Welcome to the 2023 First Half Results Announcement Conference Call for Budweiser Brewing Company APAC Limited. Hosting the call today for 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 six months ended 30th June, 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, from the anticipated results and financial condition indicated in these forward-looking statements. Budweiser APAC is under no obligation to, and especially 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 risks and important factors that could affect Budweiser APAC's future results, see Risk Factors in the company's prospectus, dated 18th September 2019, the 2022 annual report published, and other documents that Budweiser APAC has made public. I would also 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 otherwise stated, 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 half 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, and good morning, everyone. Thank you for joining our earnings call. We delivered double digits top and bottom line growth in the first half of 2023, through our sustained recovery momentum in China and strong growth in India. Let me provide some more color on each of our key markets. In China, we have seen a strong recovery of volumes in all channels and city tiers since February. We outperformed the industry based on our estimates. The growth momentum was led by channel reopening and strong sales of our premium and super premium brands. Our revenue and EBITDA in China were above pre-pandemic levels, driven by more than 20% premium and super premium revenue growth for both the second quarter and the first half. In the second quarter, the recovery accelerated, with volumes increasing by 11% and revenue expanding by almost 20%. Our premiumization strategy continued to prove effective, with our premium and super premium segments increasing their volume weights and the combined volume of both segments growing by mid-20s, year on year. Budweiser revenue grew by more than 20%, and Budweiser Innovations, like Bud Supreme and Magnum, grew by strong double digits in the second quarter. We also saw strong double-digit revenue growth in the super premium segment, which we continue to see as the next blue ocean in China. Meanwhile, on the digitization front, BEES has been expanded to more than 220 cities and represented more than 45% of our China revenue as of June. In South Korea, our volume and revenue grew by low single digits in the first half, while revenue per hectoliter declined slightly amidst a tough comp, particularly in Q2. EBITDA in the first half was further affected by increased commercial investments and commodity cost escalation. In Q2, we launched the Cass Cool summer campaign, along with the introduction of the limited edition Cass Lemon Squeeze, an innovation that further boosted Cass brand power, which has been expanding for four consecutive quarters. In India, we continue to outperform the industry in both the first half and Q2, with strong double-digit revenue growth in our premium and super premium portfolio, which supported a double-digit expansion in overall revenue in the first half. India is now the 4th largest market globally for the Budweiser brands. Before I pass it over to Iggy, let me give you an update on our recent sustainability progress. We have launched a new sustainability program to reduce our value chain partners' emissions, which is also necessary to achieve our own net zero ambition. As of now, we have completed this program at 48 manufacturing sites across 26 suppliers, helping them with site-specific carbon footprint maps. We've also made advances in water usage and renewable energy. We lowered our average water usage for beer brewing in APAC to 2.03 hL per hL, which represents a 32% reduction versus our baseline year of 2017. We also went from four to 10 RE100 breweries across APAC in the first half of this year. Finally, APAC has been included in Sustainalytics 2023 ESG Top-Rated Companies list for the first time. We have been classified as low risk, ranking us 4th out of 84 alcohol companies globally, and 10th out of 618 food and beverage companies globally, as evaluated by Sustainalytics. 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 half of 2023, volumes increased by 9.4%, as our business in China continued to recover, further supported by healthy growth in India. Revenue grew by 14%, supported by a 4.2% increase in revenue per hectoliter. Normalized EBITDA grew by 10.7%, and our normalized EBITDA margin was 32%. Our net profit declined to $590 million, more than fully driven by the release of a tax provision in India in the first half of 2022, without which our net profit growth would have been positive. Cost of sales per hectoliter increased by 3.7% in the first half of 2023, driven by continued commodity price escalation and brand mix, partially offset by ongoing cost initiatives. In China, volumes grew by 9.4% in the first half, in line with BUD APAC overall, while revenue per hectoliter increased by 5.5%. Both benefited from the channel reopenings as well as ongoing premiumization, leading to revenue growth of 15.4% and normalized EBITDA increasing by 17.2%. In East Asia, volumes grew by 3% in the first half, while revenue increased by 1.9%. Revenue per hectoliter declined by 1.1%, and normalized EBITDA declined by 15.9%. Finally, we reaffirmed our commitment to disciplined financial and cash management practices, allowing us to maintain a solid balance sheet. As of 30 June 2023, our net cash position stood at $2.4 billion. 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 at most two questions. Please ask your question one at a time. Your first question is from Chen Luo from BofA. Your line is now open. Please go ahead. Hi, Jan and Iggy. This is Chen from Bank of America. First of all, congratulations on the strong results, especially in China and India. I've got two questions on the China part. First, we noticed that in China, most recently, we have very strong performance of our premium, especially our super premium portfolio. On the other hand, investors currently, in general, are very concerned with China's weak macro and also the potential consumer trading down in a weak, weak environment. Do we think trading down will be a, become a concern going forward, and that will negatively impact the future growth of our super premium portfolio? What kind of measures are we going to take if the macro weakness continues in China? This is my first question. I will raise the second one later. Thank you. Perfect. Good morning, Chen. Good to hear you again. Yeah, I think for, for China, what is key to remember is that beer is a very resilient category, and premium, super premium within beer is a very affordable luxury, which is performing well, and we also expect it to continue to perform well. You know, when you look at our consumer research, really in China, we split the population in, in four different income groups. And you're right, that there, there are different realities depending on the consumer group we talk about. When we, when we look at the highest income group, they appear to be retaining the same consumption behavior as before. When we look at the high, the high to middle income group, you know, they are. I mean, they, they appear to be reducing spending on the real luxury items, like, for example, in alcohol, expensive baijiu and, and western spirits. In our view, at least in the numbers that we see in our, in our trades, is that they do replace it with more affordable luxuries, and in many cases, they actually trade down in a way to premium, super premium beer, which in these occasions is, is a trade-down, but in our portfolio, it is actually a, a premium, super-premium offering. Remember, the price tiers within beer, you know, stay, stay relatively affordable if you compare it to many other categories within alcohol. If you look at the middle income group, we continue to see this group spending very well on affordable luxury, on premium, super premium beer. You know, we do see a strong correlation between the, the growth of this group, and increasing demand for premium, super premium beer is very encouraging for our portfolio. When we look at the lower income group, we do see the price sensitivity in our consumer research and the numbers and there is downtrading there, but as you know, this part of the brand portfolio is less important for our, for our, group in China, because, you know, let's say two-thirds of our, of our business is premium, super premium, so it's much less relevant for this lower income group, right? We, we're, we're much less exposed than some competitors, to this dynamic. Our main business and our, our key demographics are in the two middle income groups, so they're the high, high to mid income and the middle income groups. We have seen quite consistent demand for the premium offerings from these target groups, and we also see in the stated preference in research that they continue to say that they will spend more on beer. About 30% of the mid to high income groups says they will continue to spend more on beer. We know in their spending, the experiences and the rituals are quite important when they decide to spend for premium. About 75% of Chinese consumers do say that they are willing to pay extra for the emotional value offered by a brand. As you know, we do have a strong brand power in our premium, super-premium brand portfolio, so we, we are actually quite well positioned for these consumer demands. We see premiumization continue to be ongoing. I mean, it was there during COVID as well, but less, less apparent in our numbers because of the channel closure at the time. We do see today a premiumization ongoing, and of course, further supported with the, with the channel reopening. You know, we, we, we do see us in a very good position to continue to take a disproportionate benefit from the reopening in 2023, with the support of the channel mix coming back in our advantage. We are particularly well positioned for the premium, super premium segments, which we continue to see strong demand for in H1, but to be honest, we, we are quite optimistic on that front. Thank you for the question, Chen. Thank you, yeah. My next question, question is on the market dynamics of our stronghold regions. Can we have some additional color on the premium growth of our stronghold markets, such as Guangdong, Fujian, and the southern part of Zhejiang? How are channels and geographic geography evolving in this context? Thank you. Yeah, thank you, Chen. I think we continue to see a very strong recovery momentum starting in February this year. We actually see ongoing premiumization across all city tiers. It's not only a Tier 1, Tier 2 phenomena, we see it in Tier 3, Tier 4 as well. We, we, specifically on our stronghold markets, like you call them, I mean, I can disclose that we continue to deliver, I mean, we actually delivered this year double-digit revenue growth in these markets. If we look at it, versus China, you know, it's, it's pretty much in line with our, our overall China performance. We, we are driving the industry premiumization in these provinces, as a leader there, as well. We're quite happy with our performance in the stronghold markets. You know, this is also happening, of course, because of our multi-brand portfolio. When you look at the maturity in these markets, we do offer a differentiated portfolio to them. We continue to see Budweiser doing well with the trading up in the portfolio, from Budweiser to the Budweiser Innovations, like Supreme and Magnum are both doing very well. We continue to see a driving up to the super premium portfolio as well, right? We do see premium and above volume weight continuing to increase in these markets. Then especially our super premium brands in the stronghold markets are quite important, and we continue to see them very healthy, leveraging the, the full strength, of our premium, super premium portfolio. As you know, super premium, we see it as, as the next blue ocean, in China, but especially in these provinces, it is really, a key growth engine. It's not only on geography, we also see, big opportunities in, in channel expansion. As you know, Budweiser was built in a nightlife channel in the past, and like 10 years ago, 80% of the business was, for Budweiser was in nightlife. When we, when we see the opportunity now for our super premium brands outside of nightlife, we expect to see a very similar movement as we did with Budweiser, starting from nightlife into, in-home and, and, and Chinese restaurant channels. We can see a very similar opportunity for the super premium brands, and we are effectively covering our expansion strategy, both in a geo, but also in a channel, in a channel way. Thank you for your questions, Chen. Thank you, yeah. That's really helpful. Thank you. Thank you. Your next question comes from Xiaopo Wei from Citi. Your line is now open. Please go ahead. Good morning. Can you hear me? Yes, we can, Xiaopo. Good morning. Morning. Yeah, I have two questions on China as well. I will ask one by one. The first one, it is about outlook. As we know that there are so many uncertainties on China macro, China consumption in the news, that exactly what investors have been focused on. Could you share with your color on your priorities among the probability, top line, market share? What are possibly positive or negative factors that may impact your premiumization process and financial target? If possible, could you share color for both 3Q, second half of the year and 2024 as well? I will take a pause here. Sure. Thank you, Xiaopo, and, and good morning. Good to hear from you. You know, we, as, as a company, we believe in the culture of and, right, not or. So, you know, I, I don't really want to choose between top and bottom line, and I, I don't think we should, especially in our case, in 2023. You know, our strategy on premiumization, expansion, and digitization, and we believe, you know, this will be key for us to continue to drive the industry, up in 2023. You know, just like we did in H1, we are quite confident our strategy will also continue to work in H2. If you look at premiumization, as I, as I mentioned, right, we saw premiumization continue as an underlying trend throughout the pandemic. Of course, now that we are post-COVID, you see much stronger output of that because we also have the tailwind of the channel reopening. You would have seen that actually Budweiser had a strong growth of more than 20%, and our super premium brands grew more than 35%. We actually see a very strong business performance in the first half. If you look at the expansion initiative, I mean, still today, despite the size of the Budweiser brands, only one out of three stores today in China is selling Budweiser, right? Less than 35% distribution. Super premium, less than 10% distribution. Expansion remains a very big opportunity and priority for us. As we mentioned earlier, right, we want to grow Budweiser this year from 200 to 220 cities. I'm happy to, to report that, you know, we are on track, actually slightly ahead of track, on expansion, and we do see double-digit growth in, in these markets. And we are on track to deliver on our ambition to significantly expand our distribution footprint this year. Thirdly, on digitization, we continue to support, you know, our top line growth and bottom line growth using technology to enable that. We, we are basically connecting digital consumer with our sales channels, with our supply chain efficiency. So that, that closed loop that we are building, we really see a strong momentum in our digitization efforts. You know, we, we continue to expect to bring more and more good news on that in the next coming quarters. Digitally, BEES is now in more than 200, more than 220 cities, and more than 45% of our net revenue was digital in by the month of June. We see strong momentum in there as well. If I look at Q3 and H2, to be more specific on your question, right, we expect the, the key underlying drivers to be solid and to continue to drive strong results ahead of the industry in Q3 and in H2. Premiumization trend for middle income households continues. When we look at the comps of last year, we continue to see tailwinds, or we expect to see tailwinds from channel opening, channel reopening if we compare it to Q3 and Q4 last year. As you remember, both in Q3 and Q4, we had headwinds in the, in the channel closures, which will turn into tailwinds this year. We, we don't see any significant closures this year, in, in any kind of level of city that would impact this momentum or, or this tailwind in the third or the fourth quarter. We continue to be optimistic on that. As I mentioned, expansion is well on track to to basically deliver distribution expansion in the second half as well. Again, we don't see any reason to be pessimistic on that for the, for the second half. I mean, as you can probably hear by my choice of words, right, we are quite confident on our strategy. We are quite confident on the outlook for Q3 and H2 to continue to lead ahead of the industry by leading premiumization in China, Xiaopo. Thank you for your question. Thank you. We can see your optimism on China outlook. Great to see. My second question actually is getting more detail of the China growth. We have been half year in a China reopening. From an Investor Day in Wenzhou, we can see great job being done by your team to enhance your distribution. Could you give us more color on your year-on-year movement for your partners, distributor, or wholesaler, you call it, on the profitability of a distributor so far, and how effective are the great work you've been done to help them, and any color will be very helpful. Thank you. Thank you, Xiaopo. You know, as, as you know, majority of our wholesalers have been working with us for more than 10 years, some even more than 20 years. We have very strong relationships with, with our wholesalers, and we see a very solid wholesaler base, you know, with a very kind of, on the one hand, stable relationships with, with all the wholesalers we've been working with for, for more than a decade, maybe even more than two decades in many cases. On the other hand, an increase in new partners that are also seeing the opportunity of partnering with us on the premiumization momentum in China. As you know, we are leading premium and super premium segments with a very strong brand portfolio. As the, the basic reason why we have been successful in partnering in a very kind of strong win-win partnership with these wholesalers, because we do offer higher margins to our wholesaler partners than if you compare to a core or a core plus dominated portfolio. We also continue to see significant room for us to continue to grow together with our wholesaler partners through premiumization and expansion, because we really believe the size of the China middle income class will continue to grow. Whether GDP grows by 5%, 7%, or 3%, we expect disposable income will continue to increase, on average in China, and the middle class households are really critical for premiumization in China. We're quite optimistic for that to continue, and our wholesalers are also betting on that, and then they are with the right partner. On digitization, you know, we do see very strong partnerships with our wholesalers as well. We prefer to disrupt the market together, leveraging technology, than by being, being disrupted in the future. We are actually, you know, as, as we explained in Wenzhou, right, in the Investor Day, we wanna sell more to more [folks], with better ROI and better service, leveraging technology together with our wholesalers to get there. We went wide at first, right, on this 45% digital net revenue, is a good number. It will continue to grow. This year, we are very focused on going deep, which basically means that we will use this scale to improve our algorithms, to use algorithmic selling to offer the right assortment of our products to the right store by learning from other successful stores in the same cities and the same city channels. We also leverage BEES to help our wholesalers communicate and engage with the second-tier wholesalers and the stores to sell beer in more stores in the future as well. we've seen a good successful pickup of our wholesalers on these initiatives. Kind of on another front, right, we continue to invest in their capabilities as well. I actually just came back from a, a trip to Europe with some of our biggest wholesalers that we, we brought to the Tomorrowland EDM experience, which, as you know, is probably the most successful festival in the world. You know, I spent quite some days with our wholesalers as well, connecting with them at, at, at this experience. Of course, also in China, we continue to build on their sales, their finance, operations, their people processes, with our wholesale excellence programs that are really benchmark, at least in the beer industry. We, we continue to develop our wholesaler partners. We continue to grow together with them, and I think they're as excited as I am with the opportunity they see this year and coming years on, on leading premiumization in China. Thank you so much. Thank you very much. We are very looking forward to our next Investor Day then. I, I keep telling to Mandy as well, right? She did two Investor Days in six months, so let's see when the next one will come up. Yeah. Thank you, Charles. 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 and Iggy. I've just got one question about the competition in Korea, please. I'd like to dig into your commercial response to the launch of Hite's Kelly brand. You know, how have you been investing to counteract this competitive launch? How has your response this time around been different to the way that you responded to Terra in 2019? How should we think about the sort of magnitude and the duration of investment this time around? Are we thinking about this as a, as a kind of one-time, you know, short, short, sharp, scorched earth approach, or is this something that's gonna take a more continued investment campaign to get on top of? Yeah, it's really focusing on, on what the lie of the land is in Korea and, and, and where to from here, please. Yeah, good morning, Euan, and great question. Thank you for that. Happy to hear you. You know, Korea obviously was a difficult quarter, Q2, right? There's no way around it. I think when you look at the financial results, this, this was not a great quarter. However, we are actually quite confident with where we are, and if you look at our... the way we reacted this year versus four years ago in 2019, you know, I, I, I believe we're in a, in a much better position than we were four years ago. When, when, if, if I would take you back, Euan, to 2019, at the time, we went into the summer, with a significant price gap because we had left price increase at the time without followership. At that time, the macroeconomic environment was actually better than it is today. We went through that summer with a, with a significant price gap, which, which allowed our competitor to get momentum at a time on their innovation. Secondly, we also did not increase the commercial investments to really pick up the battle, let's say, in the store execution, and that's quite different today as well. We believe, you know, at that time, we were significantly less competitive than, than we are today. If you compare that to this time around, our portfolio actually continues to perform very well. Actually, if you would look at the first half, I can disclose that, you know, we actually continued to grow market share within the core segments across all channels. Overall market share, I'll give you some more color. If you look within the core segments, you know, let's say Cass, HANMAC, Terra, Hite, Kelly, you know, Kloud, all of these brands, right? We actually continued to grow market share in the first half, which, you know, if you, if you look at the, the level of competitive investment, I think, you know, kudos to our team in Korea, that have been very focused on the execution and protecting the momentum of our core portfolio. If you look at our total brand portfolio, including the premium brands, we grew market share in the on-premise channel, which also you, you see our, our strength in the Korean restaurants and the other channels, that we continue to grow share if you look at the total on-premise. If you look at off trade, we were actually impacted in the premium, in the premium channel. That was mostly driven because of a price gap, in the premium segment in the second quarter, because we took price in, in the, the premium brands, in April, was not at a time immediately followed by competition. In the meantime, in July, we actually no longer have a price gap, in the premium segment. In Q2, we were at a disadvantage in premium, which impacted our, our overall, market share, driven by the off, off, offline channel or off trade channel. If, if you would look at our, our brand performance, right, we actually continue to build strong brand leadership in Korea, both in core and premium. In the past years, right, we actually solidified our core portfolio with the all new Cass innovation, plus the launch of HANMAC. If you look at the Cass brands, we actually continue to grow brand power, which is now four quarters in a row. We continue to grow brand power on Cass, right? As you know, the, the sum of all the brand powers in any given country is 100, right? So for us to continue to grow brand power on Cass, you know, in, in, the last four quarters is actually quite strong, given a competitive investment level. If you look at the second quarter, specifically, we increased our commercial investments to support our innovation campaigns and to be competitive in the marketplace. We had a strong campaign ongoing on Cass with the cool campaign, right, Cass Cool. In the summer campaign, we did launch a limited edition, Cass Lemon Squeeze, which has been selling out much faster than we anticipated. It's doing very well. HANMAC has launched a first ever draft beer with a double smooth draft with exclusive glassware. On the pack price, we also offered specific packaging options to satisfy the consumer need for more frugality. We launched in and outs on the Cass 24-pack, 350 ml cans in the in-home channel to be price competitive as well versus competition. Interesting to know for you, maybe less visible, if you look at the overall numbers, but we are already preparing the future way of further premiumization as well. We, we did take price on premium, which was a strategic move on the first of April, because it actually for the first time in many years, is connected, the premium price point on promotion in several channels, including CVS, where premium is now higher priced on promotion than the mainstream brands. Took a while for the price gap to disappear, but after three months, we are now line priced. Our competition is now line priced with us in premium, and our premium segment is officially higher priced than, than mainstream. We are, by the way, the only one brewer to own our own destiny, right, with a premium portfolio, leveraging our global brands of Stella, Budweiser, Hoegaarden, and we're quite with a balanced portfolio, uniquely positioned to meet Korean consumer needs. Actually, we are expanding or at least targeting to expand the premium segment in Korean restaurants as well. We launched the Stella Artois 500 ml bottle in Korean restaurants with exclusive glassware, mini chalices, so small glassware on Stella Artois to create a more premium dining experience with better margins for wholesalers and stores or restaurants, in this case, to continue to drive premiumization and bring the premium segments to Korean restaurants. We, we're actually quite confident on our strong and healthy brand portfolio, and our people capabilities to lead the beer industry growth in Korea. I know the financials have been quite tough in the second quarter, but you know, strategy-wise, we're actually quite confident on where we are with these brands. Thank you for your question, Euan. Thanks, Jan. Sorry, that, that... Is it possible to just have a quick follow-up and clarify? You talked about, in your release, you talked about transient challenges in South Korea. Can you maybe just expand on that timing thing? Like, what are you thinking in terms of transient? Are you, are these short-term investment campaigns, or is this something that is going to be just the, the new lie of the land? Yeah, maybe this one I can, Iggy, I don't know if you're connected, on the line here, but I think- Yes. Iggy was. Go ahead, Iggy. Happy to take it. Then you can refer me to the core signs as well, right? Yeah, of course. I think you and, I mean, we say it's transient, right? Because structurally, as we discussed previously, we see the, the business doesn't have an impediment, right? From kind of a margin, perspective. Of course, there's the commercial, piece, right, that, that Jan just discussed, but also even the cost headwinds, right, that we've seen, they're still strong in the first half of this year. We expect it to start waning, right, in the second half of 2023 and then into 2024. It's more, you know, a series of quarters and a series of years, and I think that's why it's, it's a transient headwind as opposed to kind of a structural, issue for the, the Korea business itself. Thank you. Your next question is from Lillian Lou, from Morgan Stanley. Your line is now open. Hey, thanks, Jan and yeah, thanks, Jan and Iggy. I also have two questions. First of all, on cost goods sold, i.e., the raw material cost, 'cause Iggy just mentioned probably the unit cost is gonna trend down, the raw material cost is gonna trend down, lower sequentially. Want to get a little bit better idea in terms of our own unit cost trend in the third quarter and fourth quarter, 'cause in second quarter, we definitely saw, already saw an increase in GP margin. Are we gonna continue to see that in the following quarters? That's my 1st question. I will ask the second one after that. Sure. Thank you, Lillian. Good afternoon. Good to hear from you. This sounds like a good question for Iggy, right, on our raw material evolution? Yeah, let's, let's build off of the previous one then. That's perfect. Thanks, Jan. Lillian, to your question, I think, look, in the second quarter of this year, right, our costs per hectoliter increased by 2.3%, which is actually quite modest. This was driven still by some of the remaining commodity price escalation headwind that we've discussed previously. Obviously, some of it by premiumization inherently, right? As, as we premiumize, of course, as a mixed element too. We significantly offset that with both cost initiatives and, of course, some of the operational leverage benefits from the volume recovery, which Jan would have mentioned earlier. This year specifically, right, if you look at 2023 on a whole, we did still expect commodity prices to continue to increase year-over-year. We did say it would be much more modest than it would have been last year, right? 2022 versus 2021. From a phasing perspective, the majority or the bulk of that increase was phased into the first half of the year. That's just, you know, directly driven by the kind of the, the hedging policy, right? The spot pricing, right, in the second half of 2022, already being significantly lower than it was in the first half of 2022, right? If we look at it from that perspective, and we look at aluminum first, you know, the second half aluminum pricing was already down to about 2,400 last year from kind of that peak peak number, right, of close to 4,000. Actually, even if you, if you fast forward a little bit, you're looking now at numbers, you know, holding steady near 2,200 per metric ton, and even lower from time to time. Barley pricing was, of course, a bit more volatile, and it tends to be in general, but they've also continued to move lower, you know, since, since the back half of last year and even the start of this year. Specifically, you know, the French crop had a, a very good harvest driven by, by weather. Then on top of that, and still not factored in, of course, into, into future numbers, but as the, the speculation has diminished, in, in kind of the barley markets with Australia and China working on, on resolving the trade dispute over barley imports, you know, the lifting of, of that barley embargo, we still expect will reshuffle global barley flows and, and should pressure prices down, hopefully, in that space, right? Of course, these would be positive on a year-over-year basis, less necessarily in the second half of this year, more likely in, in 2024, but it's still good to keep them top of mind. I guess overall, when you, when you put in the raw and packaging material kind of evolutions, we're expecting things to start to flatten in the, in the second half of 2023, particularly as we get towards the, the fourth quarter. That's good because then as the commodity price fluctuations flatten, right, you, you'll only see premiumization impact in, in costs per hectoliter. You'll see that, of course, significantly benefits our, our gross margin. That's the type of kind of healthy cost per hectoliter driver we want to see. Of course, we'll continue to offset that with efficiency improvements and, and cost management initiatives, many of which are still ongoing, to ensure that we have a healthy, you know, cost per hectoliter growth, mainly driven by mix in, in the future. It's a bit of summary for this year, Lillian. Yeah, thanks a lot, Iggy, for your very detailed answer. My second question is also on Korea. Jan just mentioned, in April, we raised the prices for premium products. I want to understand the overall pricing trend in China, in Korea, because obviously, the competition, especially on the mainstream products, do we have any kind of price action to take for our main brand Cass in the second half or maybe in 2024? Sure. Thank you, Lillian. I mean, you know, we always take price decisions in the context of the macroeconomic environment. When you look at the current annual CPI excise adjustment system in Korea, the government did take the excise tax up earlier this year, right? We, we review our prices on an annual basis. The Korean government took excise tax rates at 3.57% on the 1st of April, which was in line with the current legislation, right? It was actually 30% below last year's CPI. When we looked at the beginning of the year at the macro environment, we judged that the environment was not there for us to take price in core despite the excise tax increase. We, we actually did not take price on core brands. Our revenue per hectoliter was negatively impacted in the second quarter because excise was up, but price was not up, right? The good thing is that month-over-month, we do see CPI reducing in South Korea. You know, I think it was about 5.1% full year last year. When we look at the month of June, was down to 2.7% in June in South Korea. We see a gradual decrease month-over-month, creating a better environment for future pricing. We actually took price up in premium, which of course is a much smaller segment. We took 9.1% in the in-home channel on the 1st of April. With a three-month, two to three month delay, the markets follow that price increase. At this moment, we have nothing to announce regarding further price increases, for sure, we will continue to evaluate the macroeconomic kind of context, and we'll take our revenue management decisions to ensure that the timing is right for our price increase, and we continue to evaluate that in the near future. Thank you for your questions, Lillian. Thank you. Your next question is from Christine Peng, who is from UBS. Your line is now open. Please go ahead. Thank you, management to take my questions. I have only one question. It is about the Korean market. If, if we look at what happened in the Korean, you know, market, the EBITDA margin has been quite volatile. I, I understand there are many factors in play, but in the longer term, what should be the sustainable EBITDA margin investors should be looking for? Thank you. Thank you, Christine. Let me maybe ask Iggy to take this one. S ure. Thank you, Jan. Thanks for the question, Christine. So look, while we don't provide obviously a specific guidance, you know, we're cautiously optimistic, right, about margin improvements over time. Going back to, to kind of the previous comments, there really are no structural, you know, issues, right, in the business that prevent, you know, both margin recovery to kind of pre-COVID levels, but also improvement kind of on a sequential basis, right? So that's why we, we call these or some of these factors, you know, temporary external factors or, or transient factors. Just a reminder, again, you know, in the case of APAC East, right, the order of relevance towards EBITDA margin expansion is first and foremost, rate. Second of all, operational efficiencies, and, and third of all, you know, mix and, and kind of the impact of premiumization. In terms of rate, as Jan mentioned, right, we were able to take price in our, in our premium brands, right, in, in Q2. That only just started to kick in to the Q2 results, and of course, will help more so in the second half of 2023. Of course, as, as Jan mentioned as well, the core segment, right, is the majority of the, the bulk in, in Korea. As a result, right, the, the timing, right, of any future pricing activity will dictate when we get the margin recovery benefit, right, on the rate side there. On top of that, the second point was the operational efficiencies piece. There's of course, kind of our ongoing costs and, and cost management measures. These will continue, and they're actually driving quite a bit of benefit. That's why we see it as, as still a structural driver, as we discussed in both the, the Investor Day. Then on top of that, the commodity normalization that I mentioned previously today, that will start to take pressure off in, in Q3 and, and Q4 in particular. Of course, we're, we're seeing a much better picture if you look at year-over-year spot pricing for 2024, right, which is very encouraging as well. In terms of premiumization, you know, we didn't touch on it as much today, but we know the country's still under indexed. We're seeing great results, as Jan mentioned earlier, in some of our premium brands in, in the country. We have lots of reason to be optimistic, both in the trend for industry long term, but also our, our ability to compete and to continue to win within the segment, with our portfolio. It's the third of the drivers, but it can still become somewhat relevant. Yeah, in, in the end, you know, we, we don't see a structural headwind. If anything, right, we see. We, we expect actually to be less impacted in Q3 than we were in Q2 from many of these drivers. Then of course, as we continue to see, you know, industry recovery, let's not forget that industry still has not recovered to pre-pandemic levels. As inflation stabilizes and consumer sentiment recovers, and we're in a better position from that perspective, we're confident that with the, the strategy and, and the commercial capabilities that Jan shared, we're in a great position, right, for future sustainable growth once these headwinds, further ease. Thank you so much for the question, Christine. Thank you. Your next question is from Leaf Liu, who's from Goldman Sachs. Your line is now open. Please go ahead. Hello, can you hear me? Yes, we can. Hi, Leaf. Good afternoon. Good afternoon. Thanks a lot, Jan and Iggy. This is Leaf from Goldman Sachs. Congratulations on the solid performance in AP West, and also congratulations on moving into a new office in Hong Kong. I have two follow-up questions for China. I will ask one by one. We are encouraged to see a strong premiumization trend, post reopen so far. If we step back and look from a longer time horizon, would you please share your thoughts and insights about the premiumization trend, maybe in 2024 and also longer term in China? That's the first question. Thanks. Perfect. Thank you, Leaf. I, I think, I mean, this allows me to take a step back maybe, right? I think when we look at China, China is already the biggest beer market in the world, right? About one quarter of the total global volume of beer is, is, is consumed in China. When you look at premiumization, it is still, let's say, midway versus where, where, where it can be in the future, right? Because if you look at the share of premium, super premium beer within total industry, it is, it is less than half of the more mature markets. We do see a lot of growth potential for premium, super premium. It, it's mostly driven by these middle-income households, as I was talking to earlier, right? The, we actually see the number of middle-income households quadruple in the next 10 years, at which point it should become about twice the number of middle-income households than there, than there is today in the U.S. It's, it's quite a sizable opportunity. As consumers will be able to afford more premium, super premium beer, of course, the margin pool will expand significantly. As per our calculations, right, applying the different kind of price structures and gross margin contributions of the different price tiers in the beer market, we actually believe more than 80% of the future gross margin growth will come from the premium, super premium segment. Obviously, that's exciting for us because we are well positioned in these segments. We, we are leading both the premium and the super premium segments. We believe with our strategy of premiumization, expansion, and digitizations, we're well positioned to take an outsized share of that growth in the future. If you think about the changes that we see over time, we believe that premium will continue to grow. And then once people have enough disposable income to afford super premium, we do believe the super premium segment will become the blue ocean, right? In terms of being the new profits opportunities for the beer industry. And of course, as consumers evolve into, from premium to super premium, they look at more and more differentiated offerings, and you really need a portfolio of brands to win. You know, with one big brand, you can be winning in the premium segment, but you need multiple brands to be able to win in the super premium segment, almost by definition, because people want to be differentiated in different brands and different rituals in different occasions. When we look at the Budweiser brands, of course, we are playing and catering to the needs of more premiumization within Budweiser by Budweiser Supreme, which is serving the more premium dining occasion, Budweiser Magnum, with a more stronger taste profile. We have significant innovations there that are offering strong double-digit growth in the second quarter of this year, of this year, right, last year. We expect it to continue to grow in the future. Then for super premium as a blue ocean, you know, we, we do see very strong performance of our portfolio, more than 35% growth in super premium. Of course, both the underlying momentum, but also the reopening of the different sales channels, versus the COVID period. We're really planning to leverage this, this leading position, continue to innovate, continue to play the portfolio, and, and drive the expansion opportunities to really advance premiumization at scale in China. Thank you for your question, Leaf. Thanks a lot, Jan. That's very clear. Perfect. The second question is about China's commercial investment and competition. Actually, we ask a lot of question about, about Korea. After reopen, how do, do we look at Budweiser's marketing strategy and also commercial investment level in China in this year and also next year? Especially, can you give us some insights to compare the investment level in on-trade, on-premise channels currently, comparing to the level during COVID and also comparing to the level, where, in pre-COVID period? Thank you. For sure. Yeah, I, I think, Leaf, as, as we, as we get into this year with stronger growth, right, we, we basically invest at the pace of our business growth. We, we invest in our business, and we look at our investment as a percent of net revenue. As you see our revenue grow double digits, our investment level also grows double digits. And, if you look at the last three years, and you would compare the investment levels, we actually did learn very interesting skills on how do we maintain the efficiency of our investment, right? We become much more agile in our resource allocation, and also our digitization efforts, especially with BEES, but also digital consumer. They help us in becoming more and more efficient. Even as, as our beer volume premiumizes, you know, you could think, well, maybe the investment level will increase because we sell more premium, super premium volume. We're actually able to offset that by being more agile and being more digital, which allows us to be more efficient as well, right? Of course, our, our cost connect twin approach continues to apply so that we, we can leverage the scale that we have, save on the non-working money and reinvest in the working money. That logic still continues to apply, and we can use our bigger scale for the efficiency as well. When you look at the absolute levels, or the, I should say, the relative levels, comparing to previous years, we do see a very competitive, right at around this 2022 level on a full year basis. You can have some puts and takes at a quarterly level, right? Last year we had the FIFA World Cup. We had some, some other puts and takes with kind of the, the, the, the COVID impact over different quarters. If you would look at a full year level, we believe we are at about the right level in 2022 as a percentage of net revenue. That, that probably helps you in terms of estimating what we expect. You know, as our volumes continue to premiumize, of course, this will help us to invest more per case in a market with a differentiated, kind of execution, while providing the right margins and strong margins for wholesalers and stores. We believe if we keep this investment level as a% of net revenue of 2022, it probably helps us to be competitive, and, you know, to continue to lead the market for more premiumization. Thank you for your questions, Leaf. Thank you. We have time for two more questions. Our final questions will come from the line of Linda, who is from Macquarie. Your line is now open, Linda. Please go ahead. Thanks, Anna. Thanks, management. I have the final two question. Number one is about Korea market. We saw that the Korea economies are facing some of the challenges, such as, high inflation, low consumption sentiment. I'm just wondering that, how will that impact the beer consumption, and how will the company react to this macro impact on the consumption? This is number one. Number two is that, I wanna also, ask about India, because, we are quite excited about, the India, the beer consumption, and the company's premiumization. Can you also please give us an update on the India market, and how should we think about this market in two to three years? Thank you very much. Thank you, Linda. Good afternoon, and thank you for your questions. Yeah, I think Korea, as I said, right, it was quite a challenging quarter, the second quarter, financially. First driver was the excise tax, right, which went up on beer by 3.57% in April, and we decided not to take price given the macro environment in the core segments. At the same time, industry recovery was negatively impacted with consumer sentiment down, mostly driven by inflation, in our view, which started relatively high, continuing from last year. You know, volume declined low single digits in the second quarter. Revenue, revenue per hectoliter declining mid-single digits because we had, on the one hand, a tough comp because last year, same quarter was a COVID recovery after the reopening. We had this excise tax increase without price increase, we had some unfavorable pack mix as well, as consumers looked for more affordable options with the frugality in the context of the kind of macro environment. You know, EBITDA was impacted by all of this, plus, of course, an operational deleveraging and more commercial investments. That's why financially, it actually turned out to be quite a tough quarter. If you look at what we did, from a brand perspective, you know, we continue to connect with our consumers with, in our view, quite successful marketing campaigns with Cass, with the summer campaign, the innovations we launched. We actually sold over one million cans of, of our Cass Lemon Squeeze in two weeks time, so, which was well ahead of our expectations, so we clearly struck, struck a, a chord there. Our brand performance or brand power is actually quite healthy and continues to do very well. If we look forward, you know, CPI did reduce month-over-month to the 2.7% in June, so we do see consumer sentiment recover, which is a good news in Korea. You know, the government kind of reports on that on a monthly basis. In June, for the first time, we saw consumer sentiment index above 100, which is the first time it went above 100 since May last year, which is quite good. Industry also has room to grow. We are still below pre-pandemic level, in Korea. As you probably remember, right, in Korea, the soju is actually lower priced per, per, alcoholic liter than beer. In, in the longer term, we see beer gain share of throat versus soju. Whenever there is macroeconomic impact on consumer sentiment and frugality, soju typically gains a little bit from beer, but we've seen in the past, that comes back when the economy gets back to a normal kind of growth curve. We're actually quite confident with our strategy and commercial capabilities, that we are well positioned for a future sustainable growth once these headwinds, the transient headwinds, like Iggy explained earlier, will settle. Shifting gears to India, it's kind of the other extreme, I would say, right? I think India had an amazing quarter and is really with very strong momentum. We're quite excited with industry recovery in India is well above pre-pandemic levels, and we actually continue to outperform the industry, both in the second quarter and the first half. As you know, we're by far the number one brewer in premium, right? We have 67% segment share in the premium segment. Two-thirds of our net revenue in India is coming from the premium, super premium brands. You know, premium, super premium revenue continued to grow very strong, double digits versus last year. In the second quarter, we achieved double-digit growth in revenue, driven by premiumization, but also some other profitability improvement measures. You know, when you look at the strategy in India, we have kind of three different fronts, right? We have the premiumization front, which is key for the top line growth. You know, we've seen great progress there, right? As I said in my, in my introductory words, this is actually the first time, right, that India became the fourth biggest market for Budweiser, for AB InBev globally, right? We were, I mean, two years ago, sixth, last year, fifth, in the first half, we became number four. You can imagine the, the team is excited to get on the podium globally, quite soon with the Budweiser brands. You know, we also continue to grow the segment, the premium segment, as a consequence in India. I would say second driver is productivity. We do have a significant agenda on continuing to improve our profit margins in India, and, and we have a lot of opportunity, actually, quite well mapped out by comparing India to China breweries, right? If we compare the smaller breweries in China to the bigger breweries in India, there is quite a clear roadmap on how to improve the brewery productivity, how to leverage route packs with the increasing scale of our business, you know, and, and how to have the right footprint there to really optimize our product flows between our, our different breweries and states. We, we do see quite a clear opportunity in productivity in the future to continue to drive our profit margins up. Then the third big priority in India, a little bit different than in the other markets in Asia, is really on moderation, right? We have quite a strong agenda to engage with the different state governments to improve the distorted tax structure between beer and hard, hard spirits. You know, positioning beer, which it is, right? a beverage of moderation. We want to promote low and no alcoholic beverages with a better route to market and, and better tax structure, to basically advance, on the one hand, the health agenda, and also differentiates the tax structure for beer versus other kind of alcoholic beverages, like it is in most other countries around the world, would allow us to unlock a lot of industry growth in India, which can, which can continue to improve the attractiveness of the profit pool there. We're quite excited, our team in India as well, with the momentum we have there. Thank you so much for the question on that part of the business as well, Linda. Thank you. Ladies and gentlemen, this concludes our Q&A session today. I would like to turn the conference back over to Mr. Jan Craps for the closing remarks. Thank you, Anna. As you can probably hear by, by the call, right, we remain very confident about our premiumization, digitization, expansion strategies. We are optimistic about our ongoing business recovery, also specifically in China. I wanna thank you all for joining us today, and I, I look forward to speaking to you again very soon. Thank you. Ladies and gentlemen, this concludes today's results call. You may all now disconnect your lines. Thank you.