Welcome to the Anheuser-Busch InBev full year 2016 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, Chief Executive Officer, and Mr. Felipe Dutra, Chief Finance and Technology Officer. To access the slides accompanying today's call, please visit ab-inbev.com and click on the investors tab. Today's webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. If you should require operator assistance, please press star zero.
Some of the information provided during the conference 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 and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, see the risk factors in the company's latest annual report on Form 20-F, filed with the Securities and Exchange Commission on the 14th of March 2016, and on Form F-4 filed with the SEC on the 14th of November 2016.
AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. Please refer to the reference base press release dated 6th of January 2017, available on the company's website for important information about the company's updated 2015 and 2016 segment reporting. It is now my pleasure to turn the floor over to Mr. Carlos Brito. Sir, you may begin.
Thank you, Maria, and good morning. Good afternoon, everyone, and welcome to our full year 2016 earnings call. As usual, let me start with the highlights. In October 2016, we completed a combination with SAB, making us the first truly global brewer and one of the world's leading consumer product companies. By the end of 2016, we had also agreed to the terms on all key disposals resulting from the deal. We're delighted to welcome SAB's talent from the retained businesses and are also excited to further develop the long-term relationship with SAB's business partners across the globe. With respect to our 2016 results highlights, this was a challenging year, and especially difficult for Brazil. However, we delivered solid performance in many of our markets around the world. In the U.S., we grew our gross profit margin for the seventh consecutive year.
In Mexico, revenue grew by double digits this year. In Western Europe, our premiumization strategy generated strong financial and market share performances. Our three global brands, Budweiser, Stella Artois, and Corona, had another strong year, with combined revenues growing 6.5%. Our premiumization initiatives in both developed and developing markets have generated revenue per hectoliter growth of 4.5%. We continue to leverage our global scale to realize our dream of bringing people together for a Better World. We introduced our updated Better World platform in October 2016, focusing on three priority areas: a growing world, a cleaner world, and a healthier world. By completing our combination with SAB, we created the world's first truly global brewer with a leading position in eight out of the top ten biggest beer markets by volume. We have much to learn and gain from the sharing and embedding of best practices from both companies.
Category expansion framework, smart affordability, and the core lager toolkit are just a few examples of commercial learnings from SAB that are already being integrated into our ways of working. Our combined innovation capabilities and total understanding of the beer category in both developed and developing markets, together with our determination to see beer grow its relevance and attractiveness to consumers, position us for sustainable and profitable long-term revenue growth. We are updating our total synergy guidance to $2.8 billion per year at constant August 2016 exchange rates to be delivered in the next three to four years. This number is inclusive of the $1.05 billion of cost savings previously identified by SAB, of which $547 million had been delivered by the 31st of March 2016. An additional $282 million of synergies has been delivered between April 1st and December 31st, 2016.
We expect the delivery of these recurring synergies to require estimate one-off cash costs of approximately $900 million to be incurred in the first three years after closing, of which $158 million was spent in 2016. The fourth quarter 2016 was the first quarter of the combined company, this is reflected in our full-year results presented today. On that basis, total revenue increased by 2.4% in 2016, with revenues from our global brands growing by 6.5%. Revenue per hectoliter expanded by 4.1% on a constant geographic basis, driven by our revenue management initiatives and strong growth from our premium brands. Total volumes were down 2% on the year, with own beer down 1.4% and non-beer down 6.2%. EBITDA was roughly flat, down 0.1%, resulting in EBITDA margin contraction of 92 basis points to 36.8%.
However, as illustrated on slide six, the company grew EBITDA by 6.3% when excluding Brazil. Normalized earnings per share decreased to $2.83 from $5.20, mainly driven by unusual items to be explained later by Felipe. The board has proposed a final dividend of €2 per share for fiscal year 2016, bringing the total dividend for the year to €3.60, in line with the prior year. Our global brands are very complementary, providing us with the opportunity to connect with a broad range of consumers across multiple geographies and consumption occasions. Last year, revenues of our global brands grew by 6.5%, well ahead of the growth of our total portfolio. Budweiser revenues grew by 2.8%, driven by Brazil and the U.K. Stella Artois revenues grew by 6.3%, with solid performances in the U.S. and Canada.
Corona led the way as revenues grew by 14.3%, with especially strong performances in Mexico, U.K., Chile, and China. These results are underpinned and fueled by consistent global messaging and market activation. We believe this portfolio of complementary brands has the strength to be marketed worldwide, capitalizing on common values and experiences that appeal to consumers across borders. In order to accelerate top-line growth, we have developed a deep understanding of consumer needs and occasions, enabling us to identify four commercial priorities. These four priorities, with which you are familiar, have been significantly enriched by know-how gained from SAB and remain relevant across our expanded geographic footprint. Growing our global brands involves leveraging the potential of Budweiser, Stella Artois, and Corona. Premiumizing and invigorating beer by bringing new energy and variety to the beer category to ensure it remains exciting and aspirational, especially among young adults of legal drinking age.
Elevating core lager by increasing its appeal to more consumers through differentiated messaging and large-scale activations to raise the perception and relevance of this important segment. Finally, developing the near-beer category, which allows us to compete in a wider range of occasions by providing innovative choices, including low and no-alcohol beers to our consumers. These four commercial priorities are applicable in all geographies in which we operate, although depending on the attributes of each specific market, some of the priorities may be more relevant than others. You should have a better understanding of this concept once I take you through the results in more details. Let's start with North America. All volumes in North America declined by 1.6% this year, while revenue increased marginally. Our revenue per hectoliter grew by 1.8%, driven by revenue management initiatives and continued premiumization of our portfolio.
EBITDA grew by 2% with margin expansion of 76 basis points to 39.8%. In the U.S., we estimate industry sales to retailers, STRs, declined by 1% in 2016. Our own STRs were down 2% on the year, resulting market share loss of approximately 50 basis points. Based on our estimates, an improvement versus last year's decline of 65 basis points. Our U.S. business delivered solid financial performance, expanding gross margin by over 220 basis points, the seventh consecutive year of margin growth. EBITDA grew by 2.2% to over $5.5 billion, with a margin expansion of 84 basis points to 40.1%, as increased sales and marketing investments were more than offset by lower cost of sales result due to favorable commodity prices and further brewery efficiencies. Our business in the U.S. has continued to improve, we're not fully satisfied with our results.
We'll continue to invest efficiently behind proven initiatives and new partnerships to restore net revenue growth and further improve EBITDA performance. Given the scale and sophistication of the market, it's not surprising that all four of the commercial priorities are relevant to our U.S. business. In the case of the U.S., growing our global brands means a deep focus on Budweiser and Stella Artois. Budweiser's consistent marketing campaign around the brand's quality and heritage credentials continues to resonate with consumers, and the brand has stabilized its recent trends, with STRs declining by mid-single digits in the quarter and full year. Stella Artois has been performing very well, consistently ranking one of the top five best-performing brands in the U.S. and reaching all-time highs in awareness, considerations, and penetration this year. Our craft portfolio, as well as Stella Artois, play key roles in premiumization and invigoration of beer.
We're a leader in the high-end segment and continue to gain share. We have built a winning craft portfolio through our local, regional, and national brands, with a combined portfolio of regional craft brands growing over 30% last year. We believe we have the right portfolio of brands in place to sustain growth for years to come. Elevating our core lager brands, Bud Light, Budweiser, and Michelob ULTRA, is our top priority in the U.S. In 2016, we put significant resources behind Bud Light with the Bud Light Party campaign, our NFL execution, and new visual identity, which improve our brand's perception. However, our efforts did not translate into improved volume and share performance, as STRs declined by mid-single digits and the brand lost approximately 50 basis points of share in the year.
In 2017, Bud Light is going back to its roots with a new campaign called Famous Among Friends, which was developed in partnership with our wholesaler network and the agency. Turning around a brand the size of Bud Light takes time and requires discipline, and we remain committed to doing exactly that. Michelob ULTRA had a great year in 2016 as the fastest-growing beer brand by absolute volume growth and share gain in the U.S. market. The brand's core plus positioning, low carbs and calories, and exceptional taste are powerful differentiators from the rest of the beer category. We're investing to support the continued acceleration of this brand that still has a lot of room to grow. We believe we're on the right track in the U.S. and look forward to executing our plans for 2017. Moving now to Latin American West.
Volumes in Latin American West grew by 6% this year, driven largely by strong performance in Mexico. Revenues grew by 9.3%, with revenue per hectoliter increasing by 3.1%. Our EBITDA increased by 5.6%, with margin contraction of 160 basis points to 45.8%. Mexico recorded a very strong performance in 2016, with volumes up high single digits and revenue growing by double digits. Our EBITDA grew by high single digits. Growing our global brands in Mexico entails focus on Budweiser and Stella Artois, which are both showing very good growth from a small base. Of course, Corona plays a very important role in Mexico, but just like Budweiser in the U.S., Corona is a core brand in its home market. Premiumizing and integrating beer involves driving the Modelo brand family and enhancing our premium portfolio with international and craft brands.
Michelob ULTRA has posted high growth in this space as we continue to focus on increasing the brand's awareness. Elevating our core lager brands is key for Mexico, with Corona, Bud Light, and Victoria leading the way. Corona had a strong year in 2016, achieving all-time high preference metrics among both the total population and among young adults of legal drinking age. Bud Light continues to grow by double digits, and this year, we leveraged our NFL partnership in Mexico through special edition cans launched alongside the NFL game played in Mexico City. In the near beer segment, we've launched Vicky Chamoy, our approach to the typical mixers made in Mexico, combining beer, tomatoes, salt, and lemon. It's a natural extension to the Victoria brand, identifying identity, highlighting Mexican heritage, and is off to a strong start. Moving now to Colombia.
In Colombia, we saw volume decline in the low single digits since change of control in October 2016. Revenue grew by mid-single digits due to our revenue management initiatives. All three of our global brands are present in Colombia following the launch of Stella Artois in 2016. We're excited about the opportunities for these brands in Colombia following the close of the combination with SAB, as we can now leverage the scale of our operations to further develop our global brands. Our Club Colombia brand family enables us to premiumize and integrate beer, and is doing well, having grown volumes by double digits in the fourth quarter. This year, we launched Club Colombia Trigo to continue building a strong portfolio of appealing variants for the consumer. Elevating core lager in Colombia focuses on Aguila and Aguila Light, both of which executed new campaigns this year.
In the near beer segment, we launched Redd's Apple Ale, targeting social out-of-home occasions. Turning now to Latin American North. 2016 proved to be one of the toughest years in our history of operating in Brazil, our largest market in Latin American North. Volumes in the region declined by 5.9%, with revenue down 3.9%. EBITDA declined 16.7%, with margin contraction of 686 basis points to 44.3%. In Brazil specifically, we saw the industry decline by 5.3% this year, given a challenging consumer environment characterized by rising unemployment and a decline in real disposable income. Our beer volumes declined by 6.6%, while our non-beer volumes declined by 6%. Our beer market share declined to 66.3%. Our revenues declined by 5.3%. EBITDA was down 19.9% this year, with margin contraction of 827 basis points to 45.3%, driven by the top-line result as well as adverse ForEx impacts on our cost of sales.
While the macroeconomic environment has been challenging, we remain cautiously optimistic about the outlook for the Brazilian beer industry. We are confident in our ability to recover and retain market share over time, given the strength of our brand portfolio. Notwithstanding current challenges, we remain committed to our commercial priorities, which we view as essential to capitalizing on long-term opportunities in Brazil. All three of our global brands have an important role to play in accelerating the further growth of the premium segment and driving positive brand mix. Budweiser had an especially good year with double-digit growth. Our global brands, supported by our portfolio of domestic premium and craft brands, also played a critical role in premiumizing and integrating the beer category in Brazil. Elevating core lager is extremely important in Brazil and requires sustaining and further improving brand health metrics of Skol, Brahma, and Antarctica.
This year, we refreshed Skol's packaging and visual identity to highlight its iconic logo. Finally, we're very excited about the opportunities to reach consumers in new occasions by nurturing expansions of the near beer segment. One example I would highlight is the success of the Skol Beats brand family. It grew double digits this year with volumes that are largely incremental to our existing portfolio, and saw a successful launch of the new Skol Beats Secret line extension. It was a tough year, but we remain committed to an attractive Brazil market and believe we have the right strategy to get the business back on track. Moving now to Latin American South. Volumes in LAS declined by 5.6% this year as a difficult macroeconomic environment in Argentina resulted in consumption contraction. Revenues grew by 16.9% as a result of pricing in line with inflation, as well as revenue management initiatives.
EBITDA grew by 23.4%, with margin expansion of 263 basis points to 50.2%, as a result of the top-line growth as well as disciplined cost management. Although the tough situation in Argentina negatively impacted our results in LAS, it is worth noting that both Paraguay and Chile recorded all-time high volumes in 2016. Turning now to EMEA. Our volumes declined by 2.4% in EMEA this year. Our revenues grew by 4.2%, largely driven by the growth of our premium brands in Western Europe, where we also grew market share in six out of our seven markets. EBITDA grew by 3.7% with margin contraction of 14 basis points to 29.5%. Our beer volumes in South Africa declined by 5% in the fourth quarter as a result of macroeconomic weakness and a sizable price increase due to currency and commodity headwinds, which also resulted in an EBITDA decline.
Our premium brands, Castle Lite and Flying Fish, delivered solid volume growth. With respect to our global brands, we are pleased to have already launched Stella Artois and Corona in January, with plans to launch Budweiser later this year. Castle Lite leads our efforts to premiumize and integrate the beer category. With packaging innovations designed to make your beer colder in half the time. Elevating core lager entails growing our largest brand in South Africa, Carling Black Label, as well as Castle. Innovations such as Brutal Fruit Cranberry Rosé and Redd's Rosé are paving the way to the near beer segment development. Moving now to Asia Pacific. Our volumes in APAC declined in the full year by 1.2%, though revenue grew by 1.5%, driven by brand mix. EBITDA grew by 5.4% with margin expansion of 99 basis points to 27.1%.
In China, industry volumes declined by approximately 3.8% in 2016, with most of the impact being felt in the value and core segments. Our own business, which is more focused on the core plus and premium segments, performed better than the industry, with total volumes down 1.2% in the year. Revenues grew by 1.3% in 2016, driven by continued premiumization initiatives, while EBITDA grew 6.6% this year, with margin expansion of 117 basis points to 23.8%. In China, growing our global brands, premiumizing, invigorating beer, and elevating core lagers are the most relevant of our commercial priorities. Future growth in China is expected to come from the core plus, premium, and super premium segments. These segments now account for more than 50% of our total China volumes, over-indexing to the industry. Budweiser, the leading premium brand in China, has successfully activated Chinese New Year for many years.
This year, we launched a Halloween campaign that led to enhanced brand preference, increased volumes, and lots of dollars in earned media. Stella Artois and Corona are in the super premium segment in China, which has nine times the gross margins of the core value segments. Stella Artois focused on urban centers to grow the brand, highlighting the food and savor occasion at Western restaurants. Corona made strides growing brand awareness and penetration this year, with volumes up over 50%. Much of this success was due to the Corona Sunsets music festival activation, which was
Ladies and gentlemen, today's conference will resume momentarily. We are having technical difficulties. Please hold. Ladies and gentlemen, we are experiencing some technical difficulties. Please hold, the conference will resume momentarily. Sir, you may begin.
Hi. I don't know exactly when I lost you guys, I was talking about the selling Corona brands in China. Corona growing 50%. A lot of the success based on the Corona Sunsets Music Festival activation. Over 6.5 million people tuned in to watch the stream, with an additional 30 million people listening on the radio live stream. With respect to elevating core lager, Harbin Ice is our flagship core plus brand, bringing fun and energetic experience to our consumers. A more premium Harbin wheat variety called Harbin Baipi was also launched this year with great momentum, which will help premiumize the Harbin brand. I'd now like to move on to our Better World initiatives as we continue to work toward our dream of bringing people together for a better world.
In October 2016, we introduced our updated Better World strategy, aligning our environmental, social and community efforts around three core principles to make the world a better place. Our ambition for a growing world gives everyone the opportunity to improve their livelihood. Some of the initiatives from this past year include the 4E Small Retailer Support Program, which has helped over 20,000 shopkeepers in 6 countries in Latin America develop the skills they need to improve their business sustainability and quality of life. Our Smart Barley program, which has worked with over 4,500 growers in 9 countries to cultivate the highest quality barley with the best yields and lowest costs. Additionally, agriculture is a critical source of income and livelihood in a number of markets across Africa.
We're working to make beer an affordable alternative to unhealthy, informal, or illicit alcohol by brewing beer from local crops grown by smallholder farmers. In a cleaner world, our natural resources are shared and preserved for the future. This year, we continue to sell our Buy a Lady a Drink program with Water.org. Which aims to tackle the global water crisis and has helped provide clean water to nearly 800,000 people in the developing world. We also continue to scale our water stewardship efforts by engaging in watershed protection partnerships with local stakeholders, focusing on high-stress areas across multiple countries. Additionally, we're proud to have delivered on many of our 2017 environmental goals early, including improving water and carbon efficiency in our breweries and rolling out eco-friendly coolers with our retailers. In a healthier world, every experience with beer is a positive one.
This year, we continue to make progress on our global Smart Drinking goals, empowering consumers to make Smart Drinking choices and change behaviors by shifting social norms. One of our goals is to have low and alcohol beers represent 20% of our global beer volumes by 2025. In 2016, we launched no alcohol varieties of several brands, including 0.0% ABV global brands, Budweiser Prohibition in Canada and Corona Cero in Mexico. We also established the AB InBev Foundation in 2016 with a commitment to help address harmful alcohol use and spread ideas for advancing broader health and social issues.
Ladies and gentlemen, we are experiencing some technical difficulties. Please hold and today's call will resume momentarily. You are live, sir.
Sorry, everybody, and thank you for your patience. In a healthier world, every experience with beer is a positive one. This year, we continue to make progress on our global Smart Drinking goals, empowering consumers to make Smart Drinking choices and change behaviors by shifting social norms. One of our goals is to have low and alcohol beers represent 20% of our global beer volumes by 2025. In 2016, we launched no alcohol varieties of several brands, including 0.0% ABV global brands, Budweiser Prohibition in Canada and Corona Cero in Mexico. We also established the AB InBev Foundation in 2016 with a commitment to help address harmful alcohol use and spread ideas for advancing broader health and social issues. With that, I'll now hand over to Felipe. Felipe?
Thank you, Brito. Good morning, good afternoon, everyone. I will start from slide 26 with a summary of our normalized earnings per share performance in 2016, and then drill down into some of the other line items. Normalized EPS declined from $5.2 per share in full year 2015 to $2.83 per share in the full year 2016. $1.87 per share or 79% of the year-over-year change resulted from changes outside the ordinary course of business. $0.74 per share resulted from the funding of the SABMiller combination prior to the closing of the transaction and full consolidation of SABMiller in the group's results. $0.39 per share resulted from foreign exchange non-cash gains on U.S. dollar cash held in Mexico in full year 2015 that did not reoccur in full year 2016. $0.74 per share relates to year-over-year changes of the non-cash mark-to-market adjustments relating to our share-based payments.
Year-over-year changes in the ordinary course of business include the SABMiller results since completion of the combination and the post-closing acquisition funding cost. The net negative impact on our normalized EPS of $0.50 per share in the ordinary course of business is largely due to the foreign currency devaluation of $0.60 per share. We now turn to the net finance costs, where net finance costs for the year were just over $5.2 billion, compared to about $1.2 billion last year. This variance was driven primarily by the additional net interest expenses resulting from the bond issuances in early 2016. Additionally, other financial results include a negative mark-to-market adjustment of $384 million linked to the hedge of our share-based payment programs, compared to a gain of $844 million in 2015, a negative swing of just over $1.2 billion.
Foreign exchange and hedging activities in the fourth quarter this year led to a negative impact of over $300 million. Additionally, we experienced a non-recurring net finance cost this year of over $3.3 billion. Non-recurring net finance costs include a negative mark-to-market adjustment of over $2 billion related to the portion of the FX hedging of the purchase price for SABMiller that does not qualify for hedge accounting under IFRS rules. We also recognized a negative mark-to-market adjustment of $304 million resulting from the derivative instruments entering to hedge the deferred share instrument issued in a transaction related to the combination with Grupo Modelo compared to a gain of $511 million in 2015. A negative swing of $815 million. The normalized effective tax rate for the year was 20.9%, an increase from 19.1% in 2015.
This increase is mainly due to the mark-to-market losses linked to the hedging of our share-based payment programs. We expect a normalized effective tax rate in full year 2017 to be in the range of 24%-26%, excluding any potential gain or losses on the hedging of our share-based payment programs. This guidance includes the impact of the change in the country mix following the combination with SABMiller and the expected tax consequences of the funding of the combination. It also recognizes that incremental earnings tend to be taxed at the maximum marginal corporate rates. We now have a debt maturity profile, which we consider to be conservatively staggered over the medium term at an attractive overall cost of debt, allowing for a clear path to deleveraging without being dependent on capital market transactions for debt rollover. Our business remains highly cash generative.
Our tried and tested model of working capital management again saw improvement in core working capital in 2016. Excluding the impact of the SABMiller acquisition, core working capital reached an average of 15.2% in 2016. The board is proposing, subject to shareholders' approval, a final dividend of EUR 2 per share, which combined with the interim dividend of EUR 1.6 per share paid in November last year, would lead to a total dividend payment for the fiscal year 2016, in line with last year, of EUR 3.6 per share. Expected dividend payment dates for each of our listings are shown on page 19 of our press release. Our capital allocation objectives are unchanged. Our optimal capital structure remains a net debt to EBITDA ratio of around two times.
Our first priority for the use of cash will always be to invest behind our brands and to take full advantage of the organic growth opportunities in our business. Deleveraging to around two times remains our commitment, and we will prioritize debt repayment in order to meet this objective. M&A remains a core competency, and we will always be ready to look at opportunities when and if they arise, subject to our strict financial discipline and deleveraging commitment. Our goal is for dividends to be a growing flow over time, consistent with the non-cyclical nature of our business. However, as I said before, given our emphasis on deleveraging, dividend growth is expected to be modest in the short term. With that, I will hand back to the operator for the Q&A section. Thank you.
The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up. Again, if you have a question or comment, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We do ask that while you pose your question, that you pick up on your handset to provide optimal sound quality. Thank you. Our first question is coming from Simon Hales of Barclays.
Thank you. Good morning, Felipe. Good morning, Brito. A couple of questions then, please.
Morning.
Firstly, just on the increase in the cost synergy and savings target, are you able to provide any granularity of perhaps which buckets that you identified for the previous cost savings, where the incremental is coming from the analysis you've perhaps done and the integration that you've seen so far? With that, you've talked about delivering that full $2 billion of further savings that are still to come over the next three to four years. Any idea about how we should think about the phasing of those savings? Then just my second one, just on your CapEx guidance, Felipe, it's a little bit lower than I would have thought for 2017. What's driving that reduction in CapEx this year, and how should we think about CapEx perhaps moving over the medium term for the combined group?
Hi, Simon. In terms of synergies and your first question, the additional synergies will come basically from a couple of areas. First, reverse synergies. Again, we prepared for 11 months in terms of integration planning, but we have been now five months managing the new company. As we learn more about some of the practices from our new colleagues, we learned that some of those practices could be reinjected in our old footprint, and that is what we are calling reverse synergies. A little bit comes from that. A little bit comes from procurement. When you do integration planning, you have the procurement contracts in clean rooms. Therefore, after closing, we are able to look at those contracts and see that there were further opportunities right there in just comparing contracts between the two companies. The third area of opportunity is the whole thing about ZBB.
Once you get more granular, you start with broad assumptions. Once you get into the business, you grow more granular, and that is when sometimes you find more from non-working money that could be shifted to working dollars. That is what gave us the additional $350 million and got us to 2.8 as a total number of synergies. In terms of the synergies, we said these are to be captured in the next three to four years, and that is what we said about timeline for those.
On the CapEx piece, there are two elements. The same way currency is a headwind for the translation of our results as seen in our EPS, for example. It becomes a tailwind for the local currency CapEx investment. Therefore, the US dollar number tends to go a bit down, given the currency devaluation of last year. Secondly, we are really prioritizing CapEx. In the short term, taking into account the deleveraging commitments, of course, not putting our business at risk, being more selective on the investments.
Okay. Thank you, gentlemen.
Thank you.
You're welcome.
Our next question comes from the line of Trevor Stirling of Bernstein.
Hi, gentlemen. One question from my side, please. Brito, I guess looking at Brazil and looking back at Brazil now compared to where we were a year ago, I think it's turned out to be much more tough than you expected. With hindsight, is there anything you'd do differently in Brazil?
Hi, Trevor. I think you have a good point. Brazil has had two years, 2015 and 2016, of negative GDP or GDP contraction, two years in a row of three-plus %. In the first year, we were able to balance things out because consumers are not as under pressure as they were, and taxes and the currency, because of our hedging policy, was still not hitting there. In 2016, all those things came together. Second year with GDP contraction, unemployment going up, inflation going up, political turmoil, the currency devaluation hitting our COGS, and states looking for revenues and increasing taxes. All that came at once, and it became very hard to pass this through prices, and that's what, especially in the second half of the year.
That's what you saw, consumers under pressure, our business under pressure because of lots of state taxes being put into the business and also a lot of COGS escalation because of currency. Because we're committed to the long term, Trevor, I don't think we would have done much different, because on the other hand, what gives our people confidence that we're in this business for the long run is that even in the tough year, we don't cut investments that are there for the long term or mid-term. I'll give you a couple of examples. In Brazil, in 2016, we continued to invest heavily in the returnable glass bottle opportunity. Consumers are looking for out-of-pocket price points, and returnable bottles, different sizes, can afford them those price points at margins that are good for us and price points that are attractive to consumers.
We didn't for a minute blink on those investments, and we invested every time we saw an opportunity. Another thing is general market assets. For example, sponsorships that we had lost some years ago to some of our competitors, given inflation, those costs rose a lot. At some point, we thought those are not worth it. They got those things. Now in a crisis environment, a lot of those properties came back to the market, shopping for buyers and sponsors at a much more reasonable price, and we could get much better conditions for longer periods. On the people side, we continued to hire trainees and MBAs from the best schools, when a lot of companies paused to wait for what was to come. I think that's what gives us confidence and also give confidence to our people that we're owners.
That is, we're committed to the long term. It's not going to be because of one bad year that we cut everything just to make that year's number, and then start the next year with a big liability because of cutting things that should not have been cut. I think that's the hallmark of the company. Of course, if we knew that they would be this bad, I'm sure we could have faced things in a different way. We could have done things in a different way, but nothing that would put our business in risk, in terms of long run, and nothing that would put us away from getting and pursuing big opportunities like returnables, assets, sponsorships, that make sense for the business at much better prices.
Thank you, Brito.
On the other hand.
One follow-up.
Yeah, go ahead.
Sorry, go ahead, Brito. Apologies.
Go ahead. I thought that was your last question. Go ahead, please.
The follow-up question, Brito, is just in Brazil, two of your competitors potentially going to combine. Do you think that will create anything, any changes in the competitive environment for better or for worse?
Well, Brazil is a very competitive market as we know it, and these two competitors are competitors that are already in the market, so they're not new to the market. Of course, the fact that they combine is something new. It will give them more scale. Again, it's a competitive market. We're used to competition. Just to follow up from your first question, on the other hand, when we look at 2017, with the public information we have, not giving any guidance, but when you read what's out there in terms of macro numbers and what economists are saying and predicting, we see some facts and some predictions. We see, for example, that inflation continues to go down. That's a good thing for consumers in general and for us. We see that the economists are talking about our GDP to be flat after two consecutive years of decline.
Again, not great news for GDP, but much better than we had in the past two years. Employment also being forecasted to start reverting in the second half of the year. As a consequence, disposable income likely to resume growth towards the end of the year, again, after two very tough years. In this environment, that's where we said about being cautiously optimistic about Brazil in terms of beer industry for 2017, especially for the second half of the year. Along with that, you have the COGS, per hectoliter, that will evolve throughout the year, given that we had our hedges in place, and those hedges will get to a better place as we go through the quarters, especially in the second half. That also will benefit the year.
On top of all that, the fundamentals of the Brazilian industry in which we've been operating now for 30 years remain the same. We have very favorable demographics. We have regional disparities that are beginning to close more and more, and per capita consumptions in some of those regions coming up, middle class growing, and consumers are very open for innovation and premium and global brands. I think those are all true. It's not one bad year or two years that will change that. You put the 2017 predictions and facts that we see with these fundamentals that have always been there. In our experience in operating in this market, it's a great market. We've always been bullish about Brazil. We remain of the same opinion.
Thank you very much, Brito.
Thank you.
Our next question comes from the line of Chris Pitcher of Redburn.
Thank you, Brito. I know you don't disclose sales and marketing now at the regional level. It came in slightly ahead of my expectation at the company level. I'm wondering if you're able to say, versus the previous guidance you were giving of high single digits, low double digit, where that sales and marketing grew this year. In relation to that, specific to something like a Bud Light, at what point do you take the view that more money and more investment isn't the solution on these brands? Are we at a sort of level of peak sales and marketing investment, or will you keep spending until such time as that stabilizes? Thank you.
Two things on that. Last quarter, and in total align with the guidance we gave for 2016, which was sales and marketing for the total company growing high single to low double digits. I can say that we are within that guidance for the year and that we said more. We said in the third quarter, last quarter, we said that because of that guidance for the year, that the fourth quarter for sales and marketing would be essentially flat to the fourth quarter 2015. That we are in that guidance. That's your first question. In terms of Bud Light, what's happened in the U.S. is the two-prong approach to sales and marketing money. Yes, we continue to invest behind Bud and Bud Light because those are very important as core lagers for us in the U.S.
A lot of the new money that we're putting in the business are going towards Michelob ULTRA, Stella Artois, the craft portfolio. New initiatives that are really forming the portfolio we need for the next many years. It's a combination of those two things. We could have opted, for example, in taking money out of Bud and Bud Light to feed the new initiatives, to continue to support the new initiatives. We decided, given the complexity of the market and how competitive it is, that it was time to keep the investments behind Bud and Bud Light and grow investments in things that are really working well, like Michelob ULTRA, the highest growing brand in the U.S., Stella, among the top five in the U.S. in terms of growth, and our craft portfolio that is growing ahead of the craft industry.
That's the makeup of our portfolio and resource allocation within sales and marketing in the U.S. market.
As a slightly tangential follow-up question. You always cite timing of Carnival in Brazil as an important driver of beer volumes, how early it is and how late it is. Given the fact that you nearly had three-week later Carnival this year, have you seen the benefit? Can you say whether that rule should still apply, that you've had the longer summer period and therefore that should benefit consumption versus last year?
Well, we're not talking about 2017 here, you're right. In general, that's the rule. A later Carnival is pretty much connected to the end of the summer period. When kids go back to school, when people go back to work. A late Carnival signals normally that the summer will be a bit more stretched, which for our business, being a seasonal business, it's very good. That's the rule, sorry, I won't comment anything on 2017. That's the rule, you're right.
Okay. Thank you very much.
Thank you.
Our next question comes from Andrea Pistacchi of Citi.
Yes, hi. I have two questions, please. The first one on the volumes in some of the new SAB markets you're in were softer than expected or maybe softer than recent quarters. In particular, I'm referring to South Africa, Colombia, Australia. Now considering the macro and the market dynamics there, do you see this volume weakness as a quarterly one-off or something that may last a little longer? Were there any phasing issues anywhere that may have affected volumes? In particular, could you talk a little more on Australia? The second question is on your other operating income, which declined in the quarter quite sharply in China and in Brazil as you got less government grants. How should we think, without going into guidance, and you haven't guided on this line, how should we think about this income going forward?
Will an improvement depend on recovery in top line in those markets, or should we think as Q4 level as a sort of new base?
Andrea, in terms of softer quarters for some of the new territories, I can make a couple of comments here. For example, in South Africa, what happened there, and we mentioned that, is that we had to put a higher price increase, higher than average because of the pressures from commodity and foreign exchange, and that, of course, impacted volume. Again, we're new to those markets, but I see this as something that happened this year because it happened in emerging markets in which the pressure was there in terms of COGS. That's the explanation for South Africa in terms of softness of the beer volume. In Colombia, it is fair to say that Colombia was up against a very tough comp from last year. I don't know if you remember from last year, but there was the El Niño effect. Volumes were up by 15% last year.
We were cycling a 15% volume growth in Colombia. That was really tough to beat. In Australia, despite a soft fourth quarter, we had an amazing year. Australia, everything worked. The innovations, we gained share. The financials were good. It's an amazing market that we're using more and more to learn from how to manage developed markets. Because in Australia, they got the core lager brands to grow. They did amazing things on easy drinking lager brands together with, now with Corona, Stella Artois and Budweiser, that it's back and in good shape. It's going to be very interesting to see what our Australian colleagues are going to be able to do because they had a base business that was in very good shape, and now they're getting the import business which is also in very good shape. We have high expectations for Australia.
Again, the year 2016, despite the soft last quarter, was a great year for Australia, and we gained share in the market. In terms of your second question about incentives, just general points, and Felipe can jump in. General points is, in terms of China, incentives are very linked to CapEx investments. Of course, as some of those CapEx investments come due, investments are also coming due, and it's also a lot to do with the industry growth. The industry is accelerating. We could see less capacity expansions, and that's directly connected to government incentives. That's for China. In Brazil, the drop in fiscal incentives, 75% of the drop had to do with volume and revenue coming down. A lot of those incentives are connected to sales. As you sell more, the incentives go up. As you sell less, incentives go down.
The remaining 25% has to do with incentives that expired. 75% had to do with volume and top line that did not grow, contracted. That is what happened behind those incentives in China and Brazil.
Okay, thanks.
Thank you.
Our next question comes from the line of Komal Dhillon of JP Morgan. Komal, your line is open. Make sure you're not on mute.
Hello?
Yes.
Hi, Brito, Felipe. Just two questions from me, please. I'm just wondering, a technical one on Castel. You've allocated EUR 2 billion of goodwill to the company or to your stake in the company. What market assumptions have you made to arrive at this, given ongoing challenges for the industry in Africa? A follow-up on Simon's earlier question on CapEx. We got the 2017 guidance, how should we be thinking about it in the medium term? Is this the new level, about 6%, 7% of top line? Thank you.
Hi, Komal. I'll tackle the first one. CapEx, the guidance we gave is for 2017, at this point, we're not giving any guidance in terms of more of a medium-term CapEx or anything like that. As Felipe said, CapEx for 2017 was benefiting or benefited or will benefit from the same currency that impacted EPS in a negative way, will impact CapEx expenses or expenditures in a positive way. Also because of our deleveraging commitment, as Felipe said, we're being very selective in which CapEx to prioritize. That's for CapEx. In terms of Castel?
In terms of Castel and overall goodwill allocation, as we do for associates, we did a valuation based on multiple, and we adjusted for our minority stake. Accounting-wise, that is how it was done under IFRS.
Would you be able to give us an indication of the comparable multiples you used?
Unfortunately not.
Okay. Thank you.
Thank you.
You're welcome.
Our next question comes from the line of Anthony Bucalo of HSBC.
Hi, Felipe.
Hi.
Quick question on Africa. The numbers were a little bit uneven this quarter. They didn't look great. That market is a bit of a blue water for you and your organization. Could you give some color on what's going on in the integration in terms of maybe personnel retention, maybe a cultural standpoint? Maybe give some background on maybe something you've learned about that market since you've taken it over formally.
I think it's only Brito here. It's a new market, it's a very exciting market. A market that's very similar to other markets where we operate in Latin America and Asia, in which best practices then can be exchanged in a more efficient way. Of course, every market in Africa is a bit different given stages of development of beer market, of alcohol beverages in general, or just the macro situation in general. When we go into a new market like this, we tend to learn first before we change anything. In terms of back office, the changes are done quickly because those are things that have nothing to do with the markets in general. Everything that touches the market, we of course listen first, learn first, and then apply best practice across. That's the stage we're in.
Again, what happened last year in Africa was a big pressure from commodities, currencies. Prices had to be higher than normally they are. Consumers under some pressure, and volumes therefore, as a consequence, being negative territory. That was South Africa. In other markets of Africa, volumes are up, like Nigeria and things that we're not really giving much detail. Don't take South Africa as a template for the rest of Africa. In terms of turnover, we have the people, in most of the SABMiller business, the acceptance to our offers were very high. People got very excited about the new company and what we can do together. Africa was no different. What you've seen in Africa is that in South Africa, we had a voluntary, it's called SOV.
It means voluntary severance. That was implemented in accordance with the agreement we had with the government in approving our change of control in South Africa. That was something that was necessary because as we changed ways of work and center of gravities from country to zones, some people adapt better than others, and we provided an exit for some of the people that wanted to leave. That only applied to middle management and above. Again, because the talent pipeline was very good, even some senior people that left, a lot of them for retirement, we had some very good young people to promote. That was the exception. Most people are staying with us in all geographies of SABMiller, and that's what encourages us because the knowledge is retained, and the dream was big enough to excite old colleagues and new colleagues.
You're feeling pretty confident going forward, Brito?
Yes. Pretty confident. We like what we see. The integration is doing well. Again, one thing, Tony, that I said once or twice in the past is that this integration, compared to the last two we've done in the U.S. and Mexico, is very different and much better because the markets are more similar. The U.S. market's a very peculiar market, given the three-tiered system, lots of regulations by state. Mexico also has very different modus operandi in terms of the trade environment. When you look at SAB and ABI markets, they're very similar, especially the developing markets. Also markets like Australia and Canada, very similar. There's a lot of learning passing both ways, and that's what's exciting about this combination.
Great. Thank you, Brito.
You're welcome.
Our next question comes from the line of James Edwardes Jones of RBC.
Yes, morning. Your global brand slowed down significantly in Q4, I think 2.8% growth compared to 6.5% for the year as a whole. What was the reason behind that? Secondly, what priority are you giving to sales and volume growth? You've obviously got a huge amount to focus on around the integration cost margins, deleverage, as you mentioned, and so on. Is sales and volume growth your top priority, or is it some way down the list?
No. Organic growth is our top priority along with deleveraging. Like anything we do, it will always be and not or. Organic growth is a priority, deleverage is a priority, and when we see some selective M&A, we'll look at it, and also return cash to shareholders. Those are the capital allocation priorities, but remain assured that organic growth together with deleveraging, it's and not or, are the top priorities for us. In terms of global brands, I wouldn't take one quarter as any indication of trends or anything. I would take the last five years, and if you look at the last five years, the growth has been amazing, way ahead of the average of our portfolio, and I see no reason why that would change because of one quarter. I would look more at the year-
You think we should read anything into that slowdown?
No. That was a big impact from China. China had a weak quarter, and that impacted Budweiser volumes. That also impacted the total net revenue for global brands. Again, this is one quarter. I would look more at the trend on a year-over-year basis, and then you'll see that they continue to grow very strongly. The amazing thing, James, about our global brands is that every market we introduce these brands, they do very well. You look at Budweiser. The markets were introduced after 2009. With no exception, the brand did very well in all markets we introduced. You look at Stella, as we continue to grow the brand. You look at the U.S., you look at Canada, you look at Brazil, the brand continues to do very well. Now in the new geographies, I think there's a lot to be said about Stella.
Consumers value the European heritage roots of the brand. You look at Corona, since it became part of our system, the growth did nothing but accelerate. Sometimes we lose opportunities because of capacity constraints in Mexico, and that's why we've been adding capacity in Mexico. I think the global brands are really in a very good trajectory, and it's amazing because they are well-received everywhere we go.
Thank you.
Our next question.
Thank you.
Comes from the line of Mark Swartzberg of Stifel Nicolaus.
Oh, thanks. Good morning, Brito. Morning, Felipe.
Good morning.
My first question, Brito, pertains to what seems to be a course change in the way you're spending on sales and marketing. As Chris pointed out, we don't have the sales and marketing detail we once had, but the SG&A guide of flat for the year follows, I believe, a 7% increase for SG&A last year, which was driven by sales and marketing. Sales and marketing was up on a big increase in calendar 2015 as well. Is there a course change going on here in the way, in the absolute approach you're taking to sales and marketing? Whether you'd call it a course change or not, how would you characterize your approach to sales and marketing in order to derive a certain organic growth outlook? It seems like you're saying, "You know what? We've been spending.
It hasn't quite produced the desired outcome in terms of organic revenue, so we're going to pull back and reevaluate here." I might be misinterpreting that. Just wondering how you're thinking about level of sales and marketing spend, pace, and what's going on here that appears to be different versus 2016.
No, I think, Mark, two things. First, our philosophy has not changed. We continue to believe in what we call the Cost-Connect-Win, in that organic growth is one of our priorities, as I just answered to James. Cost-Connect-Win is all about running a very efficient operation, running a very tight ship, finding those non-working dollars to connect with consumers in the market to win more business and grow the business. That has not changed. When you look at our guidance for next year in terms of SG&A, you should remember that synergies is what has a big impact on that line. When I say flattish, it means that some of the things could be growing, some others could be going down, but the net is really flat.
We have to remember that a lot of the synergies are going to show up in the SG&A line. Actually, from our synergies of 2.8, 40% will show up in COGS, 60% in SG&A. If you put that in, that's why we're saying flattish. The other thing is that in the last three years, we've increased our base of sales and marketing big time, double digits, way ahead of top line. Of course, from time to time, it's a good time to sweat the assets. We always do it. When we have an event like this where the company gets much bigger, you tend to have a hard look at where assets and resources are being allocated. Again, don't forget that in SG&A, 60% of the synergies will show up in that line.
Got it. Very helpful. Thank you. My second, Brito, is in the U.S., we're of course hearing a lot about what's going on in sub-premiums, and I don't want to focus over much on sub-premium, but how are you thinking about the level of promotional activity you pursue against different elements of your portfolio? Do you still think you'll have year-on-year price gains in sub-premiums in the next tier up, or is there a change more towards promoting in sub-premiums or the next tier up?
Well, Mark, two things. First, in terms of promotional activity, that question came up last year, I think every quarter. I'm proud to say that now with the numbers in front of us, the U.S. net revenue per hectolitre increased by 1.8%, which is very healthy. What we said throughout the year, that our promotional strategy was changing, but not our promotional envelope or U.S. dollars, that is now confirmed in the numbers. In terms of the value segment, it's important to say it's 25% of our business. When we got here in 2009, the price discount to Bud and Bud Light was more like 30%, now it's close to 20%. We did a lot of what we said we would do.
I think now at the right price point or a better price point, it's time now to support minimally the segment, which represents 25% of our business. In a way, it's very profitable because we don't invest much marketing compared to other segments where we invest lots in marketing. It's an interesting segment for us to, now at this price level, to support to a minimum extent.
Got it. By minimum, you mean minimum versus what? Is the minimum getting higher or lower? Are you saying you're happy with the level of support, or you need to take it down?
No, when you think about the fact that we took Busch to the Super Bowl, that does increase support, right? This is the first time we do it.
Got it.
That's what I'm saying. I think these brands were not being supported, not even to a minimum, because, again, the price was very uninteresting. As it became better, the margins became better. It's 25% of our business, now it deserves some minimum support.
Got it. Very helpful. Thank you, Brito.
Thank you.
Our next question comes from the line of Robert Ottenstein of Evercore ISI.
Great, thank you very much. Can you talk, looking at the legacy SABMiller businesses, two related questions. Any comments on your market share trends? I realize in some of the countries, the shares are very high, so that may be more appropriate to talk about in terms of share of alcohol. Then related to that, can you highlight at this point any interesting revenue management opportunities at legacy SABMiller?
Well, in terms of revenue opportunities within SABMiller, we always said that we saw revenue opportunities, we saw core working capital opportunities, but we're not putting a number to it. We always said that on the revenue side, Robert, global brands was a clear opportunity. SAB had amazing core brands, core lager brands, but they never had global premium brands, and now we do as one company. I think that's a big opportunity to really get Bud, Stella, and Corona to all the right places in markets like Colombia, Peru, South Africa, and even now Australia, having the brands back into the fold. That's a clear revenue management opportunity. I think other things is that we, as ABI, were more used to deal with premium brands just because of the nature of our portfolio. SAB was very used to deal with smart affordability.
I think the meet of minds on these two toolkits will be very interesting cross zones, because there are interesting things we can apply on the old footprint as well. There are opportunities on both sides of the equation. In terms of share, as you say, we didn't see any share loss in these main markets of SAB. In Australia, we gained share. In Peru, we gained share of alcohol. In Colombia, we estimate that the category further gained share in the fourth quarter in terms of share of alcohol, further gained 100 basis points in terms of share of alcohol. Again, the volumes were in South Africa, for example, or in Colombia, better saying, was against a very tough comp of 15% growth last year. In South Africa, there was a lot of price increase because of commodities and currencies.
In Australia, not much happened in terms of currencies. We had more of a normal year. The soft fourth quarter did not compromise the year, which was a very good year in terms of gaining share. I think all in all, a very good first quarter in many respects. Again, some tough comps in some countries.
You gained or held share in most of the African markets, including South Africa?
I mean, your question about South Africa, let me see what we have here. In South Africa, we kept our share. In Peru, we gained share of alcohol. In Colombia, we gained 100 basis points share of alcohol. In other African markets, we're not disclosing at this point. Let me see here. Yeah, at this point, we know that in Mozambique, in terms of clear beer, yes, we gained share. In Tanzania, we had a tougher year. In Zambia, we gained share. Yes. Those are the main countries, in the African continent.
Great. Just a clarification of a prior question. You said that you had net revenue per hectoliter in the U.S. of 1.8%. Was that for the year or the quarter or for both?
For the year.
What was it for the quarter?
I'm not sure we disclosed the quarter. For the year, it was 1.8. Yeah.
You've disclosed that in the past. Is it?
Yeah, we're disclosing too much.
Okay. All right. Thank you very much.
1.8 for the year.
Thank you.
You're welcome.
Our next question comes from the line of Edward Mundy of Jefferies.
Good afternoon, everyone. First question is, there is a Bloomberg headline suggesting that your market share should rebound, to the 67%-69% range in the near term after dropping to 66% in 2016. I was wondering whether you could comment further on that. My follow-up is, I was hoping you might be able to provide a bit more color on the significant intellectual synergies that you've highlighted in your release today. In particular, any concrete examples of best practices that you've seen in the SABMiller business that could be applied to ABI's core business?
Well, I think in terms of SABMiller, there are many practices that we can apply in our business. One of them is the whole idea of category development. They have a framework. SABMiller operated in markets with very high market share, higher than ours, way higher on average than our markets. Because of that, they've been working with the category development framework for quite some years. We're going to use that category development framework as a basis for our long-range plan. That's all about understanding occasions, where the market is today, where our portfolio sits in relation to pockets of opportunities, and trying to predict where we should be with our portfolio and therefore trying to guide resource allocation towards that. That's very interesting. Another one is a core lager toolkit.
SABMiller also developed a very interesting core lager toolkit in that they split core lager into traditional lager and easy drinking lager. They developed toolkits. For example, Australia is a great example of the application of those toolkits with great results. Colombia, South Africa also on the easy drinking. That's also a toolkit that we're going to be applying in our markets because most of our business is in the core lager territory. The other one is smart affordability. We learned from SABMiller in different markets, for example, in Africa, how we can really team up with governments to have local sourced beers being produced, our beers with local source grains, to get to lower price points. Governments like that as well.
They give us some breaks in excise taxes, so we can hit some interesting price points to get consumers from illegal alcohol into branded alcohol. That has been a partnership that's an amazing toolkit to learn and apply in other markets. The other thing is also about bolt packs or big packs. We have experience with that in Colombia, in Brazil as well. There's a toolkit that's been enriched now because of the experience of both companies. I think those are examples of things that are being utilized. As I said before, it's been very interesting because their markets are very close to our markets. It's interesting to learn things that can be applicable in a very easy way for our markets.
Brito, do you think the opportunity is more around price laddering or is it more around expanding the category?
Say it again, please.
Do you think the opportunity, from picking up on some of the SABMiller intellectual synergies, is it more around price laddering or expanding the category?
It's about both. It's price laddering, but connecting that with category growth opportunities. You have the core lager territory, you have affordability, you have premiumization, you have near beer, and you have more flavored beers. You have territories, and they did a lot of study on those territories trying to understand common traits. Again, when you look at a company like ours now with 500 brands, you have to have a framework of brand positioning territories in which you house those brands, let's say in five territories, most of them, so you can steer and create toolkits so those brands can use if they pertain to the same territory. Those are things that we were thinking about. They were ahead of us, and that enriched both toolkits of our company.
Those are some of the examples of things that we got to cross from one company to the other.
Thank you. Any other question on the Bloomberg headline around market share in Brazil? I was wondering if you'd be able to comment further on that.
I don't know exactly which headline you're referring to, but what we might have said, because we say that always, is that in Brazil, our range that we feel good about is 67%-69%. We are now at 66.3%, so below the range, and we're committed to go back to the range in 2017. We've been below the range a couple of times in the past, and we've always said we'll go back to the range, and we did. We're very committed, and we feel we have the right plans in place, to go back to that range. 2016 was a very tough year in terms of everything we just explained about Brazil. Because of price increases and all that, because of the pressure on taxes, commodities, currencies, that gave us some disadvantage in the marketplace.
We're now on a 2017 that according to what we hear, could be a better year in terms of GDP, in terms of consumer confidence, in terms of inflation and employment. We intend to go back to the 67%-69% range.
Okay, thank you.
Thank you.
Ladies and gentlemen, we have reached the allotted time for questions today. Our final question. I'm sorry. Our final question was coming from the line of Sanji, and he has disconnected from the call. I'll turn the floor back over for Carlos for any additional or closing remark.
Okay. Thank you, Maria, and thank you, everybody, for joining us. In summary, 2016 was a transformational year for our company with the completion of the SABMiller combination. Our new geographic footprint and enhanced portfolio of brands positioned us for sustainable long-term growth. However, our overall performance in 2016 was disappointing, largely due to a challenging environment in Brazil. When we do not meet our objectives, we take responsibility for it. These are times when leaders rise to the occasion in our company. When our culture is at its very best. In 2016, we laid a solid foundation for the new company. In 2017, our first full year as a new company, we will build a bridge from the old AB InBev to the company we aspire to be.
Given our strong team, our capacity to learn and adapt, and a long track record of success, we're confident about the future. Thank you for joining the call, and enjoy the rest of the day. Thank you.
Thank you. This does conclude today's teleconference and webcast. Please disconnect your lines at this time and have a wonderful day.