By Brazil Stock Guide – During its third-quarter 2025 earnings call, Ambev S.A. (B3: ABEV3) faced pointed questions from analysts about Brazil’s weak demand, despite margin gains and tight cost control. The Q&A session revealed growing skepticism around the company’s ability to balance pricing power with volume recovery in a sluggish consumer environment.
Margins under scrutiny
Lucas Ferreira from JP Morgan said the market was surprised by the company’s positive COGS performance, given lower production and weaker volume leverage. COGS, or Cost of Goods Sold, represents the total cost of producing Ambev’s beverages — including raw materials, packaging, and factory operations. A lower COGS signals strong efficiency in production and logistics, which supports profitability even in a soft market.
CFO Guilherme Fleury credited “a series of initiatives we control,” including SKU optimization, verticalized production, and manufacturing efficiency. “We remain committed to delivering the lower half of our cash COGS guidance of 5.5% to 7%,” Fleury said, adding that productivity gains could “potentially allow further margin expansion” over time.
Climate and income weigh on demand
Henrique Brustolin from Bradesco BBI asked whether consumer enthusiasm was fading, especially in the North and Northeast. CEO Carlos Lisboa replied that the slowdown was cyclical, not structural. “About 70% of the industry’s decline is weather-driven — colder, rainier months — and the rest is linked to limited disposable income,” he said.
Lisboa emphasized that brand equity and category participation remained solid, but acknowledged that on-trade consumption, particularly in bars and restaurants, suffered the most from reduced consumer spending.
Price adjustments fail to lift volumes
Isabela Simonato from Bank of America questioned whether June’s price hikes had intensified volume weakness. Lisboa dismissed that correlation: “Price adjustments had no measurable impact on demand, as beer inflation remains in line with Brazil’s CPI.”
He insisted that accessibility remains a strategic priority. “Most of our consumers are middle- to low-income. Ensuring they remain engaged with the category is essential for long-term growth,” he said.
Efficiency and discipline remain priorities
Thiago Duarte of BTG Pactual asked if the 0.4% drop in administrative expenses reflected structural savings or merely lower bonuses. Fleury explained that Ambev’s variable pay adjusts naturally to company performance but said investment in sales and marketing continues.
“We keep investing in what matters — connecting brands with consumers — while maintaining strict cost discipline. That balance sustains our value creation,” Fleury said.
Premium momentum and diversification
Lisboa also addressed the company’s advance in premium and super-premium beer, noting that Ambev has gained 14 percentage points of market share since 2015, driven by a diversified portfolio strategy.
“From Spaten and Original to Stella Artois and Corona, each brand plays a complementary role without cannibalizing another,” he said. He also highlighted the strong momentum of the “beyond beer” segment — Bits, Brutal Fruit, and Flying Fish — which continues to grow at double-digit rates and acts as “a second engine of growth.”
Analysts flag short-term risk, long-term opportunity
Several analysts noted that while Ambev’s cost control is impressive, it may be masking underlying volume weakness. “The question is whether margins are sustainable once the climate normalizes,” one participant commented during the call. Fleury responded that structural efficiency — not temporary savings — explains the performance, adding that “the long-term fundamentals of the category remain intact.”
Lisboa also reiterated confidence in the company’s digital ecosystem, citing Biz Marketplace and Zé Delivery as “strategic tools” to improve revenue management and pricing elasticity. “We are learning faster, using data to anticipate consumer behavior, and that gives us a competitive edge,” he said.
Looking ahead to 2026
Concluding the call, Lisboa struck a cautiously optimistic tone. He said Ambev is “well positioned to capture upside” from next year’s FIFA World Cup, which could boost beer consumption across Latin America. “Our ambidextrous strategy — balancing operational discipline with innovation — keeps us resilient and ready for growth,” he said.
Read more: Ambev sustains margins as profits rise 7%
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