We're going to try and condense a little bit the schedule, so people can stay for as long as possible. We'll make the Q&A maybe a little bit shorter, and I think we'll end maybe 10 or 15 minutes earlier than we originally scheduled, just so we can try and have as many people stay as possible. Thanks very much to the market visit leaders for hosting us, really appreciate it. I know for my van, we had many interesting conversations with the different outlet owners, so that was great to see. I'd also like to welcome back the webcast audience if you're still with us. I hope you enjoyed the three-hour break and back with us now. We have two more sessions, or three more sessions, before we let you leave to catch your flights home.
In the case of some of you, I think you're heading on a grand tour of the U.S. and other capital market stays, so I hope you enjoy those as well. We're going to start with Fernando, who's going to talk about the third pillar of our strategy, optimize our business. Fernando, over to you.
Please welcome to the stage Fernando Tennenbaum.
Hello everyone. Thanks for joining our Capital Markets Day here in St. Louis. It is a great pleasure to welcome you all here in person, and thanks to those taking the time to join remotely across the various time zones. We always learn from talking with you at these events, and we really appreciate the time. Shaun, where are you, Shaun? Shaun has given me the tough task of being the final speaker on day two, after lunch, two early morning spinning classes, and a market visit. Once again, appreciate the vote of confidence, Shaun. Thanks. The presentation yesterday, we brought to life the first two pillars of our strategy, so lead and grow the category, and digitize and monetize our ecosystem. Then we had the brewery tour and the brand immersion dinner last night, along with today's market visit.
I believe that gave you an opportunity to see this strategy in action. Now, I will take you through the third pillar of our strategy, which is optimize our business. This session, it brings together how we translate our strategy to financial performance and long-term financial returns and long-term shareholder returns. Let's get started. Quick introduction. I'm Fernando Tennenbaum. I'm AB InBev's Chief Financial Officer. I've been with the company for more than 22 years across different financial functions, including investor relations, treasury, M&A, and just prior to my current role, I was the CFO of our publicly listed subsidiary, Ambev. The goal of optimizing our business is simple. We want to maximize shareholder value over time. Every investment, every operating decision, and capital allocation choice, we need to evaluate that through that lens. When we look at our value creation model, we focus on four areas.
The first one is consistent compounding growth. We talked a lot about it yesterday, but consistent compounding growth. The second one is disciplined resource allocation. The third area is strong free cash flow generation. The fourth, with this free cash flow, dynamic capital allocation decisions. I like to say that each one of these supports the other, working together to drive shareholder value. Let's start with the first one, consistent compounding growth. When you see this slide now, you might be wondering why the first slide in the finance guy's presentation is about sales and market investment. But in reality, strong culturally relevant brands are the foundation for driving consistent compounding growth. Strong brands, they increase consumer loyalty, they earn a premium price, they enhance profitability, which enables us to invest more to continue to increase the power of our portfolio.
As you can see on the chart, we have consistently invested in our brands, mega platforms, and capabilities. Since 2021, we've put more than $7 billion on average a year into sales and marketing. Yesterday, Marcel showed the impact of this investment. Our capabilities have evolved, enabling us to better serve our customers, attract new consumers, and lead and grow the category. In our industry, scale matters. It improves efficiency, profitability, and importantly, increases our capacity to invest. Over the last few years, you have seen us partner with global mega platforms such as the Olympics, FIFA, Netflix, Live Nation, and beginning in 2027, the UEFA Champions League. All of these partnerships, they are enabled by our scale, footprint, and brands. Importantly, this investment, it has also been driving consistent financial results.
While the operating environment has remained dynamic over the last five years, our top-line performance has been reliable. Revenue has compounded in the mid-single- digits over the whole period. It was supported by contributions from volume, revenue management, and positive mix. If you move down the P&L, let's take a look at margins. Our margins are best in class across our CPG peer group, reflecting the fundamental strengths of our business. It is our brands, scale, leadership positions, efficient operating model, and ownership culture. Strong margins enables us to efficiently convert each dollar of revenue growth into earnings. At our last Capital Markets Day in Mexico City, we showed how commodity cost increases and transactional effects headwinds put pressure on margins from 2021 to 2023.
Over this period, we chose to absorb cost increases on behalf of consumers, maintaining our disciplined pricing approach while continuing to invest in the business. At that time, we said there was no structural reason our margins could not expand over time. Indeed, over the last couple of years, we've seen some progress in this direction. Since 2023, input costs have increased mostly in line with inflation on average, and this more normalized environment has given us the opportunity to improve margins. By maintaining disciplined revenue management, unlocking production cost efficiencies, and tightly managing overhead costs from 2023 to 2025, we expanded gross margins by 200 basis points and EBITDA margin by 220 basis points. The key point is that we have expanded margins while we continue to invest behind our brands and capabilities to drive top-line growth. We are encouraged with the margin progression so far.
While each year will be different, we believe we can continue to trend in the right direction over time. Moving to bottom- line performance. Our top-line growth and margin improvement, it have delivered reliable compounding EBITDA growth. Every year has had its own dynamics, but the resilience of our strategy and the diversification of our footprint have enabled us to deliver within or above our medium-term outlook in every year since 2021, putting us in the top quartile of our CPG peers on a CAGR basis. The next step is converting this EBITDA growth into dollar EPS. Since 2021, we have grown underlying EPS at an 8.3% CAGR. Once again, it is putting us in the top quartile of our CPG peers. By improving cost efficiency and optimizing across the P&L, we have been able to deliver consistent EPS performance.
Now, let's move on to our second focus area, which is disciplined resource allocation. The scale of our business, it gives us significant capacity to invest. That makes disciplined resource allocation even more important. Every dollar must compete for capital and be directed toward the opportunities with the strongest mix of strategic impact, growth, and financial return. Yesterday, David presented Watchtower, showing how we use technology to help make the optimal decision for our commercial investments. For CapEx, we follow a project-by-project evaluation process that enables us to assess the trade-offs, make better investment decisions, and invest in opportunities that offer the best mix of growth and financial return. Having said all that, frameworks are easy to put on a slide. Very easy. What really matters is how we execute. It is the process, it is the quality of our decisions, our willingness to make the right trade-offs.
This is what delivers values. Our resource allocation capability has been one of the drivers of the improved CapEx efficiency across the business over the last few years. With technology, increased best practice sharing among our zones, and applying a ZBB mindset, we have reduced net CapEx from $5.5 billion in 2021 to $3.6 billion in 2025. Importantly, this increased efficiency did not come at the expense of growth. As our top- and bottom- line performance show, we have continued to invest in the initiatives that support long-term growth. Nearly half of our CapEx has gone towards growth projects, with the balance supporting our existing business. Let's take a look at some concrete examples. We have invested into new facilities, including a $400 million brewery in Colombia. We have expanded our Beyond Beer, no alcohol beer, and premium beer production capabilities globally.
You saw an example of this during yesterday's tour with the Beyond Beer packaging here in the St. Louis brewery. As you heard yesterday, we have invested into new partnerships with global mega platforms such as the Olympic and Netflix, and we extended our partnership with FIFA. In addition to capabilities and capacity, we continue to invest to strengthen the resilience and efficiency of our supply chain. We remain focused on improving operational efficiency in three key areas that are essential to our business, agriculture, water, and energy and emissions. In water, we have challenged ourselves to go further on water use. We are aiming to achieve an average efficient ratio of two hectoliters per hectoliter across our breweries globally by 2030. Water stewardship is at the core of building resilience in our business. If there is no water, there is no beer.
Return on invested capital is a key measure of how growth, efficiency, and disciplined resource allocation are improving the value creation potential of our business. Our main focus here is increasing total ROIC, which measures return across the full invested capital base. Since 2021, it has increased by 120 basis points, driven by higher profit and greater capital efficiency. While total ROIC is the key KPI for us, given the change in our strategy to organic growth, ROIC excluding goodwill is a useful additional measure of our return potential going forward. It shows the returns generated by the operating capital deployed in the business, and it makes it easier to compare us with peers. We see a clear path to further improve ROIC through continued profit growth and greater efficiency across the invested capital base.
That will bring us to the third pillar of our value creation model: strong free cash flow generation. In the end, everything we do to optimize the business across the P&L and balance sheet is reflected in free cash flow. We often say inside the company, and I think I said a few times yesterday, "Cash is king." Free cash flow is the clearest measure of whether our growth, efficiency, and capital discipline are translating to real financial returns. At our full- year 2024 results, we spoke about the step change in our free cash flow from $9 billion to $11 billion. We also noted that we expected to grow from this base going forward.
If you look at performance over the last 12 months ended June 30, 2026, this is a very good example of this, with our free cash flow stepping up to nearly $14 billion on the last 12 months. When we look ahead, EBITDA growth continues to be expected to remain the main driver, but along with disciplined CapEx, lower net interest expense as we continue to deleverage, and the structural benefit we have given our negative working capital cycle. Similar to the CPG category overall, when it comes to free cash flow generation, scale and efficiency are very important. Strong free cash flow gives us the capacity to invest for growth while maintaining flexibility in our capital allocation choices to drive value. A strong cash conversion enables to make every dollar of profit become more meaningful for our stakeholders.
Michel mentioned earlier that we are relentless in benchmarking ourselves against our peers, always looking for ways to improve and become truly best-in-class. The mix of our profitability, cash conversion, and free cash flow scale is unique among CPG companies today. While we continue to see opportunities for further improvement, we are already operating at best-in-class levels across these metrics, which provides a powerful platform for long-term value creation. Now to the fourth pillar, dynamic capital allocation. Free cash flow generation is only meaningful if it is being allocated in the most effective way to maximize long-term value creation. Our capital allocation framework remains unchanged. Our number one priority is to invest into the organic growth of our business. Fully funding attractive growth opportunities remains non-negotiable, and we continue to see many options for investment across the business.
After funding the business, the excess cash is dynamically allocated across our other three capital allocation priorities: deleveraging, return of capital, and selective M&A. The goal is to create the greatest value for shareholders. In the near- term, our ambitions are to fully fund our growth plans, progressively increase the dividend, complete our current $6 billion share buyback program, and further strengthen our balance sheet. Looking at the balance sheet, we are pleased with the progress we have made on the leverage over the last five years. From 2021 to 2025, we have allocated $25 billion of cash to reduce debt, and we reached a net debt-to-EBITDA ratio below 3x in the full- year of 2024, for the first time since 2015. Our optimal capital structure remains around 2x .
With leverage at 2.87 x at the end of 2025, there is some further progress to make, but the balance sheet already gives us much more flexibility. As the balance sheet has become stronger, we have increased our return of capital to shareholders. We have increased the dividend every year since 2021. It was supported by EPS growth and a measured increase in the payout ratio. In 2025, we also declared an interim dividend for the first time since 2019. While our payout ratio remains low compared with CPG peers, our ambition is to maintain a progressive dividend over time. Together with our dividend, we have also been executing larger share buyback programs. Our approach is to deploy capital dynamically. When we believe our shares represent an attractive opportunity to create value, buybacks can be an effective use of capital along our other priorities.
We have completed $5.5 billion of share buybacks since 2023, and $3.7 billion remains on the 24-month program announced in October 2025. Our focus is on completing the current program. Beyond that, we continue to assess the buybacks through the lens of long-term shareholder value. M&A remains a core capability. However, it now complements organic growth rather than being the foundation of our strategy. We have the experience, playbooks, and discipline to do selective deals that create value. Acquisitions and disposals must compete with the returns available from invest organically in our business. That creates a high hurdle and a very focused opportunity set. Over the last few years, we have sold some non-core assets and used that money to either increase the exposure to growth segments or to improve profitability.
On the disposal side, you can see a few examples here, such as the sale of certain non-strategic brands and assets, like small craft brands and facility in the U.S. On the acquisition side, we have made bolt-on acquisitions like BeatBox to improve our portfolio. I believe you saw BeatBox on the market today. Cutwater and NÜTRL are other good examples that were completed a few years earlier and are now meaningful parts of our portfolio. We have also evaluated EPS accretive opportunities, like buying back the minority stake in our metal container business here in the U.S. While organic growth is our main focus, selective acquisitions and disposals are relevant options to consider when they meet our financial and strategic criteria. Putting it all together, five years ago, most of our excess free cash flow was allocated to deleveraging, and for a good reason.
Moving from nearly 5x net debt- to- EBITDA to below 3x was the best use of capital to create shareholder value. Since 2021, we have allocated $25 billion of cash toward reducing debt and made our balance sheet much stronger. As a result, we have already begun to rebalance our capital allocation priorities. As we continue progressing towards our optimal capital structure, we see clear scope for that rebalancing to continue over time. Optimizing the business is a simple idea, and by simple, I don't mean easy, because the actions behind it are very detailed, and they require everyday financial discipline, sound judgment on trade-offs, and a long-term view. We have made progress across key metrics in our P&L, balance sheet, and cash flow. But as Michel said, the job is not finished yet.
Actually, the job is never finished, so it's important to keep score and ensure that we are moving in the right direction. Here is my scorecard for the last five years. Our business has consistently grown revenue and EBITDA at the top- end of our peer group through different operating conditions. Our margins have seen some recovery since 2023, while we continue to invest in behind the growth. EPS and ROIC have increased through stronger profit growth and capital efficiency. Free cash flow has increased from $9 billion in 2021 to nearly $14 billion in the last 12 months. In capital allocation, we have made our balance sheet stronger, steadily increased our dividend, and run larger share buyback programs. When you look at this scorecard, I believe the progress is clear. We have made the business stronger, increased our earning power, and improved our financial flexibility.
At the same time, we still see meaningful upside ahead. Let's shift from reflecting on past performance to discussing our future potential. When we introduced our medium-term outlook in 2021, EBITDA was the right measure at the time. It was the right measure because we were focused on deleveraging, organically building our capabilities, and showing the resilience of our business. But going forward, we believe EBIT is the more relevant measure. As we focus on consistent compounding growth and better asset utilization, EBIT more clearly reflects business performance and long-term shareholder value creation. Our new medium-term outlook is for consistent compounding EBIT growth of 5%-9% on average, reflecting the progress we have made in building the earnings power and capital efficiency of the business. The drivers of our underlying growth model, they remain consistent. It is category expansion and market share momentum, revenue management, and positive mix.
It's operating leverage, capital efficiency, and margin expansion. Just to be clear, our outlook for 2026 remains unchanged at 4%-8% EBITDA growth, and we will provide our outlook for 2027 when we report our full- year 2026 results. Our key focus areas for value creation going forward, they are no different than what we had in the past. What is different from five years ago is that now we are starting from a position of strength. We have built better processes and invested in the capabilities we need to drive consistent compounding growth. We have improved the efficiency of our resource allocation and are using more technology to make better investment decisions. Together, organic performance, best-in-class profitability, and strong cash conversion are increasing our free cash flow generation. With a stronger balance sheet, we have increased flexibility to continue to evolve our capital allocation mix.
What gives us confidence is that these are not independent drivers. They build on one another. Consistent compounding growth increases profitability and cash generation. A strong cash generation gives us more capital so we can allocate. Disciplined capital allocation allows us to continue investing growth, make the business stronger, and increase return to shareholders. That in turn, supports the next cycle of growth. This is how we intend to compound superior long-term shareholder value. Thank you.
Please welcome back, Shaun Fullalove.
Stay there. Thanks, Fernando, for the presentation. I think next up we're going to have our second Q&A panel. We're originally scheduled for 30 minutes. We might try and keep it at 25 just to make sure we can have as many in the room stay for the session and the closing as well. I'd like to invite Michel and Fernando back to the stage. If you can join me up here. In terms of logistics, we're going to do the same as we did yesterday. We're going to start by taking some questions in the room. Those that didn't get a chance to ask yesterday, we'll probably prioritize you. If you would like to ask a question, Ed, you're on the blacklist for today, but if you would like to ask another question, then you can still be allowed.
We also have the live stream questions here. If anyone would like to ask a question to the live stream, I can take a read here, and we might take one or two of those. We have some mics around the room like we did yesterday. Please raise your hands, and we will get started. Same rules. No 1As, no 1Bs, no half parts, half parts. Try and stick to one question as much as possible. Great. Let's get going. James from RBC, let's start with you.
Thank you. Interesting, the increase in medium-term growth. Why are you changing from EBITDA to EBIT? You kind of vaguely alluded to it, I think, but I didn't really understand the justification.
James, it's the evolution. If you look over the past five years, there was a lot of emphasis in resetting the business, which means strengthen the balance sheet and probably one of the key KPIs when you think about leverage is net debt- to- EBITDA. While we were working on the fundamentals, we are also resetting the business and preparing for this next phase, which is reignite. When you move into reignite, it's not only the growth that you generate, but how you grow. How efficient you are in growing and delivering this growth. For us, it's the natural step to move from reset to reignite, to move from EBITDA to EBIT, and then you can see all the benefits that we have in a business at the scale that we are.
When you grow the scale that we are, we believe for this new range of 5% - 9% is one that makes more sense for this next phase.
Great. Thanks, James. We'll come to Trevor over here in the middle.
Thank you. Question for you, Michel. I appreciate it's impossible to cover everything in two days, but one zone that we haven't really touched on is Asia. Neither the challenges in China nor the opportunities in Asia ex-China. Maybe could you give us an overview of where you see Asia today?
Asia is a great opportunity, as you know, when you think about population and population growth. Asia is a massive pocket for today's business and for future business. Our business in Asia over the years has a growth story, let's say from 2010 to 2017, 2018. We had the period between 2018 -2 025 where many things changed, mostly in China, and our business did not catch up at the speed that we needed to catch up with the market and with the change. Some of these changes, when you think about what happened during post-COVID, were really, really big structural changes in the market, like the change between the East Coast and the inland China, the changes that happened between on-trade channels and off-trade channels, and this all had an impact on our business.
One impact that one day can come back because the business remains somehow strong on these regions with the brands that we have, but we can't wait forever for the change. We should be acting, we should have acted, and now we are running after this adaptation on the portfolio, on the channels, on the geographies. It's taking long because the consumer in China is also not in the best place. It's taking long because the fact that the business shift away from the channels and regions where we operated created an issue on inventories, on the route to market, on the sales force. But we continue to be very positive about the long-term outlook for the region overall, for China as a specific market. If you look around China, talking about Asia, as you said, in general, our business in Korea remains very strong, gaining share.
Our expansion on the Southeast Asia, where we have a few markets there that we work as an importer, is growing high- double- digits. The business in India is growing from strength- to- strength. India is a topic that we do not speak a lot often on our meetings, but we just crossed 20% share. Our business is basically premium, super premium. We are the fastest growing company in that market in beer with a premium positioning. Our footprint is evolving, and this market, in all ways that you look at the future beer industry globally, is to be a top contributor in volume growth for the future. We have a very strong base where it matters in India. Altogether, strong potential, very important for the future market. We have an issue, it's not good at all, to solve in China.
We are working hard to that, as we always do. We are doing what we consider to be the right choices, the best decisions for the long- term, and our team is playing catch up, adjusting capabilities, moving more into the off-trade, more in land, and at one point this will turn around.
We'll come to Sanjeet, and then we'll go to Rob, and then we'll go to Laurence. We'll go to have you. Sanjeet first. Sorry. I'm confusing everyone by calling multiple names.
Fernando, just coming back to the pivot from EBITDA to EBIT. You've had three years of CapEx now being right-sized, and I think you've articulated how that can be sustained over the medium- term. Is the idea now you start to get some benefit creeping in in your depreciation expenses, and you get some leverage there, and hence a bit more focus on EBIT than EBITDA?
You still have some. By definition, depreciation is a lagging indicator. There was always some delay, so you still have some benefit on depreciation. Yeah.
We'll come to this table. Rob first, and then Ed can be after that. Over here.
Great. Robert Ottenstein, Evercore ISI. I think probably directed for both of you. To get to the EBITDA goal, which I think is a very good and competitive one, what are your assumptions in terms of performance in the U.S., both top- line and bottom- line, to be able to deliver to be in that range? What do you need to see happen there?
I think let me start, and then Michel can follow- up on that. We don't disclose market- by- market because actually that's one of the strengths of our company. They have a very diverse portfolio of countries, of brands all around the world. If you look over the last five years, we discussed different topics around the world, and every year there was one topic, one way or another, and we deliver nevertheless. I think when we set our goals, we look at the whole portfolio of countries, the whole portfolio of brands, and when we put the outlook at that, we feel confident with this portfolio we can deliver this 5% - 9% on the medium- term on a consistent basis.
Just to complement on that, I think that without giving any details on a country- by- country, but you saw here Brendan, Kyle, Simon talking about that. I think that our business reached an inflection point in terms of relative performance, and we think that this relative performance giving the portfolio of brands footprint that we have and the direction that we see in the market is to be sustained. We've been enhancing this momentum in beer with the total alcohol answers, with a Beyond Beer portfolio that continues to grow. Brendan shared here we are always experimenting around other possibilities to monetize our ecosystem. So we are experimenting energy in protein now, and there are other possibilities that can always add to this algorithm.
We move it from what we call an area that is suboptimal on the portfolio performance to an area where we believe in sustainable top- line growth. A natural evolution for that depends on the overall economic situation, the consumer disposable income, how tariffs and commodities are impacting the business, is a profitable business, as Tadeu described it on the first day, that is able to grow top and bottom- line. Okay? So the assumptions for the U.S., they do not change. We focus on rebalancing the portfolio, operate the business in an optimal way and find ways to monetize the ecosystem that we have, which is a fantastic ecosystem in the U.S. We are insulated from the overall economy, from everything that surrounds us. As the economy progress, business will improve performance. The important is that we have today a portfolio that can outperform the average market.
Thanks, Robert. We'll go to Ed, and then we'll come to Javier, and then we'll go to the other two tables.
Thanks. Taking the question. I'm Ed Mundy from Jefferies. In 2021, you pointed out the new growth strategy. In Mexico, you provided some proof of concept, and then today you've showed how far your capabilities have advanced and that you've got this consistent compounding model. If we think about where the next CMD might be in, let's say 2029, what do you think are going to be the absolutely key two or three things that you've got to get right to then reflect that it's all working as you would like it to work?
Wow. You are merciless. We're not even finished this one, and you want to know what's going to be the next. Thank you so much. We talked about, and I will talk a little bit about this on the closing, but the three objectives for the Reignite is to continue to deliver consistent compounding growth. As I shared on that slide, this consistency rewards big time over time because the small effects, they compound on a big difference from the medium, from the top quartile over time. Consistent compounding results. As I said, the second one is accelerate investments for growth.
This is the real core of the Reignite, and I hope, as we want to do always, that when we look back three, four years down the road, we will see not only the consistency and the acceleration on these investments, but the result that this will bring to the business on this idea of organic growth. Last, of course, we all work to see this being translated in superior shareholder value creation. So those are the three objectives. Those are three things that you can definitely expect to see me talking when we meet again in two, three years. Let's see when that's going to be.
Let's go to Javier at this table on the end.
Yeah. Thank you. It's Javier Lastra from Berenberg. My question is on BEES, which I think we've all appreciated the size of the operation and the very strong capabilities you have there. But we've seen many other e-commerce platforms in other sectors struggle to generate profits really, yet you seem like you are already there in terms of the platform being profitable. So I just wonder, what do you feel you've done differently that has allowed you to reach that consistent profitable state that many others have struggled in other sectors?
Yeah. Thank you for the question. It's a great topic, and I think that it is, as anybody else, we also had our own doubts, dilemmas, and conflicts around these initiatives. I was talking to some people here during the day. I like a lot the idea of having principles as we define things that we are going to do. I shared this morning the 10 principles on culture. They are very important when we make decisions around people. You can have 100 different opinions. The principles are clear. You guide your decisions based on principle. In business, I have couple of principles that are very strong. Doesn't mean that they are always right, doesn't mean that we don't flex them over time, but I firmly believe that businesses and all the efforts that we put behind, they exist to generate profit.
Regardless what initiative you have in mind, when you fund an initiative, cash is the most important thing that you need to manage. Through the years, being direct- to- consumer, being BEES, I was always very strong on the point of view with our teams that whatever we do, we got to be able to generate profitability, to have positive cash, and to self-fund our growth. If at one point the opportunity is just way too big and we need to fund, we need to be very clear about the returns that we expect for that. So one of the points, and we had several discussions on that, on how fast we would accelerate the 1P, how fast we would onboard and accelerate the 3P. We were extremely disciplined. Nick was talking about this. Nick is here.
He was talking about this during the process in making sure that we are cash accretive to the business, that we are very aware of the margins of each business model, that we have the benchmarks to the other companies that we copy, learning from as we build this, and that we are at their margins or better. I think that I understand the dilemma of other e-commerce business, the competition that they have, the privilege that they have to be funded by people. Therefore, they can just grow without thinking about their own cash. For us, it's different. BEES, Zé Delivery, they live within ABI, they compete with all other businesses that we have in terms of cash deployment, and they need to be very efficient.
Because we are a big platform, the benefit that they have is not free money for growth, but it is the ecosystem in which we grow. Our acquisition cost is smaller, our scale is bigger, our ability to dilute fixed costs is bigger. The infrastructure that we have to support the business, the backbone of the business, the back office, is also big. Instead of allowing people to just spend money on the structure, customer acquisition, so on and so forth, we prefer to use the money to grow the business in the right way, generating right margins and right cash.
Thanks, Javier. We'll go to Chris at the back here.
Thank you. Chris Pitcher from Rothschild & Co Redburn. We started the event with your sort of outlook for the market being 0.3%-0.5%. To get from that to 9%, that's quite a good conversion from volume to that. Just understanding the top end of your range, everything that we've seen for the last two days, these new avenues for growth, be it Beyond Beer, be it no and low alcohol, particularly BEES, they all seem to me to be highly margin accretive. Is that variance between 5% and 9% from that sort of relatively low-growth market backdrop, the success at which these new enterprises, to add Capital Markets Day in three years, those are the ones that are going to drive the variability? Or are you perhaps thinking more of a market coming through stronger? I'm just trying to understand the top- end.
I try to elaborate and give some color on all of those. I mentioned a lot of things. I mentioned volume, I mentioned revenue management, I mentioned mix, I mentioned cost efficiency, I mentioned margin expansion, I mentioned capital efficiency. At the end of the day, there are a lot of ways for you to continue to optimize our business, and it's the combination of all of those that is going to lead to the 5%-9%. Every year is going to be different. There are years that there are going to be more headwinds, there are years that are going to be more tailwinds, different regions performing differently.
But with all these levers that we have in our hands, we are comfortable that we can pull them at the right moment, the right way, in a way that is sustainable and still deliver within the 5%-9% in the medium- term.
Thanks, Chris.
Just to complement on that, another point linking to what you said, I think that Tadeu shared two things. He shared this structural components of the global beer industry that linking to our footprint would yield a CAGR of 0.3%-0.5%. The second thing that he shared, and it's very interesting for curiosity, which he has a lot, I have a lot. If you go back on our industry, our industry has two things that are very interesting. One is what Tadeu called the resilience. Because in good times and in bad times, the industry is very tight and you go on this +2%, -1% over time. You go 10 years, that's a story. 15 years, that's a story. 20 years, that's a story. Because the industry grows, because it's very penetrated together with the overall economies across the globe.
One of the components could be a great year to be on the top. One of the components to be at the average or at the low- end could be a bad year. Interestingly enough, if you break even the years in semesters, you have equal in numbers of semesters that are positive and negative. If you break it by quarter, you are going to find an equal in number of quarters where this industry goes up and goes down. Right?
I think that the range that we have is a range that is tight enough to not be too big for not making sense, and is good enough to get us stretched to be always operating with discipline, to make sure that we are investing in the good moments, that we are pricing at the right moment, that we are outpacing the market always by 1%, 2%, so this compounds over time. But I think that the industry part that you mentioned is a very interesting one. Structurally, 0.3%-0.5%. Historically, half of the year is positive, half of the year is negative, but the range is very tight. So we do not go 10% up, 10% down. Right? So, very controlled range.
Thanks, Chris. We will go to Laurence at the end there, and then we will see how the time goes based on Laurence's question. Make it a one-minute question, Laurence.
Always one question, Shaun. I would like to ask about your portfolio, because you gave us some interesting stats yesterday around the total addressable market and what the potential could be. Of course, over the last few years, ABI has moved into plenty of new categories, whether that is Beyond Beer, spirits, now energy drinks, protein drinks. What do you see as the limit of what ABI could potentially own as an own brand? Could we see the portfolio expand further than, say, energy drinks into traditional soft drinks or protein into protein snacks or, there is plenty of adjacent opportunities that BEES gives you the opportunity to get into.
Yeah. Let me answer the question starting from the opposite angle. Our business is and will be in the future beer. Beer is the most relevant part of our business. It is a fantastic category to be. It is the right platform for us to build everything that we want to build in the future. We said this back there in 2021, and I think today is becoming more measurable and meaningful, that we would extend our portfolio to create digital brands that we could scale at low capital deployment and with speed. You see today where BEES Marketplace is going, and you see the materialization of this digital direction that we decided to take and how this is now enhancing our portfolio with brands such as Zé Delivery and BEES Marketplace.
I think that at this point, it is even more clear that this idea of Beyond Beer is a place that we see high fit to the assets that we have, to the brand building capabilities, to the route to market capabilities, and this will become an ever-growing part of our portfolio. Today is at $2 billion, growing north of 30%. We believe that the headroom there is a huge headroom for growth. In many markets, think about Brazil, Argentina, Honduras, El Salvador, we work with soft drinks. We are the largest bottler, I think we still are, from PepsiCo outside of the U.S. Those are great business, highly synergetic to our route to market. Where it makes sense, we have been in and out over the years, more in than out, and this is good.
Of course, from there onwards, there will be always opportunities that today we are ever more equipped to spot because of the insights that we have, because of the marketplace capabilities. If there is high returns, if there is an opportunity for us to do more, that will be always evaluated and considered on a market-by-market base, but most importantly, on the global strategy on how we want to digitize and monetize the ecosystem. That is why the digital products are the leading, the spearhead of this diversification, let us say, but other things can fit in there if they are good returns, route to market, effective, and if we can make it in a way that leverage our assets. That is why we are doing energy drink in the U.S. That is why we are partnered here to do protein ready to drink in the U.S.
There are other opportunities, but we need to start from developing beer, continue to invest on our digital products, take all the opportunities that we have and build beer, and then from there, we are going to build on top.
Thanks, Laurence. Laurence asked a five-minute question, so we're actually at time. Unfortunately, I think for this, we'll wrap it here. Olivier, happy to catch up with you and Andrea afterwards as well on those for you to connect with us. We'll wrap it there, guys, I think for Q&A. Thanks very much for the time. Thank you all in the room and on the webcast for the participation. There were a few questions here on capital allocation. Fernando will take them separately with people afterwards. Michel, you can stay here on stage, I think, given you'll be wrapping us up. No need to introduce you, but stage is yours. Want a handshake?
Handshake. Handshake. That brings us almost to the end of the 2026 Capital Markets Day, and I'll try to take us home in effective way, quick, so you don't miss your flights. You can be on time for other appointments that you have. You know, let me start this way, that an event like this takes a lot of preparation, a lot of people to organize details, and I'm very happy with the dedication of the team. I just want to take a minute here to thank all the presenters, the hosts, the U.S., North American team, the team that worked with us here in terms of organization from Switch, from the hotel, the agencies. But above all, thank you for the attention, for the engagement, for the questions. I think we had great days together.
I hope that the pictures are just the pictures that they could show here. I didn't review before. So everybody having a lot of fun. And I hope you enjoyed the day yesterday, the day today, the visit to the brewery. I was talking to my team before. On their side, they all are very proud, and they liked a lot the interactions and to be with you, okay? So please just join me in thanking them. Thank you. Shaun is investing very heavily on his next career, a spinning instructor. So it's like one-third of the entire Capital Markets Day was about spinning, Shaun. So I see that you enjoy the case. But let me, before I get like the final takeaways to you, I thought about sharing a few personal reflections, okay? In a very personal point of view.
The first thing is that I'm very optimistic and confident in the next phase of our journey, the Reignite. And the reason why is because our ambition and our plans are grounded in very strong elements. First, this relentless benchmarking exercise, where we are always learning from peers and from whatever is available there, copying and improving this at ABI. Second, I think you had the time to interact with our team. It's a great team. We combined, we have 400 years of experience in CPG and in this business. Some of them three years, some of them 30 years, but combining, we have 400 years of experience in our business. And then through these benchmarks, which is something that I invest a lot of time in learning and understanding, I start seeing these stories that I call enduring growth stories.
I have learned that best-in-class CPGs, they do a couple of things. The most important thing, they compound value and growth over time. There is a lot of small elements, but they compound value over time. What is interesting, as they compound growth over time, is how they do that. I took three lessons from that. One is consistency. Two, relentless. The third is what I call quietly confident. Let me double-click on what I call consistent. Consistent is this idea of long-term, that is why I invest so much time on planning on what we call 10-year plans. They have price discipline. Not too much, not too little, but consistency in the way that they look at the value of their brands.
They do that because they are consistent not only on pricing, but even more important, in the way that they invest and they sustain brand investments so they can price correctly. They are very smart in the way that they allocate capital so they can have the right returns. Simply put, there is no strategic zigzagging. There is no the strategy of this year. There is no one strategy for every part of the business. They consistently compound over time. When I say relentless, I mean focus on execution, each and every detail, delivering results regardless the environment. Can be in a given month, quarter, year, but when you look over time, there is always consistency in results. This is built with a culture of performance and the idea that the job is never finished. They are never satisfied. Lastly, what I call quietly confident.
This confidence comes from being predictable. Usually, there is no drama. Very simple and effective portfolio architecture. What I admire the most, they are humble. They are always humble in the way that they see what they are doing, but what they want to do. They value quality over hype. Long-term sustainable, investing for the future, valuing quality over hype. My biggest reflection on that is that becoming a best-in-class CPG is, at the end, a leadership choice. Choice to be predictable, to build margins, to earn more cash, and to build a resilient business. To have the discipline to stay the course even when things are very hard. The key question that I always put to my team is: How do we measure our success, the progress of our business?
This is never based on a single quarter, year, the most fashionable of the KPIs of every and each day, but is when we look at the business today, and structurally, this business is stronger than it was five years ago. With that, I would like to share what my key takeaways for the two days are. You can take this home and start your work, which I know that you will do from this one page. Okay? 5 years into our 10-year plan I feel we have done most of what we said we would do. Consistent compounding results, stronger balance sheet, and we build key capabilities for organic growth. The job is not finished, and we are just getting into the Reignite. The Reset is complete, and the Reignite has begun.
In this phase, we are focused on continued delivery, consistent and compounding results, increasing investments to accelerate growth, and we want to outperform the category. All of that continues to be important to create shareholder value. We operate in a category that's fantastic. We already saw the love that consumers have for this category, and it is one of the most attractive categories in the world, and therefore, the right platform for us to build everything else that we want to build. Beer is big, beer is profitable, beer is growing and is growing share of alcohol beverage, and is loved by consumers. We made the decision to go Beyond Beer so we can bring even more people to celebrate together, and this enlarges our total addressable market on a very important way.
We have today very unique leadership advantages, and they are getting stronger as we combine them with the right capabilities. We have our global scale, diversified footprint, iconic brands, and superior profitability. All the investments we've made to create best-in-class capabilities, they made us more consumer-centric, digitally enabled, and financially effective. We successfully rebalanced our portfolio in the U.S. Our business today has momentum, is growing share on an increased addressable market. We scaled our digital platforms. Our products today are strong. They make our businesses stronger, but they also generate new revenue streams that are even more important for the future. This morning, we talked about our culture. Our people and our culture, they have enabled the transformation from inorganic to organic. Simple, two letters, but very hard to make in five years.
The culture that enabled that is durable and will be the same that will drive the next phase of growth. As we saw with Fernando, our leverage continues to go down. Cash flow remains stronger. As time goes by, we will have even more flexibility on our capital location. We evolved our outlook because, again, next phase, and this outlook of EBIT will reflect better the efforts we will make in this phase of growth. The medium-term outlook as next year will become EBIT 5%-9%, and details of that, as Fernando said, when we present the total results for 2026, will be given to you. The last takeaway here before I let you go, I think that brings us back to the same question that I started the meeting with. What does it take to become a best-in-class CPG?
Because at the end of the day, this is what we aspire to be and what we are building towards. I'm very happy with the two days here. A lot of people asking this question to me, and I'm happy, not because of the presentations, not because we are sharing results, but because we could spend some time together, drink a beer, learn from you as we share the time here together. I hope that you feel good as well as you go back home, okay? Safe travels. Enjoy the rest of your tour in the U.S. for those traveling from abroad. Enjoy back home for those from the U.S. I hope that Newark is operating. I'm going that direction as well. Remember to drink a beer on the weekend. It was a pleasure to be with you. Thank you. Bye bye.