser has in China, it's about one out of every three stores that carries Budweiser as a brand. That's why we see significant runway for further geo expansion. We've developed new wholesalers in the last three to six months, both for Budweiser super-premium, to again help us expand distribution in these target cities. We delivered in the first quarter double-digit revenue growth in these expansion cities, and we are well on track to deliver on the Budweiser super-premium distribution cities expansion as per plan. When we look at channels, our on-premise channels, especially nightlife, they were last year disproportionately impacted by the COVID restrictions. We saw virtually all pops fully reopened by March, so the churn has really been fairly contained. On that note, we saw nightlife channel mix, the ratio increased in the first quarter as the nightlife business normalized. We do expect this to unwind the disproportionate negative impact it had in the business last year. Do we continue to expect some significant channel recovery in the coming quarters? I hope that answers your question, Ewan. Yeah. That's helpful. Is it possible to kind of put some numbers to that? Are you able to give us a rough kind of quantification of how you see these drivers going forward and their relative importance? Yeah. I think if you look at our, you know, if you look at the footprint of our business, the recovery, of course, in the incremental revenue would have been the primary driver in the first quarter. It really becomes noticeable when we look at the differences between January as a month and then Feb/March as a combined kind of period where we really saw the normalization happening. When we look at the normalization of the operating conditions, in January was still negative net revenue versus prior year. When we combine Feb and March, we were in double-digits net revenue growth, and double-digits growth for the full quarter as a result as well, driven really by strong Feb and March where we saw the full recovery. Volume growth was about 7.4% there, net revenue per hectoliter improved significantly versus the fourth quarter of last year. Net revenue per hectoliter, three single digits, you would have seen the 3.3% versus last year. That was despite the earlier CNY, mostly benefiting from revenue management and premiumization. When we look at revenue management, in March, we took the prices up on the core and value segments above CPI. As we do normally, premium, super premium, we took price in November 2022 on both the premium, super premium segment in line with the CPI. When we looked at premiumization for Feb and March, we saw the full channel recovery. Net revenue per hectoliter there was already directionally in line with a more normalized historical mid-single digit net revenue per hectoliter we would have seen before. We do expect premiumization to continue to be a primary driver of top line growth, which is really driving our financial performance. We're quite optimistic obviously for this year, the business recovery and us being able to take a disproportionate share of the recovery in China. Thank you for your questions, Euan. Okay. Great. Thanks, Jan. Appreciate that. Thanks very much. Thank you. Thank you. Your next question is from Luo Chen from Bank of America. Your line is now open. Please go ahead. Thank you, Jan and Iggy. I've got two questions, both are related to premiumization in China. First of all, with regard to the growth rate of premium, super premium in China, can we actually achieve the level on that we saw before 2019? Basically during those few years, 2017, 2018, we actually done extremely well. Are we actually able to achieve back to that level? Or because of a low base during the past few years, actually the growth rate could be even higher. In fact, in our view, what are also the key risks to the premium, super premium growth this year? Is it because of new waves of potential COVID outbreak again, or we couldn't expect a macro or competition from peers? This is my first question. Thank you. Sure. Thank you, Luo Chen. Good morning. Good to hear you. I think when we look at last year, obviously there was both a channel restriction impact on the premiumization and a geographic mix impact. Was actually much more important than any. Like, we didn't really see any structural consumer trade-down. As a result, in Q1, as I was saying, we saw premium, super premium revenue growing about double digits versus last year, despite the CNY being earlier. Actually, when you compare to pre-pandemic level, premium, super premium volumes already grew around 20% in the first quarter versus pre-pandemic level, if you look at our premium, super premium brands. In some ways, you could say the growth rate is normalizing to pre-pandemic levels, but of course, on a higher base each year as it continues to grow. Longer term, medium long term, we're also optimistic about our business prospects, and that's really linked to the middle class household expansion that we expect to quadruple in the next 10 years, which we should continue to drive the business momentum given the portfolio we have to take an outsized share of the growth as the middle income households increase. If you look at the changes over time, we really see super premium as a blue ocean because the consumers continue to trade up. We also see the demand spaces evolve, where the consumers look for more differentiated offerings and a portfolio of brands and innovations that continue to play an increasingly relevant role. When you look at our innovations, that's why we're also very focused on Budweiser Supreme, Budweiser Magnum and other innovations even below premium like Carbon IPGD, because they play very complementary roles to build this consumer portfolio of premium experiences. When you look at Premium Magnum combined, we grew very strong double digits in the 1st quarter. These innovations are really very solid and drive a lot of the momentum. If you look at the risk factors to your question, I think anything that results in channel closure, of course would give risks to consumer confidence and also to the business. You know, in terms of COVID, we really hope that, you know, we are on the other side, and we believe we're on the other side of that topic. We don't expect anything there, and there's really nothing on the radar that makes us think that there could be difference. If you look at consumer behavior, we have seen the premiumization trend recover, really speaks to beer being a very resilient category. Also when we talk about premium, super premium, I mean, this still remains an affordable luxury. We really see premium, super premium beer performing, and we expect it to continue to perform very well. If you look at risk factors of competition, I would say, you know, industry-wide focus on premiumization is positive, both to the trend and the industry and the industry dynamics. And, you know, we don't need to carry the weight alone of premiumization. H owever, I mean, we do see. I mean, we are very confident, uh, in our brand portfolio, the combination of our mega brands and the also the seeding of the brands for the future for super premium and above, combined with the very strong route to market with our BC wholesalers and ambassadors, um, and our people capabilities, which will continue to drive and to lead the premium, super premium segment growth, from our perspective. So we-we're quite optimistic there. A nd I hope this, this answers your question, Luo Chen. Yes, that's very helpful. Thank you. My next question is actually regarding a specific price segment within the premium portfolio. Basically it's between RMB 80 and RMB 12. Of course, different companies may call that range in different ways, maybe core plus plus or sub premium. We think this is actually the largest segment within the premium portfolio by volume terms. This is also the most competitive segment as a lot of our peers are trying to expand very aggressively within that price range. Given all this setup and dynamics, what is our strategy for that price range? Thank you. Yeah, thank you. A good question, Luo Chen. Really strategically, it goes back to, you know, almost the different profit pools that we described when we had the investor day together in Korea six months ago. When you look at volume on the one hand, of course, the answer can be very different from profit contribution on the other hand, at a segment level. As you probably remember, we actually would predict based on trends both in China but also in other countries, that, you know, roughly 50% of the future profit growth will be driven by the super premium segments, which is actually above 12 RMB, where a portfolio is really important. That's what we call the blue ocean of the profit growth in China, and we're very well positioned there. To your question of the RMB 8-RMB 12 kind of price range, I think most brewers actually differentiate between the RMB 10 and above, which we call the premium segments, and then the below RMB 10, which is a core plus and core plus plus segments. We would call the RMB 8-RMB 10, so below RMB 10, I should say, we call it core plus plus. You know, typically RMB 8. RMB 6, we would call core plus, and then below six is core and value, right? That's kind of the definitions we use and, you know, I believe most kind of agencies and people who look at the beer industry in China would typically use that. There is some exceptions by other players, but in the end, that's kind of how different players look at the industry. RMB 10, Budweiser is typically a brand that plays in premium and premium plus. Excuse me. When you look at Budweiser, typically has a price point of RMB 10-RMB 12, really depending on the city. Supreme and Magnum are priced above Budweiser, so above these RMB 10-RMB 12 price points. Obviously, Budweiser is a very big brand in that segment of RMB 10-RMB 12. When you look at the RMB 8 price point, which we call core plus plus, some other place call it sub premium, you know, there is indeed a nice opportunity there of trading up from core to core plus to core plus plus, whatever you choose to call it. Really, Harbin Icy plays a big role for us there. As you know, Harbin Icy is our second biggest brand in China. We actually launched a Harbin Icy variant, which we call ICGD, Icy Genuine Draft, to seize an opportunity in this price segment. It's an ultra ice liquid with an innovative packaging with a pull cap, and really is positioned on what Harbin Icy is known for being the iciest beer in China, coming from Harbin. We launched this innovation really with a focus on Chinese restaurants and in-home channels, where the opportunity for the RMB 8 price point is the largest. It's been very well received by the younger generations. We have a brand ambassador, Da Jiang Way, who has announced the pre-summer kickoff campaign. We have several KOLs who are, you know, driving content on the different social medias like Douyin to drive this Harbin Icy refreshment content. It is really a transitional product for the consumer trader between core plus and premium, really. We believe these in-between offerings can indeed take significant volume and trading up opportunity. Of course, according to our estimates, premium, super premium continue to be the big growth opportunity from a margin pool perspective, without any doubt, if you look at just the multiples of gross margin and the profit pool margin that they contribute for these different brands. Well, thank you for the question there, Luo Chen. Yeah, thank you, Jan. We are also very excited with the upcoming investor day in Wenzhou at the end of this month. We look forward to more discussions on our business development and premiumization strategy. Thank you. Thank you, Luo Chen, and we look forward to that as well. It'd be nice to be physically together in mainland China this time. I'll share a little bit more in the next couple of minutes on that as well. Yeah. Thank you. That would be great. Thank you. Thank you. Your next question is from Lillian Lou, who is from Morgan Stanley. Your line is now open. Please go ahead. Yeah, sure. Thanks, Jan Craps and Iggy. I also have two question. One is a follow-up, one on China. Basically, Jan Craps, you just mentioned the major biggest price range products. Could you share us about the recent performance trend among six mega brands? How do they perform so far? That's my first question. I will ask the second one after that. Sure. Thank you, Lillian. Good afternoon. Great to hear from you. Yeah, pleasure to update you on the 6 mega brands in China. Really our biggest one, of course, is Budweiser. It's the biggest premium brand in China. From memory, it's about half of our total revenue. In the first quarter, Budweiser brands net revenue was in double digit growth versus last year and roughly 20% above pre-pandemic levels. Quite strong recovery. We're happy to see the momentum and recovery there. If you look at Budweiser Supreme and combined with Magnum, maybe, you know, the volume grew strong double digits versus last year. We're very happy with the momentum there. Really these are incremental innovations targeting different consumer groups and different drinking occasions, at more premium price points than Budweiser. It's really a premium plus or a premium above price points. Really consumers have very strong reaction to these innovations. We're very happy to continue the expansion both in channels but also in geographies in more and more cities. If you look at Core Plus, Harbin is our second largest brand by volume in our portfolio. As I was just mentioning to Lu Chen, we just did a significant launch with Harbin Icy GD to take the opportunity in the HRMB price points. We have high expectations there. We have a great celebrity, good reactions from consumers, and we did ample consumer testing before the launch. We believe this GD offering in the Core Plus Plus price points with the iciness of a brand like Harbin Icy targeting the LDA consumer, the young adult consumer, really has a big chance of being very successful for us in this trading up opportunity to the Supreme segments. When we look at Super Premium, of course, Corona star brand together with Blue Girl and Hoegaarden. Corona, we left very extensive 360 support around the lime ritual going into the summer campaign. We've seen very significant brand equity improvements and continued increase in brand equity for Corona. We look forward to continue to drive very strong business growth quarter. Blue Girl, if you look at the strategy there, it's really around identifying the key expansion cities. We have found a strong campaign on being Blue Girl being the top one beer in Hong Kong for continuous 16 years, which resonates very well with our Chinese consumers. The superior quality Super Premium beer to also to accelerate growth. That combination of being the number one beer in Hong Kong for continuous 16 years within a super quality, super premium beer is really resonating very well with our consumers. We're planning to do more concerts with Blue Girl and Gem, the celebrity, that we use for mainland China in more key cities in the second quarter. If we look at Hoegaarden, we launched the Spring Festival events in several cities, including Shanghai. actually quite interesting, we turned the PCR pavilions to become beautiful beer kiosks, attracting more consumers, also female consumers, in an unwind moment. Also the fruity flavors are doing very well on Hoegaarden and very incremental to our beer portfolio. I would say our different brands are very healthy, both from a volume growth, revenue growth, and brand power perspective. You know, very strong plans to start the summer early. We are quite excited with what is to come in the next couple of quarters, Lillian. Thank you for your question. Yeah. Thanks a lot, Jan. That's a very detailed explanation. My second question is related to Korea. Obviously, I think, some, there has been some competition there. What's our overall product in the channel strategy in the market? And have we seen any impact from our competitors', newly launched new product, Kelly, so far? Thank you. Thank you, Lillian. I was actually in South Korea last week, so was quite, to be honest, very great energy and commitment from the teams there. We had our national sales convention, what we call the growth workshop, was actually very nice to see the whole team together and a lot of energy in the room, I can tell you that. On competitors, as you know, we typically don't comment too much. But our own actions, you would have seen a very strong first quarter in South Korea. We've been able to expand our market share in both channels, supported by both the strong performance of All New Cass and also a continued on-premise channel recovery. The on-premise market share in Korean restaurants actually achieved the highest market share since 2019. We see very strong business momentum there. If you look at our investments in the markets, we are committed to continue to invest and to continue to win in South Korea. As you can imagine, we learned a lot from 2019, right? The year that we had, another launch of a significant innovation of a competitor. You know, we have a very strong commercial plan, including the learnings of 2019 to be quite effective. The team is very excited, behind the summer plans that we have. For example, we have just launched a new equity campaign for Cass, reinforcing the purpose and the reasons to exist for the brands, which is really about bringing the real people together in a very authentic manner and with some witty and well-received tone, targeting that young adult audience. If we look at HANMAC has rolled out a further enhanced liquid and the visual brand identity in recent weeks. We see the liquid now boasting an even more dense foam. There's a lot of communication around the strong foam density, which is retained for longer periods, really staying true to owning the smooth imagery. The new packaging is even more sleek and simplified, resulting in a more sophisticated look and feel, very well received by our consumers. If you look at premium, super premium, we have very strong executions there. Some new pack options as well, and new variants in the market or soon to come, both from Stella Artois and Hoegaarden. Really we have a very solid summer plan, a very strong commercial plan with momentum, with a team that is more experienced than in 2019 with a lot of learnings there, and to be honest a lot of energy and excitement for the plans on really making this a good year for South Korea. I hope that answers your questions, Lillian. Yeah, thanks. That's wonderful. Thank you, Jan. Thank you, Lillian. Thank you. Your next question is from Anne Ling, who's from Jefferies. Your line is now open. Please go ahead. Hey, thank you very much. Hello, Jan, and hello, Iggy. I have two questions now also from South Korea. Let me, like, start with the first one. It's about the margin outlook. It seems that, you know, our peers are also not keen on, like, raising price, you know, as the government is targeting, like brewery as well as other beverage, you know, with the anti-inflation measures. Given the fact that, you know, we have this 3% excise tax, you know, starting from April, are we going to absorb this excise tax? You know, do you think that this will impact our margin, or we should be able to like, you know, offset it with premiumization and all that? That's my first question. Thank you, Anne, and good afternoon. Good to hear from you. Let me maybe ask Iggy to forward this question. Sounds good. Thanks, Jan. We'll give you a break here. Thanks for the question, Anne. I mean, South Korea, you know, if we look at the first quarter of this year, you know, our top line increased by double digits, right? That growth has really been driven by continued top line growth, right? You know, to offset both raw packaging material cost escalations, which we mentioned are still an item, and also to manage increased commercial investments, right? We need to support our volume growth. Volumes grew by double digits in Q1, driven by that on-premise channel recovery. Of course, we had continued market share expansion in both on-premise and in-home, which is very important, as well as a strong performance of both All New Cass and HANMAC, right? As Jan mentioned earlier. Revenue grew by mid-teens, right, in the quarter, benefiting also from the carryover of some of the revenue management initiatives we would have implemented last year, right, in 2022. If you recall, we took price last year, right, in March 8th of 2022 on the core segment. Now, I think if we take a look at kind of the dynamics for this year, well, COVID restrictions are now fully lifted, right? Except of course in medical facilities and other such cases. The on-premise channel continues to recover versus last year now that the COVID restrictions have waned. Just as a reminder, right, the industry has not yet recovered back fully to pre-pandemic levels, right? That's one of the reasons we still see further room for recovery in this year and beyond. We don't give a specific guidance on EBITDA margin, but we're still cautiously optimistic about margin improvements over time. As you know, at the end of the day, and we shared this, I think, during the investor day back in Korea, there are really no structural issues in our business that prevents us from having both a margin recovery and improvement. Of course, I mean, in the short term, EBITDA margin is lower than pre-pandemic levels, if you look at the first quarter of 2023. This is really mainly due to the continued commodities escalation. As we look forward, you know, in APAC East and in Korea specifically, the main drivers for growth continue to be in the following order, rates as the number one, operational efficiencies as number two, and mix as number three. You know, at this moment we have nothing to announce regarding a price increase. that explains number one. In terms of operational efficiencies, we still continue to implement, you know, cost and operational efficiencies across our business with the same discipline that you count us on using. We continue to apply the cost connect win approach that Jan mentioned earlier as well. Anything we can reduce in indirect overhead cost to drive EBITDA margin recovery, that happens naturally as part of the way we run the business. Of course we'll benefit further in this aspect once commodities normalize. Finally, in terms of premiumization, you know, we'll continue to premiumize. Korea is still significantly under indexed versus other mature markets, so we know there's a big opportunity here. I think what's important there is being in the right position to capture an outsized portion of that growth, and we should be able to do that with a comprehensive portfolio of both premium and super premium brands that we have available. Thank you for the question, Anne. I hope that answers it for you. Yeah. Actually, like, you know, regarding the premiumization, you know, I just want to follow up. I remember that, you know, during the IPO, GlobalData actually talked about like, you know, expect premium volume to account for 40% of the total volume when maturity, you know, i.e., you know, year 2023. I understand that we have this past three years of COVID outbreak, but like, you know, based on your knowledge, you know, how far are we from there for this market? How long do you think that, you know, it would for us to take it to that level, you know, for Korea market? Thank you. Thank you, Anne. really there are two key drivers for a slower premiumization in Korea than we would have, heard from GlobalData, three, four years ago. One is COVID, you mentioned it. Obviously, consumer confidence has been impacted at a time with a slower trade-up or slower premiumization, but also because our on-premise was impacted and typically, you know, in the on-premise channel is where we can build the premium brand experiences which then translate into more off-premise sales momentum. The second big event was a No Japan movement in 2019, which you might remember. a significant portion actually of the premium segments, was based on Japan-based brands. This also set back the segment trends as these brands were significantly impacted and not everything was basically replaced within the premium segments. We are seeing signs recently of a return to growth of Japanese brands. Also the on-premise recovery allows for more differentiated experiences. More recently, we do actually see double-digit growth for our premium brands in South Korea in the first quarter. We do see that, you know, with these kind of headwinds solved and behind us now, we do see the double-digit growth as well in our premium portfolio in South Korea. As you know, we are the market leader in this segment. We have three of the top six premium beer brands with Budweiser, Stella Artois, and Hoegaarden in South Korea. We do see the growth there. We see brand health quite healthy as well in terms of brand power measurements. To your question, we believe that South Korea will continue to premiumize. Today, it's still under index. It's about half of the weight of a fully mature market. For reference, normally the U.S., as a reference, is more than 40% premium, super premium weights in the beer industry. South Korea is probably at roughly half plus about of that, right? Let's say 50%-60% of that. We do expect South Korea to accelerate the premiumization in the next number of years with all the key drivers coming back into play. Thank you for your question. Got it. Thank you. Your question on South Korea, Ann. Thank you. Thank you. Thank you. Your next question comes from the line of Ethan Wang from CLSA. Your line is now open. Please go ahead. Thank you. Good afternoon, Jan. Good afternoon, Iggy. I have two questions. Allow me to ask them one by one. My first question is on the brand innovation of Budweiser. Jan, you have mentioned that the Budweiser Supreme, Budweiser Magnum have done pretty well. Actually, they've done pretty well in developed countries. And the things are just getting started in China. Just wondering, what is our branding and pricing strategy for Budweiser Supreme and Magnum in China? In terms of numbers, how much do these extended Budweiser brands contribute to our total Budweiser sales or volume in China right now? Thank you. Thank you, Ethan, for your question. Good afternoon. Good to hear from you too. Yeah, like you said, right, we continue to expand Budweiser Supreme, Budweiser Magnum. We also have Bud Light in Guangdong, right? Which is more young adults targeted in one of our biggest strongholds and leading markets. Really the role of these innovations for especially Supreme and Magnum, is to target new drinking occasions, to be incremental to the Budweiser consumer needs, and also to bring further premiumization and high standards with these innovations to the brands, right? It's really there as well to continue to premiumize the brand image of Budweiser. If you look at Budweiser Supreme, it's really focused on premium dining occasions. There are, you know, 360 quality campaigns that we launched actually this month, leveraging a celebrity, Nicholas Tse, who is really a large celebrity, right? Who is helping us to further build brand awareness and the sales growth potential across key markets. To your point, Budweiser Supreme is very strong in some key markets, but still with potential to really become a national proposition. There is both a big growth potential within the key markets, but also a big expansion potential across China. Budweiser Magnum is a more recent innovation of the last one or two years. That's a very different liquid, right? Different beer. It's a strong, full-bodied beer. Very premium look and feel. Gold and black color coding. You know, we are expanding nationally to most of the key markets. With the learnings we have recently, we have optimized the product profile to bring the best experience for consumers, especially in Chinese restaurants and in-home channel. The combination of these innovations for Budweiser, they're around mid-single digits in the net revenue of the Budweiser family. We are targeting for this to be, you know, let's say double digits in the next two or three years would be, you know, at least our expectation, because these brands are really high growth and very complementary to the Budweiser brands. All right. Thank you, Jan. Good to hear. My second question is on raw material price. We all know that China and Australia has finally resolved that dispute regarding barley. This is good news for the beers sector overall in China, but we also understand different companies, due to their different sourcing strategy, and their hedging strategies, the impact can be different. Just wondering how this resolution of the barley dispute is gonna benefit our raw material price going forward. Thank you. Sure. Thank you, Ethan. Let me ask Iggy to answer this one. Yeah, thanks, Jan. Thanks for the question, Ethan. Yeah, I mean, we've heard that news on this potential lifting of, you know, the tariffs on Australian barley. You know, it's not yet been confirmed rather, but if it is lifted, of course, the global barley price, you know, could or should further stabilize. It's already actually been declining from a peak for a period of time. Of course, this would only continue to help, and we would expect it to be very beneficial to the Chinese beer industry as well. I think it's important to keep in mind a couple of things. We apply a 12-month, you know, visible rolling horizon hedging policy for a reason. We do so to reduce, you know, volatility in our input costs, but also to give us more visibility to manage them, as well as supply security. You know, of course, we have some flexibility in exceptional circumstances, but if you think of this hedging policy in the context of, you know, any changes here in kind of tariffs, we would expect that for 2023 raw material costs, the majority of items, and in this case, barley, of course, are mostly locked, right? In that sense, this is more really of a 2024 potential impact to raw material prices than a 2023 impact. I mean, of course, we'll continue to closely monitor the Australian barley situation. If any opportunity presents itself, we'll ensure we're ready to capture it. Thanks so much for the question, Ethan. That's it. Thank you. Thank you, Ethan. Thank you. We have time for two more questions. Our final questions will come from the line of Melody Zhou from CICC. Your line is now open. Please go ahead. Hi, it's Melody Zhou from CICC Food and Beverage team. Thank you so much for giving me the chance to ask these two questions. My first question is about cost of goods sold. What are your cost expectations this year? Is it possible for packaging materials costs to decrease in the second half of this year? This is my first question. Thank you. Afternoon, Melody. Great to hear from you. Let me ask Iggy to cover this one. Thanks, Jan. Thanks for the question, Melody. I mean, while we don't give an outlook on cost of goods sold per hectoliter, I think maybe if I take you through a couple of the key elements, I think it might help to give you a sense of how they're evolving. I mean, in the first quarter of 2023, our COGS on a per hectoliter basis increased by 5.2%. As you could expect, this is mainly driven by the commodity escalation headwinds, the continuing ones, with cost initiatives, still partially offsetting, right? This would have been the case in previous quarters. You know, as we shared previously, for 2023, we're actually expecting a continued increase year-over-year, but more modest than it would have been in 2022. We previously shared actually that the 2023 increase we expected would be less than half of the 2022 increase, right? On a relative basis, still going up, but more modestly than last year. The big change really on a year-over-year basis is this kind of lower aluminum cost, right? We had peaked in aluminum at more than 4,000 per metric ton. We've been now normalized for several months, right, in aluminum. We had temporarily higher barley costs, which also seem a bit more stable. Of course, the cost initiative element that continues as kind of part of due course, right. Standard business. I think maybe the second important thing is from a phasing perspective, the cost escalation impact was always expected to be more pronounced in the first half of the year. If you think about spot price kind of peaks, right. They would have been last year, first half. We're already expecting a tapering off of cost in the second half of this year. You know, given that by mid-year last year, things had already begun to normalize. Maybe beyond the commodity fluctuations, the other thing to keep in mind always is premiumization has an impact on COGS per hectoliter as well, as it would have in any normal year, right. Of course, we welcome this as it benefits us from a gross margin perspective. Jan, of course, mentioned the gross margin ladder for premium, super premium earlier. You know, as always, we continue to look for other opportunities to minimize costs. Whether it's efficiency improvements, cost management initiatives, anything we can do to mitigate raw and packaging material escalations, we'll continue to do. This helps us to ensure kind of a healthy COGS per hectoliter growth moving forward. Thank you for the question, Melody. Okay. Thank you so much. Thank you for so much detailed information about cost of goods sold. My second question is about India market. Could you please give us an update on India and its outlook for this year? Thank you. Sure. Thank you, Melody. Actually, India, we've seen a very strong industry recovery, and the industry in India is already above pre-pandemic levels. We've been outperforming the industry growth again in the first quarter of this year. We are the largest brewer in the premium segment in India, about 67% share of segments. About 2/3 of our net revenue in India is coming from premium, super premium brands. In the first quarter, we achieved strong double-digit growth, both in volume and revenue, which is really driven by premiumization and other profitability improvement measures. We're quite optimistic with the momentum to continue, driven by our commercial executions and the industry growth that we expect to continue to see in the markets. On premiumization, we've been able to lead the segment growth in premium and above in the industry, which has been impacting positively our brand mix. We also continue to expect progress on the moderation front, right? As you probably know, we do have an agenda to engage with several state-level governments to equalize the distorted tax structures between beer and spirits. And, you know, we believe beer as a drink of moderation has opportunity to have an improved tax allowance and route to markets versus the current situation if you compare it to hard liquor. Then thirdly, productivity continues to be important for us to continue to improve the profitability levels, driven by brewery productivity, but also investing return on packaging at scale, which can continue to improve our profitability in India as well. To translate a lot of this top-line growth into bottom-line growth, which we expect to be able to drive in the future as well. All in all, very excited with our business in India. We see it as a big opportunity with a lot of momentum. Thanks for your question highlighting that country as well, Melody. Thank you so much. Looking forward to meeting you in Guangzhou as well. Thank you so much. Thank you, Melody. Thank you. This concludes our Q&A session for today. I would like to turn the conference back over to Mr. Jan Craps for the closing remarks. Please go ahead. Thank you, Anna. All the signs point to 23 being an exciting year. We are optimistic about our business and excited about the opportunity to capture disproportionate benefits from the ongoing recovery. In closing, like several analysts have mentioned, right, I would also like to invite you formally here to attend our upcoming Investor Day in China, which will take place physically on the first and the second of June in Wenzhou, in Zhejiang Province. Wenzhou is a great place to visit and witness China's premiumization trends firsthand. We will also showcase our state-of-the-art brewery, which is our newest brewery in China, with a highly automated warehouse. And we will also share our advanced levels of digitization, because Wenzhou was one of our pioneer cities for BEES. So please contact our IR team or visit the Bud APAC website to register. I thank you again for joining us today, and I look forward to speaking to you again soon, hopefully in Wenzhou at the Investor Day. Thank you. Ladies and gentlemen, this concludes today's results call. Thank you all for your participation. You may all now disconnect your lines.