Ambev S.A.

Company Overview

Business Model: Ambev S.A. is primarily engaged in the production and sale of beer, draft beer, soft drinks, other non-alcoholic beverages (NAB), malt, and food. The Company also participates in advertising, promotional material sales, and the operation of bars, restaurants, and snack bars. Its extensive portfolio includes proprietary brands such as Skol, Brahma, Antarctica, Guaraná Antarctica, Presidente, and Quilmes, alongside licensed global brands from Anheuser-Busch InBev N.V. like Budweiser, Corona, and Stella Artois. Ambev S.A. also operates as a significant independent bottler for PepsiCo, producing, selling, and distributing brands such as Pepsi, H2OH!, Lipton IceTea, and Gatorade across Brazil and other Latin American countries under license. The Company's strategic pillars focus on leading and growing its categories, digitizing and monetizing its ecosystem, and optimizing business operations through product quality, sustainability, cost efficiency, and financial discipline.

Market Position: Ambev S.A. holds leading market positions in several key regions and product categories. It is the beer market leader in Brazil, the Dominican Republic, Panama, Bolivia, Paraguay, Uruguay, and Canada (through its subsidiary Labatt Brewing Company). In Brazil, Guaraná Antarctica is the non-cola leader, and Pepsi is the second bestselling cola. The Company leverages its diverse brand portfolio, which includes both local favorites and globally recognized labels, and its extensive distribution networks, comprising both proprietary direct distribution centers and exclusive third-party distributors, to maintain and strengthen its competitive standing across its operational footprint.

Recent Strategic Developments:

• Increased Stake in Tenedora: On January 31, 2024, Ambev S.A. increased its economic interest in Tenedora CND S.A. (Dominican Republic) from 85% to 97.11% through a R$1,704 million cash payment and offsetting R$335 million in debt. A put option for the remaining 2.89% is exercisable by E. León Jimenes, S.A. in 2026, with Ambev S.A. holding a call option exercisable in 2029.
• Divestiture of SLU Beverages LTD.: On July 31, 2025, Cervecería Nacional Dominicana, S.A., a subsidiary of Ambev S.A., sold 61.83% of SLU Beverages LTD. to Koscab Holdings Limited for US$115 million (R$633 million). This transaction resulted in a R$862 million gain recognized under exceptional items, and Ambev S.A. ceased consolidation of SLU Beverages LTD. as of September 30, 2025.
• ERP System Implementation: Ambev S.A. is in the final stages of implementing its new S/4HANA (SAP platform) ERP system for its Brazilian operations, aimed at enhancing digital transformation and operational efficiency.
• Manufacturing Expansion: In 2025, the Company inaugurated its first glass factory in Paraná, Brazil, which operates on 100% renewable electricity and utilizes up to 80% recycled glass, aligning with its sustainability objectives.

Geographic Footprint: Ambev S.A. operates in 11 countries, structured into four reportable geographical segments: Brazil, Central America and the Caribbean (CAC), Latin America South (LAS), and Canada. Its principal executive offices are located in São Paulo, SP, Brazil.

Cross-Border Operations: Ambev S.A.'s international business structure includes fully consolidated subsidiaries such as Cervecería y Maltería Quilmes SAICA y G (Argentina), Cervecería Boliviana Nacional S.A. (Bolivia), Labatt Brewing Company Ltd. (Canada), Cervecería Chile S.A. (Chile), Cervecería Paraguaya S.A. (Paraguay), Cervecería Nacional Dominicana, S.A. (Dominican Republic), and Cervecería Nacional S. de R.L. (Panama). It also holds a 50% equity interest in Cerveceria Bucanero S.A. (Cuba) through its Canadian subsidiary, Cerbuco Brewing Inc. The Company manages extensive licensing agreements with PepsiCo for NAB production and distribution across several Latin American countries and Canada, and with Anheuser-Busch InBev N.V. for the production and distribution of global beer brands across its operational footprint. Cross-border trade involves global sourcing of raw materials (e.g., hops from the U.S., Europe, Argentina) and managing complex supply chains. Regulatory compliance is a significant consideration across multiple jurisdictions, including data privacy laws (e.g., Brazilian General Data Protection Law (LGPD)) and evolving tax regulations (e.g., Brazilian consumption tax reform, OECD Pillar Two).

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 51.4%
• Operating Margin: 26.4%
• Net Margin: 18.1%

Investment in Growth:

• R&D Expenditure: R$40.5 million (0.05% of revenue)
• Capital Expenditures: R$4,590.5 million
• Strategic Investments: Capital expenditures in 2025 included R$3,045.2 million in Brazil, R$603.7 million in Central America and the Caribbean, R$651.3 million in Latin America South, and R$290.2 million in Canada. This includes investment in a new glass manufacturing facility in Paraná, Brazil.

Currency Impact Analysis:

• Ambev S.A.'s functional and presentation currency is the Brazilian Real.
• In 2025, 44.4% of net revenues (from a total of R$88.2 billion) were derived from operating companies with non-reais functional currencies, exposing the Company to translation risk.
• A significant portion of cost of sales (e.g., aluminum cans, PET bottles, sugar, hops, malt) is linked to the U.S. dollar, creating transactional exposure.
• The Brazilian real appreciated by 11.1% against the U.S. dollar in 2025 (R$5.50 per U.S. dollar as of December 31, 2025, compared to R$6.19 per U.S. dollar as of December 31, 2024).
• The Company employs a hedging policy to mitigate exchange rate fluctuations, utilizing derivative financial instruments such as foreign currency forward contracts, swaps, and options. The average BRL/USD hedge rate for 2025 was 5.37, with a 2026 outlook of 5.50.
• Hyperinflation in Argentina since Q3 2018 negatively impacted net revenue by R$420.7 million in 2025 due to IFRS IAS 29 accounting.
• Bolivia experienced a U.S. dollar shortage since 2023, and Cuba's currency unification in Q1 2021 impacted Cerveceria Bucanero S.A.'s beer volume, highlighting specific regional currency complexities.

Business Segment Analysis

Brazil

Financial Performance (2025):

• Revenue: R$49,030.8 million (-0.9% YoY from R$48,605.4 million in 2024)
• Operating Margin: 25.4%
• Key Growth Drivers: Market leadership in beer and non-cola non-alcoholic beverages. Strategic initiatives include the Zé Delivery platform for customer convenience and the ongoing implementation of the S/4HANA SAP platform for operational efficiency.

Product Portfolio:

• Major product lines: Beer (Skol, Brahma, Antarctica, Budweiser, Corona, Spaten, Stella Artois, Beck’s, Modelo, Bud Light, Busch, Michelob Ultra), Non-alcoholic beverages (Guaraná Antarctica, Pepsi, H2OH!, Lipton Iced Tea, Gatorade, Red Bull), Non-alcoholic beer (Brahma 0.0%, Budweiser Zero, Corona Cero, Skol Zero Zero), Beyond Beer (Beats, Brutal Fruit Spritzer, Flying Fish).
• New product launches or major updates in 2025: Brahma 0,0% renovations, Guaraná Antarctica Zero com Fibras, Sukita Zero, Baré Zero, Beats Green Mix, Beats Tomorrowland, Flying Fish.

Market Dynamics:

• Competitive positioning: Market leader in beer and non-cola non-alcoholic beverages.
• Key customer types and regional market trends: Distribution through 89 proprietary direct distribution centers and 207 exclusive third-party distributors.
• Regulatory environment by jurisdiction: Subject to the Brazilian consumption tax reform (Constitutional Amendment No. 132/2023), which introduces dual-VAT (CBS, IBS) and excise tax (IS) on alcoholic/sugary drinks, with gradual transition from 2029-2032. The IPI excise tax rate was 8% in 2025.

Geographic Revenue Distribution:

• Brazil: R$49,030.8 million (55.6% of total Company revenue)
• Growth Markets: Focus on digital platforms like Zé Delivery for enhanced customer convenience.

Central America and the Caribbean (CAC)

Financial Performance (2025):

• Revenue: R$10,963.9 million (-0.5% YoY from R$11,023.7 million in 2024)
• Operating Margin: 42.6%
• Key Growth Drivers: Strong market leadership in beer in the Dominican Republic (Presidente) and Panama (Balboa ICE, Atlas, Corona). The segment recognized a R$824.7 million gain from the sale of SLU Beverages LTD. under exceptional items in 2025.

Product Portfolio:

• Major product lines: Beer (Presidente, Presidente Light, Brahma Light, Bohemia, The One, Corona, Modelo Especial, Stella Artois, Budweiser, Bucanero, Cristal, Mayabe, Cacique, Beck’s, Bud Light, Barena, Atlas Golden Light, Balboa ICE), Carbonated Soft Drinks (Red Rock, Pepsi, Seven Up, Canada Dry, Squirt).

Market Dynamics:

• Competitive positioning: Beer market leader in the Dominican Republic, Panama, and Cuba.
• Regulatory environment by jurisdiction: Cuba's designation as a state sponsor of terrorism and the activation of Title III of the Helms-Burton Act (reinstated January 20, 2025) pose specific risks for the Cuban joint venture.

Geographic Revenue Distribution:

• CAC: R$10,963.9 million (12.4% of total Company revenue)

Latin America South (LAS)

Financial Performance (2025):

• Revenue: R$17,988.3 million (-9.3% YoY from R$19,829.7 million in 2024)
• Operating Margin: 21.8%
• Key Growth Drivers: Market leadership in beer in Argentina (Brahma, Quilmes, Budweiser), Bolivia (Paceña, Huari, Golden), Paraguay (Brahma, Ouro Fino, Skol, Bud 66, Pilsen, Corona), and Uruguay (Patricia, Pilsen). The segment faces significant challenges from hyperinflation in Argentina, which negatively impacted net revenue by R$420.7 million in 2025.

Product Portfolio:

• Major product lines: Beer (Brahma, Quilmes, Budweiser, Paceña, Huari, Golden, Corona, Budweiser, Becker, Stella Artois, Cusqueña, Ouro Fino, Skol, Bud 66, Pilsen, Patricia, Pilsen), Carbonated Soft Drinks (Pepsi, Seven Up, Guaraná Antarctica).

Market Dynamics:

• Competitive positioning: Beer market leader in Argentina, Bolivia, Paraguay, and Uruguay; second beer producer in Chile. Second player in Carbonated Soft Drinks in Argentina.
• Key customer types and regional market trends: Argentina's hyperinflationary economy (IAS 29) and currency devaluation (40.8% in 2025) significantly impact financial performance. Bolivia experienced a U.S. dollar shortage.

Geographic Revenue Distribution:

• LAS: R$17,988.3 million (20.4% of total Company revenue)
• Argentina: R$7,890.1 million (8.9% of total Company revenue), experiencing a 31.4% year-over-year decline in revenue.

Canada

Financial Performance (2025):

• Revenue: R$10,259.5 million (+2.7% YoY from R$9,993.9 million in 2024)
• Operating Margin: 22.1%
• Key Growth Drivers: Labatt Brewing Company is the beer market leader. The segment benefits from a strong portfolio of both proprietary and licensed brands.

Product Portfolio:

• Major product lines: Beer (Budweiser, Bud Light, Busch, Busch Light, Corona, Michelob Ultra, Stella Artois, Labatt Blue, Kokanee, Lucky Lager, Alexander Keith’s), Ready-to-Drink (NÜTRL, Mike’s, Cutwater, Okanagan, Palm Bay, American Vintage, Beach Day Every Day, SVNS Hard 7-UP). Budweiser, Bud Light, Busch, Busch Light represented 49% of Labatt Brewing Company's total beer sales volumes in 2025.

Market Dynamics:

• Competitive positioning: Labatt Brewing Company is the beer market leader.
• Key customer types and regional market trends: Distribution varies by province, including Brewers Retail Inc. (The Beer Store, TBS) in Ontario, direct sales/distribution in Quebec, and government-controlled networks/private distributors in Atlantic Provinces.
• Regulatory environment by jurisdiction: Subject to U.S. protectionist policies, such as tariffs on Canadian imports (25% in February 2025, increased to 35% in August 2025), though some were later determined unconstitutional.

Geographic Revenue Distribution:

• Canada: R$10,259.5 million (11.6% of total Company revenue)

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries: Fully consolidated subsidiaries include Cervecería y Maltería Quilmes SAICA y G (Argentina), Cervecería Boliviana Nacional S.A. (Bolivia), Labatt Brewing Company Ltd. (Canada), Cervecería Chile S.A. (Chile), Cervecería Paraguaya S.A. (Paraguay), Cervecería Nacional Dominicana, S.A. (Dominican Republic), and Cervecería Nacional S. de R.L. (Panama).
• Joint Ventures: Cerbuco Brewing Inc. (a Canadian subsidiary) holds a 50% equity interest in Cerveceria Bucanero S.A. (Cuba).
• Licensing Agreements: Ambev S.A. maintains extensive licensing agreements with PepsiCo for NAB production and distribution in Brazil, Argentina, Canada, Uruguay, Bolivia, Panama, and the Dominican Republic. It also has licensing agreements with Anheuser-Busch InBev N.V. for the production and distribution of global beer brands (e.g., Budweiser, Corona, Spaten, Stella Artois, Beck’s, Modelo, Bud Light, Busch, Michelob Ultra) across its Latin American and Canadian operations. Labatt Brewing Company Ltd. holds exclusive rights for Budweiser, Bud Light, Busch, and Busch Light in Canada until January 2098.

Cross-Border Trade:

• Import Dependencies: Key imported materials include hops (sourced from the U.S., Europe, and Argentina) and PepsiCo CSD concentrate from PepsiCo. Packaging materials such as aluminum, sugar, corn, wheat, and PET bottles are subject to volatile global commodity prices.
• Transfer Pricing: Royalty and transfer pricing policies are in place, with new agreements negotiated in 2025, indicating ongoing management of inter-company transactions across jurisdictions.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases:
  • A program approved in October 2024 for up to 155,159,038 common shares was completed by December 31, 2025, at a total cost of R$1,930,815,421.
  • A new program approved in October 2025 authorizes the repurchase of up to 208,000,000 common shares until April 29, 2027.
• Dividend Payments:
  • Total dividends paid in 2025 amounted to R$13,200.5 million, distributed across four payments (R$1,997.5 million on April 4, R$2,000.2 million on July 7, R$2,000.5 million on October 6, and R$7,202.3 million on December 30, comprising mandatory and additional dividends).
  • Interest on Capital (IOC) declared in 2025 totaled R$4,200.7 million (gross), with payment scheduled by December 31, 2026.
• Future Capital Return Commitments: The Company has a mandatory dividend policy to distribute not less than 40% of its adjusted annual net income.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: R$18,638.2 million
• Total Debt: R$3,386.9 million
• Net Cash Position: R$16,933.0 million (calculated as Cash and Equivalents + Current Investment Securities - Total Debt)
• Debt Maturity Profile: Total debt of R$3,386.9 million, with R$1,167.3 million classified as current and R$2,219.6 million as non-current. Key maturities for total debt are R$1,167.3 million in 2026, R$865.7 million in 2027, R$599.3 million in 2028, and R$356.9 million after 2029. Weighted average interest rates vary by currency and type (e.g., U.S. dollar fixed rate 2.39%, other Latin American currencies fixed rate 15.15%, Canadian dollar fixed rate 5.54%, Brazilian Real fixed rate 11.73%).

Cash Flow Generation (2025):

• Operating Cash Flow: R$24,450.4 million
• Free Cash Flow: Not explicitly stated, but investing cash flow was (R$4,950.1) million.

Currency Management:

• Cash holdings by major currencies: Restricted cash not freely remittable to the parent company totaled R$4,070.6 million in 2025 due to remittance restrictions in Cuba and foreign currency unavailability in Bolivia.
• Financial hedging instruments and strategies: The Company uses derivative financial instruments (futures, forwards, swaps, options) to manage foreign currency exposure, particularly for U.S. dollar-linked costs and debt. The average BRL/USD hedge rate for 2025 was 5.37, with a 2026 outlook of 5.50.

Operational Excellence

Production & Service Model: Ambev S.A.'s operational philosophy emphasizes product quality, sustainability, cost efficiency, and customer convenience. The Company employs a vertically integrated model for certain raw materials and packaging.

• Manufacturing approach: Operates 28 plants in Brazil, 5 in Central America and the Caribbean, 19 in Latin America South, and 12 in Canada. The aggregate beer/NAB production capacity is 233 million hectoliters per year, with total production of 171 million hectoliters in 2025, indicating approximately 73.4% capacity utilization.
• Service delivery methods: Leverages digital platforms such as Zé Delivery (Brazil), TaDa (Argentina, Dominican Republic), and BEES (B2B platform across segments) to enhance customer convenience and digitize its ecosystem.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Malt: 70% of South America's malt needs were supplied by Ambev S.A.'s own 6 malting facilities in 2025.
• Hops: Sourced from the U.S., Europe, and Argentina.
• Non-malted cereals: Suppliers include Ingredion, Cargill Agrícola, and Arrozeira Pelotas.
• Guaraná: A 1,070-hectare farm provides 6% of the Company's guaraná needs.
• PepsiCo CSD concentrate: Sourced from PepsiCo.
• Packaging:
  • Glass: The Rio de Janeiro facility supplied 35% of Brazil's needs in 2025. A new glass factory in Paraná (inaugurated 2025) uses 100% renewable electricity and up to 80% recycled glass.
  • Aluminum cans: The Minas Gerais plant (opened September 2020) supplied 15% of Brazil's needs in 2025, with a capacity of 2.5 billion cans per year.
  • Crown caps: Produced by Arosuco Aromas e Sucos Ltda. (Manaus vertical operation).
• Technology Partners: SAP for the S/4HANA ERP system implementation in Brazil.

Facility Network (as of December 31, 2025):

• Manufacturing: Key production locations include Brazil (28 plants, e.g., Almirante Tamandaré for Soft Drinks, Guarulhos for Beer, Glass Rio for Glass Bottles, Cans Minas for Cans), Central America and the Caribbean (5 plants, e.g., Ambev Centroamerica in Guatemala for Beer, Santo Domingo in the Dominican Republic for Mixed products), Latin America South (19 plants, e.g., Acheral and Quilmes in Argentina for Beer, Cochabamba in Bolivia for Beer), and Canada (12 plants, e.g., St. John’s, Montreal, and London for Beer/RTD).
• Research & Development: R&D centers include ZITEC in Rio de Janeiro (since 2017) and Zarate Research Pilot Brewery in Argentina.
• Distribution:
  • Brazil: 207 exclusive third-party distributors and 89 proprietary direct distribution centers.
  • Argentina: 30% direct, 70% third-party (beer, 2025); 46% direct, 54% third-party (CSD, 2025).
  • Bolivia: 58% direct, 42% non-exclusive third-party (beer, 2025); 84% direct, 16% third-party (CSD, 2025).
  • Chile: 100% exclusive third-party (beer).
  • Paraguay: 75.4% direct, 24.6% exclusive third-party (beer, 2025).
  • Uruguay: 100% exclusive third-party (beer, CSD, from June 1, 2023).
  • Canada: Distribution varies by province, including Brewers Retail Inc. (The Beer Store, TBS) in Ontario, direct sales/distribution in Quebec, Brewers Distributor Limited in Western Provinces/Territories, and government-controlled networks/private distributors in Atlantic Provinces.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Ambev S.A. utilizes proprietary direct distribution centers in Brazil (89 centers), Argentina (30% beer, 46% CSD), Bolivia (58% beer, 84% CSD), and Paraguay (75.4% beer).
• Channel Partners: The Company employs exclusive third-party distributors in Brazil (207 distributors), Argentina (70% beer, 54% CSD), Bolivia (42% non-exclusive third-party beer, 16% CSD), Chile (100% exclusive third-party beer), Paraguay (24.6% exclusive third-party beer), and Uruguay (100% exclusive third-party beer and CSD). In Canada, distribution is managed through a mix of channels including Brewers Retail Inc. (The Beer Store, TBS), LCBO, grocery, convenience, bars/restaurants, Brewers Distributor Limited, and government-controlled networks.
• Digital Platforms: Key digital initiatives include Zé Delivery (Brazil), TaDa (Argentina, Dominican Republic), and BEES (B2B platform for Brazil, Latin America South, Central America and the Caribbean, and Canada) to enhance customer convenience and market reach.

Customer Portfolio: Strategic Partnerships: Licensing agreements with PepsiCo for non-alcoholic beverages and Anheuser-Busch InBev N.V. for global beer brands are critical for product portfolio diversification and market access.

Regional Market Penetration:

• Brazil: Market leader in beer and non-cola non-alcoholic beverages.
• Central America and the Caribbean: Beer market leader in the Dominican Republic, Panama, and Cuba.
• Latin America South: Beer market leader in Argentina, Bolivia, Paraguay, and Uruguay; second beer producer in Chile.
• Canada: Labatt Brewing Company Ltd. is the beer market leader.
• Growth Markets: Digital platforms like Zé Delivery and TaDa are key initiatives for expanding reach and convenience in emerging and established markets.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: Ambev S.A. operates in the beverage industry across 11 countries, focusing on beer, draft beer, soft drinks, other non-alcoholic beverages, malt, and food. Key trends driving industry evolution include a strong emphasis on sustainability (net-zero emissions by 2040 ambition, circular packaging, water stewardship), digitization of the ecosystem (BEES, Zé Delivery, TaDa platforms), and continuous product innovation (e.g., beyond beer, non-alcoholic beer, low-calorie options).

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The filing does not explicitly name direct competitors. However, Ambev S.A.'s market share data (e.g., Pepsi as the second bestselling cola in Brazil) implies competition from major global and regional beverage companies.

Regional Competitive Dynamics: The competitive landscape varies significantly by major geographic markets. Ambev S.A. maintains market leadership in beer across most of its operating segments (Brazil, Central America and the Caribbean, Latin America South, Canada). In non-alcoholic beverages, it holds leadership in non-cola in Brazil and is a strong second player in carbonated soft drinks in Argentina. The Company's strategy emphasizes leading and growing the category, indicating a proactive approach to competitive dynamics.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Exchange Rate Fluctuations: Most sales are in Brazilian Reais, but a significant portion of debt is in foreign currencies (primarily U.S. dollars), and a large part of cost of sales (e.g., aluminum cans, PET bottles, sugar, hops, malt) is linked to the U.S. dollar. In 2025, 44.4% of net revenues were from operating companies with non-reais functional currencies. A hedging policy is in place to mitigate this risk.
• Commodity Prices: The Company is exposed to volatile prices for aluminum, sugar, corn, wheat, and PET bottles. It uses fixed-price purchase contracts and derivative financial instruments to minimize this exposure.
• Technology Disruption: Reliance on IT systems (BEES platform, Zé Delivery, TaDa, S4 Hana SAP platform) makes the Company subject to cyberattacks and IT disruptions.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on global sourcing for hops (U.S., Europe, Argentina) and PepsiCo CSD concentrate from PepsiCo.
• Regional Disruptions: Operational risks include equipment failure, natural disasters, water crisis, power outages, supplier availability, and logistics network disruptions.
• Trade Restrictions: U.S. protectionist policies, such as tariffs on Brazilian and Canadian imports, pose risks. While some U.S. tariffs were determined unconstitutional, new across-the-board tariffs were announced.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Exposure to the U.S. dollar for debt and cost of sales, and to other Latin American currencies for revenues. Hedging strategies are in place using futures, forwards, swaps, and options.
• Interest Rate Risk: The debt portfolio includes fixed and floating rate components in various currencies.
• Credit & Liquidity: Managed through a broad distribution network, control procedures, and restricting investments to highly rated counterparties. The Company believes its cash flow from operating activities, cash and cash equivalents, short-term financial investments, derivative financial instruments, and access to credit facilities are sufficient to finance future capital expenditure, financial liabilities, and dividend payments.

Regulatory & Compliance Risks:

• Multi-Jurisdictional Compliance: Subject to data privacy laws (e.g., Brazilian General Data Protection Law (LGPD), similar laws in Chile, Argentina, Paraguay).
• Trade Regulations: Compliance with export controls and sanctions, particularly concerning operations in Cuba (designated state sponsor of terrorism, Helms-Burton Act).
• Tax Regulations: Significant changes in Brazilian consumption tax reform (dual-VAT, excise tax), OECD Pillar Two (global minimum tax of 15% effective January 1, 2025, in Brazil), and changes to federal taxation of tax incentives and deductibility of Interest on Shareholders’ Equity (Law No. 14,789/2023). Increased Tax on Financial Transactions (IOF)/Exchange rate for outbound remittances (Decree No. 12,466/2025, later suspended/reinstated with exceptions). New withholding tax on dividends for Brazilian individuals (> R$50,000/month) and dividends remitted abroad (10% WHT, effective January 1, 2026). The WHT rate on Interest on Equity increased from 15% to 17.5% for amounts declared from January 2026.
• Litigation: Significant provisions for legal contingencies (R$1.4 billion as of December 31, 2025) and estimated total possible losses (R$105.9 billion as of December 31, 2025), primarily related to tax matters (R$105.6 billion possible loss, including IRPJ/CSLL, PIS/COFINS, ICMS, IPI). Specific large tax proceedings include Deductibility of IOC expenses (R$30.8 billion), Disallowance of tax paid abroad (R$19.1 billion), ICMS-ST Trigger (R$12 billion), and Manaus Free Trade Zone–IPI Excise Tax / PIS and COFINS (R$7.3 billion). Labor and civil claims also exist.

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk: U.S. protectionist policies (e.g., Donald Trump's second term, tariffs).
• Economic Risk: Hyperinflation in Argentina (since Q3 2018), U.S. dollar shortage in Bolivia (since 2023). Brazilian economic indicators (GDP growth, unemployment, inflation, SELIC rate) influence domestic market conditions.
• Regulatory Changes: The Brazilian Federal Court of Accounts Ruling No. 2.615/2024 to resume the beverage production measurement system (Sicobe) was suspended by the STF.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network:

• ZITEC (Rio de Janeiro): An R&D center established in 2017.
• Zarate Research Pilot Brewery (Argentina): Another R&D center.
• Innovation Pipeline: Focuses on product development, including non-alcoholic beer (e.g., Corona Cero with vitamin D, Skol Zero Zero), low-calorie options (e.g., Stella Pure Gold), and beyond beer categories (e.g., Beats Tropical, Brutal Fruit Spritzer, Flying Fish). R&D expenditure was R$40.5 million in 2025.

Intellectual Property Portfolio:

• Patent Strategy: While not explicitly detailed, the Company holds a portfolio of key brands (e.g., Skol, Brahma, Antarctica, Guaraná Antarctica, Presidente, Bucanero, Quilmes, Paceña, Labatt Blue).
• Licensing Programs: Extensive cross-border licensing agreements with PepsiCo and Anheuser-Busch InBev N.V. for key brands.

Technology Partnerships:

• Strategic Alliances: Collaboration with SAP for the S/4HANA ERP platform implementation in Brazil.

Leadership & Governance

Executive Leadership Team (as of December 31, 2025)

International Management Structure:

• The segment structure (Brazil, Central America and the Caribbean, Latin America South, Canada) implies regional leadership and reporting relationships.

Board Composition (as of December 31, 2025):

• The Board of Directors comprises 10 effective members and 2 alternate members, with 3 independent members.
• The Chairman (Michel Dimitrios Doukeris) and Chief Executive Officer (Carlos Eduardo Klutzenschell Lisboa) positions are separate.
• The current term for the Board expires in 2026.
• Fernanda Gemael Hoefel joined as an Independent Director in 2025, and Ricardo Manuel Frangatos Pires de Moreira joined as a Director in 2025.
• The Board of Directors and Fiscal Council oversee cybersecurity governance.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• Brazil: Key regulations include the Brazilian consumption tax reform (Constitutional Amendment No. 132/2023, Supplementary Law No. 214/2025 and No. 227/2026), IPI Excise Tax (8% rate), ICMS Value-Added Tax (increased rates in several states in 2024/2025), and the Brazilian General Data Protection Law (LGPD).
• Argentina: Operates under hyperinflationary economy accounting standards (IFRS IAS 29).
• Cuba: Subject to U.S. sanctions due to its designation as a state sponsor of terrorism and the activation of the Helms-Burton Act.
• Canada: Operations are subject to U.S. tariffs on imports.
• Global: Subject to OECD Pillar Two rules, implemented in Brazil via Law No. 15,079/24, effective January 1, 2025, which introduced an Additional CSLL to ensure a domestic minimum effective taxation of 15%.

Cross-Border Compliance:

• Sanctions Compliance: The Company monitors and complies with multi-jurisdictional sanctions, particularly those related to Cuba.
• Anti-Corruption: Not explicitly detailed, but standard for a global company.

International Tax Strategy:

• Transfer Pricing: Royalty and transfer pricing policies are in place, with new agreements negotiated in 2025.
• BEPS Compliance: The Company is subject to Base Erosion and Profit Shifting (BEPS) regulations, including the OECD Pillar Two rules.
• Deductibility of IOC Expenses: Law No. 14,789/2023 (effective January 1, 2024) changed the basis for calculating Interest on Shareholders’ Equity.
• Withholding Tax (WHT): Law No. 15,270 (effective January 1, 2026) introduced a 10% WHT on dividends paid to Brazilian individuals exceeding R$50,000 per month and on dividends remitted abroad. Supplementary Law No. 224/2025 (effective January 2026) increased the WHT rate on Interest on Equity from 15% to 17.5%.

Environmental & Social Impact

Global Sustainability Strategy: Environmental Commitments:

• Climate Strategy: Ambev S.A. has an ambition to achieve net-zero emissions across its value chain by 2040.
• Renewable Energy: The new glass factory in Paraná, inaugurated in 2025, operates on 100% renewable electricity.

Regional Sustainability Initiatives:

• Brazil: The Company achieved its 2025 commitments in Smart Agriculture, Water Stewardship, Circular Packaging, and Climate Ambition in Brazil. The Brazilian Greenhouse Gas Emissions Trading System (SBCE) applies to facilities exceeding 10,000 tCO2e/year, with obligations enforceable 4-5 years from December 2024.
• Supply Chain: Circular packaging is a key commitment within the supply chain.

Social Impact by Region:

• Community Investment: Fundação Zerrenner, an Ambev S.A. shareholder (10.2% of share capital), provides healthcare, dental, education, and elderly assistance to Ambev S.A. employees and retirees in Brazil. Expenses incurred by Fundação Zerrenner with third parties for these benefits were R$380.0 million in 2025.
• Labor Standards: The Company manages over 17,000 labor claims, with provisions for probable losses amounting to R$216.9 million as of December 31, 2025.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure (as of December 31, 2025):

Hedging Strategies:

• Transaction Hedging: Ambev S.A. uses derivative financial instruments, including foreign currency forward contracts, foreign currency swaps, future contracts, and options, to manage short-term foreign exchange risk, particularly for U.S. dollar-linked costs and debt.
• Translation Hedging: The Company generally does not hedge exchange differences of equity investments in non-Real countries but may hedge future dividend payments in other currencies.
• Commodity Hedging: Fixed-price purchase contracts and derivative financial instruments (cash flow hedges) are employed to minimize exposure to commodity price volatility for aluminum, sugar, wheat, corn, and paraxylene.
• Average Hedge Rates: The average BRL/USD hedge rate for 2025 was 5.37, with a 2026 outlook of 5.50.
• Foreign Currency Liabilities: Foreign currency-denominated liabilities totaled R$953.0 million as of December 31, 2025.