Good morning and thank you for waiting. We would like to welcome everyone to Ambev's Fourth Quarter 2020 Results Conference Call. Today with us, we have Mr. Jean Jereissati, CEO for Ambev; and Mr. Lucas Lira, CFO and Investor Relations Officer.

As a reminder, a slide presentation is available for downloading on our website, ri.ambev.com.br, as well as through the webcast link of this call. We would like to inform that this event is being recorded and all participants will be in a listen-only mode during the company’s presentation.

[Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company.

They involve risks, uncertainties, and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements.

I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature and unless otherwise stated, percentage changes refer to comparisons with 4Q 2019 results.

Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of the Ambev's normal activities. As normalized figures are non-GAAP measures, the company disclosed a consolidated profit, EPS, EBIT, and EBITDA on a fully reported basis in the earnings release.

Now I'll turn the conference over to Mr. Jean Jereissati, CEO of Ambev's. Mr. Jereissati, you may begin your conference, please..

Good morning, good afternoon. Thank you very much for joining our call. 2020 was unforgettable in many ways, what a year, on one side, all the sadness, hardship and challenges that COVID-19 brought. On the other, I praise the resilience of our team and respect their commitment with the profound transformation our company went through last year.

Ambev made a positive impact in society. Ecosystem collaboration for a better world was the tone of 2020. We launched meaningful innovations to from Cusqueña in Bolivia, to the most commented sparkling wine, LP QTP in Argentina. Our innovations grew our portfolio and expanded our reach in terms of new propositions to consumer.

In Brazil, Brahma Duplo Malte was the star of our pipeline. Thanks to an innovative development process, singular, liquid and a disruptive marketing launch, the Beats franchise revamp with GT and Zodiac also brought us a breath of fresh air with the new generation. Ambev's technology platforms were exponentially adopted [Chuí] in 2020.

Digital businesses are here to stay and platforms like Ze Delivery and BEES, our super app, were at the right place in the right time. As for the fourth quarter, we build on the commercial momentum from Q3 to deliver a good finish to the year. More importantly, the success of our commercial strategy in the quarter also positioned us well for 2021.

And here's why. Beer volumes continued to recover and grew year-over-year in 7 out of our top 10 markets, led by our double-digit growth in Brazil, in Chile, Guatemala, and Paraguay. It was also important to see our beer volumes in the Dominican Republic recover strongly despite the COVID-related restrictions.

We have been strengthening brand equity and power of our portfolio and gaining market share in most of our key markets. In Canada, for instance, our portfolio grew share once again.

In Brazil, beer volumes grew almost 12% despite a still very volatile environment, despite the supply chain constraints that impacted us, our service level, the lower government stimulus and our price increase rollout. On top of all of that, our global brands outperformed the total industry and had a solid growth in brand equity and power.

Bohemia and Brahma Duplo Malte finished the year as the top 2 leader brands in the underdeveloped core plus segment and still have plenty of room to grow.

In the core segment, after years of volume decline, we stabilized our brand performance, thanks mainly to the expansion of the 300 ml returnable glass bottles in moms and pops and the takeaway of our strategy that we implemented. We strengthened our value portfolio with the launch of two more regional brands, Beer Hero in Poe and Esmera in Goiás.

And finally, we delivered a strong net revenue per hectoliter, thanks to a successful implementation of our price strategy that was built around a more flexible approach, a positive mix, driven mainly by innovation, the innovation performance and revenue management initiatives, including a smarter occasion based promotional activity that it proves very efficient.

We continue to transform our business to quickly respond to consumer and customer needs and solve their pain points. Today, I would like to share more details about the role technology is playing in this process and our DTC and B2B platforms are the best examples worth talking about. So, let's start talking about Ze Delivery in Brazil.

Ze's value proposition is really simple. Your favorite beverages at reasonable prices, cold in 35 minutes. This is simple, but very, very powerful. Ze is present in more than 200 cities in all 27 Brazilian states and in 2020, delivered 27 million orders with the equivalent of one order per second only in Q4.

It also delivered a rich assortment of products from over 40 partners, FMCG companies and was rated the best delivery app on the App Store and Android.

It's a strong relationship with more than 2,000 retail partners, such as small and large supermarkets, moms and pops and bars is essential to ensure a high net promoter score, currently north of 80 for both consumers and customers. Ze's focus in 2020 was geographic expansion and improvement of the operational model.

For 2021, it will focus on increasing penetration, retention, frequency and assortment in order to continue the journey to fulfill its full potential consumer by consumer occasion by occasion. Now, let's talk about BEES, our super app, our B2B marketplace platform.

BEES is designed to provide our customers more convenience in terms of 24 hours, 7 days a week order taking and delivery tracking. And also serves as a marketplace that provides a broader assortment, additional logistics and financial services.

It aims to be the one-stop shop solution for the retail, with a transformational opportunity for allowing Ambev to develop a closer and more reliable relationship with our customers' ecosystem. It's about better quality of interaction.

And as we listen more and have more data to work with, we can ultimately offer a better service level to our partners. The platform was developed in the Dominican Republic, where 90% of our customers already adopted it.

There, our marketplace service already offers a broader assortment, and we are into 8 different categories, with 70 different SKUs that go beyond our beverage portfolio. Going into 2021, we expect another challenging year.

COVID is still very real, and we will face larger cost pressures with cash COGS per hectoliter in Brazil expected to increase in the low 20s. That said, our commercial and top line momentum built last year is also real.

In fact, our top line performance will be one of the most important things to watch as we work to partially offset the cost headwinds. And the good news is that we are off to a good start, with volumes growing above 10% in Brazil beer so far despite carnival cancellation.

Also, pricing performance should benefit from mix continuing to play in our favor and a smarter promotional activity remaining in the full-year, taking into account the market environment. I have no doubt that we are starting this year much more prepared than we were in 2020.

Our portfolio is in a better shape, our brand power is healthy and growing, innovation pipeline is strong, and our route to market was transformed through all this digital platform that scaled very fast. On top of that, cash generation continues strong, and we remain committed to invest ahead of the curve. So that was pretty much it.

Thank you very much for your time and attention. I will handle this to Lucas..

water; climate and energy; circular packaging; sustainable agriculture; and smart drinking. And I am happy to report that in 2020, we made progress on all fronts even during these challenging times. And we remain on track to deliver our goals by 2025.

For instance, in terms of clean energy, in Chile and Argentina, we are already operating with 100% renewable energy and we expect to have more than 90% of our Brazilian breweries supplied with renewable energy by 2023.

In addition, we are extending the supply of renewable energy to 100% of our distribution centers in Brazil, which we'll be able to charge our delivery fleet comprised of at least 50% of electric vehicles by 2023. As a final note, I wanted to share the news that Gilliam Acacia is succeeding CHA Oliver as our Head of Investor Relations.

Yakka, as he is also known, joins us from Budweiser APAC where he spent the last 7 years leading the FP&A agenda for the region. Levi meanwhile is taking over as Head of M&A for Ambev. I wanted to thank Levi for his work in IR over the last 2 years. And wish both the best of luck and success going forward. With that, let's go to Q&A. Thank you..

[Operator Instructions] Our first question comes from Marcelo Recchia, Crédit Suisse..

Hi Jean, Hi Lucas, thank you for taking my question. The first one would be about the tax credits.

If I understood correctly there are more 1.9 billion tax credit to collect over time, correct? So, do you have any visibility on timing for that and on top of that will – will it be reasonable to accept a risk statement of Brazil beer sales of 2020? This is the first question. The second one, if I may.

With the redesign in agreements between the Coke bottlers and Heineken announced it yesterday, one of the main concerns of the market has been about competition identification, particularly in the premium segment.

So, my question is what can we expect from Ambev as mitigating levers for, let's say this potential higher competition? Thank you very much..

Thank you for the question Marcelo. I will hand over the first one to Lucas and then I get the second one..

Okay. Hi, Marcelo. Thank you for the question. With respect to the tax credit Marcelo, there is no clear timing yet as it relates to the 1.9 billion of potential tax credits that we disclosed in our footnotes to our financial statement. This really is because this is the pendant on the judicial system in Brazil.

So, we still await the judicial decision that will give us reasonable certainty to be able to record and recognize these credits. So, it is really depending on the core of the judicial dispute in respect to this amount. .

Okay, thank you..

And about the [duo] Heineken and Coke, Brazil has always been a very competitive market. And it is too early to say something about how this duo will unfold.

For me it is a little bit, it is highly anticipated this type of move and what I can say is that, for a while now, two years ago we really started to transform big time our [indiscernible] market and it remains unparallel and we believe that we are getting a new edge on that.

We have to remember that 30% of our volumes are distributed by 150 wholesalers that is with us, they are with us for 20 years and they are going through business transformation adoption these. Some of them are adopting Zé Delivery. The remaining 70% is distributed by approximately 200 direct distribution centers.

And we are betting big time on the thing about technology on the DTC and on the BEES that we believe that it will be the edge of – and the many possibilities of hypersegmentation of supporting a broader portfolio, launching innovation, is with this type of platforms like this that we are seeing that in the past, we had sales rep going to a customer, and he would have like 7 minutes, they can order.

Now, because of our platform in the wholesales, in the our customers, they are staying 30 minutes a week in the platform, looking innovation, learning about marketing campaigns, connecting. So in the end, we have our strategy of transforming our company. We are pretty much sticking to – investing on that.

And the deal, I think, is highly anticipated, let's see how it unfolds..

Okay. Thank you very much, Jean and Lucas..

Our next question comes from Andre Hachem, Itaú..

Hello Jean and Lucas. Thank you for taking my question. I have basically two questions here. The first one is regarding the 10% volume increase you mentioned this year. Could you just provide us a bit more breakdown in terms of regions and mix and how that's been developing? We're curious, especially because of the end of the government aid program.

So, especially in North and Northeast, we were wondering if you have been seeing, let's say, lower volume recoveries than in the other regions. The second question is relating to your digital initiatives.

Could you guys comment a little bit on minor.com it's been evolving quite well, I know it's been, let's say, a big bet in terms of the cash and carry or fighting off the cash and carry.

So, what is the strategy on that front? And how do you see this developing going forward?.

Okay. So, let me start with the volumes. So, I've been saying – we used to say that we lost close to 10 million hectoliters in Brazil beer from our peak volumes in 2014, and we have been working to get this 10 million back. 2020 alone was a year where we were able to recover 4.5 million hectoliters since the low point that was 2018.

And that was possible because we created – it was less about the industry and more about our ability really to create new occasions for in-home consumption. We revolutionized the way we connected with our consumers.

2020 marked a moment where we can say that pretty much all the additional volumes sold in the industry was re-driven by Ambev in a holistic play on portfolio technology lives RTM marketing. And so these things are pretty much structural. And that's because of that, that we see the momentum that we still have in Jan plus Feb in 2021.

And so that's it, we are pretty much investing in the things that we can control, and we are excited about these new things. The scenario is still very fluid. We don't know how this is going to evolve. But a big part of our volume, there is a part of it that really are market share gains when you talk about the Acelio and the Northeast.

So we have a lot of market share gains in the north and in the Middle East, too. So it is something that we are pretty much looking at volumes that were generated by our occasion expansion, industry expansion and market share gains. So that's pretty much it. So, having said that, the world is transforming.

It was amazing how we see the digital platforms really been adopted exponentially. It was really something that we didn't – it was like a 5-year plan that helped – that happened in 5 months. So we are – with Ze Delivery for a while now, and it really exponentially grew last year.

BEES is something that is more recent, is something that we are working for 18 months and then, but it is really – it was an explosion of adoption with our customers during last year. And in the end, a big difference of all the things combined in our RTM is really the – so the digital hook and the deliveries.

And so in the end, it's – so this is type of service that we are able to do from the highest north of [indiscernible] is really – our network is really granular.

And I think this is a different animal when we compare with the other options or what other industries are doing in terms of cash and carries or even other industries trying to get that reach. I think that's how the world will evolve. We have to be prepared with technology, with the evolution of the RTM, and we are very excited about it..

Just to supplement, specifically to your question around menu.com. This was an investment that we made a few years ago. We found a group of entrepreneurs that we were very impressed by and decided to partner together with them to develop a marketplace in the Brazilian market.

And I think 2020 was another year where they consistently managed to expand their presence in the market. And the more we work with them, the more opportunities we see to leverage the scale and the infrastructure of the broader Ambev organization, to help improve service level to clients across the country.

So, this is not just about menu.com and BEES and Ze Delivery. We also have Donus, which is our fintech start-ups that we've been investing behind as well.

So, we're really trying to create a menu, no pun intended, but a menu of options to serve better on the logistics side, on the financial side, on the products availability side so that we can ultimately deliver tangible benefits to our clients and our consumers. It's about an ecosystem. It's not just about one or the other..

Perfect. That’s very clear. Thank you..

Our next question comes from Thiago Duarte, BTG Pactual..

Hello Jean, hello Lucas. Good afternoon everybody. I have three questions, two of them focus on the digital initiatives and last one on the market. The first one, if you could talk a little bit about the BEES, particularly the BEES service and how that affects our commercial and go-to-market strategy.

I get the benefits of scalability, use of Big Data and the amount of services that you can put together to customers.

But I was wondering, in the past, our understanding was that one of the competitive advantages that Ambev had with the in-person presence in the point-of-sale was in terms of the competitive advantage that you built relative to the competition.

So, my question is how going digital and that platform may eventually cannibalize or even enhance the direct route strategy, whether it's detrimental or incremental to that that will be an interesting discussion? The second question is on Ze Delivery and the DTC initiatives, right? I know you're focused more on nominal dollar growth than margins, right? But you mentioned that one of the reasons for the increase in SG&A expenses in Brazil was because of the expenses related to this DTC initiative.

So, can you talk a little bit to us about how this platform stack up against your regular off-line business in terms of gross margin and SG&A, that would be an interesting point as well? And the third question is in your earnings report, you mentioned or you show in that chart that in Brazil, the share of off-trade channel in Brazil beer is back to 2019 levels.

So, back to pre-pandemic levels. So, can you talk to us a little bit about how that normalization of sales channel reflected in your packaging mix and brand mix or weather packaging and brand mix is also more normalized in the fourth quarter? Thank you..

Okay. Many questions here Duarte, let me see if I get all of them and if I miss something, you can add on the end. So, the BEES, so – and there was the question about menu first that I didn't get it right. So, BEES and menu are two strategies, two ventures that we are really working together to get this RTM revolution that we are proposing.

There is a nonlinear transformation of the RTM, thinking 10 years ahead and not the way we think it should be, okay? So BEES and menu, both are working helping us on that direction. Having said that, we don't forecast for now to lose the human contact with our customers.

I think – so what we are working very hard right now is really to upgrade and to evolve and to transform the role of the sales representative that it was in the past, pretty much order taking and some type of execution to a more business representative that has a lot of data in his hand and really can help our customers in category management, in more profits, in innovation, on technology adoption.

So, in the end, we are pretty much worked on a new approach, there is an evolving approach from we have today, but we continue with the human contact on the BEES, okay. Just talk about BEES a little bit. It centralized different services.

There's a 20-hour 7 days platform that creates customized touch point and it's really improved service level, and it's really helping to really digitalize our customers. And it's something that we thought it would take much more time, would be much more difficult.

But the adoption and with the sales representative there, the way we have been able to put the apps in our customers and made them use and then we have metrics about usage.

So, how many minutes you stay there in the loyalty programs and how many orders do you and if you follow delivery and we are really amazed by the way we were able really to make our customers pretty much adopt big time.

BEES is already a business, if we look at that business alone or that – or the channel or business, it's already with a GMV of BRL 20 billion annualize it when you look at that as – this is one thing. Second thing, it is about the Ze. So, in the end, so we know we are talking a lot about Ze.

I think Ze is something that is nonlinear for the Brazilian community in terms of beverage delivered. It solved many pain points. It was really something that – it really fits with the problems that we have in the pandemic, people looking for convenience, need to stay in that home. It has a great proposition.

And in the end, so we really believe that it's going to be a very accretive for our business because you have data, we have frequency. You have all the information that we have. And then we are in a moment that in this expansion, there is some customer acquisition on this expansion that impacts us a little bit.

But going beyond that part, we really believe that Ze is the way for us really to connect and get frequency. It's amazing how we are seeing. We really thought at some point in time that Ze would be occasion-based push. And what we are seeing is that when the customer really go in, it became a frequent customer that orders 6, 7 times a month.

It's really something about recurrence, big time, and we are very, very exciting about it. So, the last question, it was about RGB in off trades, RGB and channels, is it? So Q4, we saw a gradual re-opening of the country. In reality, this has been back and forth. So, it's some areas are reopened, some areas shut down.

We are seeing this back and forth, most of the time. And in this scenario continues very fluent with the restrictions, and this is on the municipality level. It's important to note, however, then the on-trade channel continue to reopen and channel mix is closer to pre-COVID, but that consumption occasions are still very impacted.

It's not because the bars and the mom and pops, they are open that four friends can go around the table and really get that occasion, there is socializing out-of-home. That occasion is still very impacted in the market. We don't see it coming. But we see bars, moms and pops really transforming themselves.

We are helping them on this project -- on this process. We are – so Ze is an app that we do through our customers, through the retail, supermarkets more market. So, it helps them – our customers to do this transformation.

Another thing is that we are really expanding this RGB 300 ml is [indiscernible] on a to-go strategy for the always more on trade of Brazil. So this is helping a little bit.

But the point there is, we still see many opportunity to see the location independent on the channel, that is socialized outside of home that is very accretive for us to come back. So this is still very limited..

Amazing, Jean. Thank you so much..

Our next question comes from Lucas Ferreira, JPMorgan..

Hi Jean, hi Lucas. Good afternoon everybody. You're giving a guidance of [indiscernible] increase in the COGS per hectoliter. So, I have two questions about underlines on the P&L for the year. So, Jean just discussed that Ze Delivery is still in a client acquisition phase for – to support its growth.

So, wondering if you guys can comment about the SG&A trends for this year.

If you still think that you should trend maybe slightly above inflation or relative to your regular revenues, how that should behave if you have room to some savings here and there? Or in future bringing new brands to Porto Alegre, you're going to have to speed up the marketing for those. How to think about SG&A? And the other question is on pricing.

First of all, how you see your price – the price point of your main brands relative to competition? Do you believe that there is room for some catch-up there or not? And how do you see the overall pricing for [indiscernible] this year given that not only you but everybody should be [facing corns pressure].

So, my question is that do you believe that we should be able to see cost growing above inflation this year or are you seeing inflation as your target? Thank you..

Okay. So, I'll get the last one first and then we go back to SG&A and a little bit of the COGS. So, as you know, we have been much more flexible, nimble and agile in implementing revenue initiatives and to approach market conditions to pursue healthy revenue. In the end, that's the objective, healthy revenue, combined with sustainable volumes.

And with this approach, our net revenue per hectoliter growth of 8% in Brazil beer in Q4, it was something that was based on this new strategy. And it can be broken down in three parts. So, we really started to taking price to recover inflation in Q3, end of Q3, in this process, it was rolled out through Q4 faced by 10 regions and packs.

So, this is something that it was an ongoing process during Q4. We believe that by the end of Q4, the relativities were pretty much on the historical range. But this process was something that we are really getting it phased in and nimble and flexible and agile. On top of that, we had a smarter way to do promotional activities.

It was – we used a lot this new – this concept of occasion based activations, cross promotions for consumers in different channels, and we are very happy because it was really effective in our Q4. And finally, we have – so this Q4, we had improved brand mix that it was really driven by, first, the sustained resilience of our core brands.

So that's something that we have to talk about. It is – so when you – we look like [Lasko] to end up the year with flat volumes, it's really something that it was a drag in the past and it's really helped us when you stabilize the core. We need to get all the innovation and all the premium has been accretive.

So a part of it, it was really improved brand mix with the innovations, global brands growth. So in the end, so that will continue to be the tone for 2021 where we have to approach the market in the same way.

So, the price is pretty much there when we connect with inflation and relativities the mix is – continues to be strong and the occasion based promotion activities, if we will be more nimble depending on how these things would evolve. So, having said that, let's talk a little bit about the margin side.

So, I just want to narrow more the margin discussion on beer – on Brazil, we are looking at last in Kaki already with recovering margins in 2021. Brazil is really the issue with the cash COGS of the [low 20s] that we just gave the guidance.

It's really about the currencies that we already talked about, the other commodities that really accelerated in Brazil. And the way for us really to manage that is really to continue this growth momentum.

So, this net revenue strategy that I've been talking around the own trade reopening is really something that we believe that in H2, more in H2, it's going to be something more resilient. The occasion, not the reopen, but the occasion, the socializing. And talking about sales and markets.

So, we are not going and lowering down our financial disciplines on cost and expenses. There are some bads. For example, Ze is a bad, but in the end, we are being much more effective on other fronts that are front more related with all this digital platform that we are creating on top of Ze.

There is, for example, that we just saw now that we're going to broadcast NBA and going to have all the data of everybody that has the passion for basketball and Budweiser will own this. So, it's a much smarter way for us to do this type of market.

And then we believe that this – that we'll be able – we'll not put lower the guard with sales and market. We're going to invest on the right things, but there are a lot of initiates for us to take moving forward outside of Ze, that's really a bad that we are doing..

Thank you, Jean..

Our next question comes from Rob Ottenstein, Evercore..

Great, thank you very much. Couple of things.

One, I wonder if you can give us a little bit more detail on how your premium portfolio is evolving and the strategy there and your ability to maintain or gain share in premium? And then the second, you talked a little bit about how you're helping your customers digitally, but I'm also wondering, a lot of the bars, restaurants, obviously, have been hurt badly because of COVID.

Are there things that you've done in terms of perhaps temporarily loosening up terms, working capital, assistance, any other assistance of a sort of a financial sense to perhaps strengthen your relationships and create greater degrees of loyalty? Thank you..

Thank you, Robert. So first of all, premium is really a long-term strategy in which we have to be patient – have to have patience really to build brands and to invest on brand power, brand equity, and we are taking a view, a strategy of a portfolio to do this as an important revenue stream for the future.

In this full-year, our global brands, 2020, continue to – with a very good momentum. It was a double-digit growth. It was a growth that we are comfortable in good, if we really make it for some years on that type of growth. So, there is a combination of global brands here.

If I would take out, for example, Corona, that it was a brand that we are, for a while investing that we were a little bit concerned because of the pandemic and the name and everything is really resilient and growing much ahead of our average of global brands.

Beck’s is really something that's doing very well, tripling and we had a lot of adoption on a lot of acceptation. So, I really am excited with our strategy.

Colorado is another brand that's doing very well to – if we take out the impact of the Colorado bar, so the brand is growing very well, very fast as a national craft that we have leader on the craft on the super premium side.

So, we had an issue this year pretty much on the domestic premium brands, pretty much Sertanejo, Original, that the brand Skol Puro Malte, really towards these brands – their own trade occasion really connected it suffered a little bit more on that.

But in the end, we are very excited about the consistency, the long-term view and the portfolio strategy approach that we are having with premium. I'm really excited about it. We're going to talk about it for a long because it's – I would be very consistent on that.

So, having said that, talking about restaurants, and yes, so it's a channel that is really suffering.

We really collaborate the most we could during the year with the National Bar Association with our customers have been flexible on payment terms, on delivery on healthy – kits – we gave some healthy kits for our restaurants, bars to be able to work safely. We elected one brand that was Bohemia to help on get a better margin for the trade.

So, it was the brand of the reopening to give a little bit more room for the profitability of bars. We are helping the restaurants with our digital platforms, big time. So, Ze Delivery is connected with 2,000 small clients, sometimes that's bars, sometimes restaurants. So, we help to make to – for them to have orders.

We are creating this – that I mentioned the are promotions for their bars and restaurants have a good strategy of to go to take away. So the RGB 300 ML. So, we really believe that we are in a good moment.

When we measure the customer satisfaction of this small trade, even though with all the service level that we had last year, and we still have because we are selling more than – less than we should because the supply chain is really stressed. When we measure the NPS, it was really something that changed big time from 2019 to 2020.

So, the feedback that we received from our customers, they are more – I have a better Net Promoter Score with my customers this year than last year..

Thank you very much..

And Robert jus to go back to the – Robert, sorry, just before you go. On your first question, if we just expand beyond Brazil, I also think it's worth kind of noting that our premium brands and the portfolio word approach that we're developing in other markets, right, also had a very good year in 2020.

So, if you go to places like Canada, right, where Corona and Stella Artois had a very solid performance on the brand power side and on the market share side.

If you go to Central America and the Caribbean, where you have Corona, Modelo Especial in some markets, Michelob Ultra also playing an important role of allowing consumers to trade up and increase the weight of premium volumes, right, as part of our total business in these markets. So, it's – obviously, Brazil is key to our business.

But the focus behind our above core, core plus and premium, is not limited to that. And I think the good news is that over the course of 2020, we managed to also build momentum in premium in other markets where Ambev is present..

Great. Thank you..

Get one or two more questions and we can go. Two more questions and it’s over. Two more..

Our next question comes from Olivier Nicolai, Goldman Sachs..

Good morning Jean, Lucas. Thanks for taking the questions. Two questions, please. After the very strong volume score that you have in Brazil beer in H2 and also the strong start that you have indicated for Q1. Could you please give us an update on your capacity utilization in Brazil? And then just [Technical Difficulty].

Olivier, you line is open. You may continue..

Hello can you hear me now..

Olivier, excuse, you may continue. Your line is open..

[Indiscernible].

Okay. We lost connection with Olivier. Our next question comes from João Soarian, Citi Bank..

Hi everybody.

Can you hear me okay?.

Yes..

Okay. Great. Just a very quick one on my side. Jean, Lucas, when I look into the cash COGS per hectoliter guidance that you gave, the 20%, 23%, I just wanted to understand how conservative that is in the sense that we should expect that a mix shift back towards the RGDs.

And if I recall correctly, the third quarter, you mentioned a very big impact, right, double-digit impact alone just from the mix shift. So, I understand if there is any upside that cash COGS and could it be smaller depending on the way that the mix shift behaves? And another question linked to that.

I remember that you talked about launching more RGBs into the off-trade and trying to kind of change the mix of the off-trade with innovation, with product launches in a way that you have been doing in your overall strategy. So, just trying to understand those two points..

[Indiscernible] the second one? So the first one, it is that – so yes, in terms of transparency, we decided to give a guidance that's a guidance that through everybody kind of put that on the models. And is the best number that we have. When we look today moving forward, it's true that is more related with FX and commodities.

And of course, if depending on the change in the recovery in the mixed channel, this can be better or worse. But we believe that this is the best forecast that we can do right now with the available information that we have.

So, having said that, so we are working big time on – if you think about, first of all, we are working big time to maintain our bar customers alive to transform them into a – in platforms that can be much more than the physical place. And they can deliver through them, they can have their to-go strategies, take away strategy.

And we have a big plan for returnable bottles in the half 3Q on the – what we can call small of trade or moms and pops that has this occasion that is something that we are betting that it should continue to gain traction throughout the year. So, that's what I can mention about the mix and the [indiscernible]..

Great. That’s great. Thanks guys. Thank you..

The question-and-answer session is now finished. Now I'll turn the conference over to Mr. Jean Jereissati for final remarks. Please, sir..

Okay. Thank you very much to be with us today. To wrap up, I just want to say that I'm very confident about our future. And I could mention three things, three reasons.

Although transformations take time and the environment remains challenging, our 2020 performance shows how fast we can adapt and our agility to get things done in the middle of a transformation. So, I was very excited. So, it was a year that we kind of did three years in six months. Our portfolio is in a much better place. We have momentum.

So brand power of our portfolio is healthy and growing. Innovation pipeline is strong. And our route to market is in a different place in terms of transformation, digitalization.

So this is – it will be – continue to be a competitive advantage edge that we want to continue to bet really digitalizing the platforms and really scaling all these digital efforts in a very quick way.

Another thing it is that cash generation remains strong, even though with all the ecosystem collaboration in all the – so the help that we did with suppliers and customers at some point in time during the pandemic.

But in the end, our cash generation remains very strong, and we remain committed to do the right things on the transformation with financial discipline to transform Ambev a better company in the future. So that was pretty much it. Thank you very much to you all, and have a good day..

Ambev's conference call is now finished. Thank you for your participation, and have a good day. Thank you..