Budweiser Brewing Company APAC Ltd
HKEX:1876
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Budweiser Brewing Company APAC Ltd
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Welcome to the 2022 First Quarter Results Announcement Conference Call for Budweiser Brewing Company APAC Limited. Hosting the call today from Budweiser APAC is Mr. Jan Craps, Chief Executive Officer and Co-Chair of the Board; and Mr. Ignacio Lares, Chief Financial Officer.
The results for the 3 months ended 31 March 2022 can be found in the press release published today -- earlier today and available on the Hong Kong Stock Exchanges and Budweiser APAC's website.
Before proceeding, let me remind you that some of the information provided during this results call, including our answers to your questions on this 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, uncertainties and other factors beyond our control. It is possible that Budweiser APAC's actual results and financial conditions may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Budweiser APAC is under no obligation to and expressly disclaims any such obligation to update the forward-looking statements as a result of new information, future events or otherwise. For a discussion of some of the risks and other important factors that could affect Budweiser's APAC's future results, see risk factors in the company's prospectus dated 18th September 2019, the 2021 Annual Report published and other documents that Budweiser APAC has made public.
I would also like to remind everyone that the financial figures discussed today are provided in U.S. dollars, unless stated otherwise. The percentage changes that will be discussed during today's call are both organic and normalized in nature and unless otherwise stated. Percentage changes refer to the comparisons with the same period in 2021. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Budweiser APAC's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, EPS, EBIT and EBITDA on a fully reported basis in the press release. Further details of the 2022 first quarter results can be found in the press release published earlier today.
It is now my pleasure to pass the time to Mr. Jan Craps. Sir, you may begin.
Thank you, Anna, and good morning, everyone. Thank you for joining our earnings call. I hope you're all safe and well. In China, after the healthy first 2 months of the year, COVID restrictions disproportionately impacted our business in March, and we quickly reallocated resources to minimize the impact on COVID-affected regions. The pressure we faced in China was partially offset by a strong performance in South Korea, which was driven by market share gains in both the on-premise and in-home channels and supported by an improved business environment. Together in Q1, we were able to deliver top and bottom line growth and reported the highest quarterly EBITDA margin since our IPO. That said, our volume declined by 2.7% as the renewed restrictions from mid-March significantly impacted the business environment in China. However, ongoing premiumization, along with revenue management initiatives resulted in revenue per hectoliter growth in all of our key markets.
Before I hand it over to Iggy to take you through our financial performance, I will take a few moments to provide more color on each of our key markets. In China, our volume declined by 4.3%. The COVID restrictions from the second half of March significantly impacted the business environment in the country, leading to a low single-digit industry decline in the quarter based on our estimates. We were disproportionately impacted due to the channel and geographic mix. In addition, due to the Chinese New Year occurring 2 weeks earlier this year, we also faced a tough comp from the phasing of sales. However, we continue to execute on our strategy of premiumization. Our Premium and Super Premium brands both increased their volume weight in our portfolio, with Budweiser growing high single digits and Super Premium growing strong double digits compared to the pre-pandemic levels. In addition, our EBITDA was in line with the same period of [indiscernible] year and above pre-pandemic levels as well.
We also continue to progress on the digitization front. During the first quarter, our BEES platform expanded its reach into more than 28 cities, connecting with more than 20,000 customers by the end of March. Our brewery footprint across the country ensured business continuity, thanks to the unparalleled dedication of our colleagues in this challenging time.
South Korea, we accelerated our commercial momentum and delivered robust market share gains in both the on-premise and in-home channels. COVID restrictions have been gradually eased in the first quarter by the government's Living with COVID policy, which further improved operating conditions across the country. As a result, our volume grew by mid-single digits. Revenue per hectoliter increased by low single digits, leading to double-digit revenue growth. In addition, since April 18, all the restrictions in the on-premise channels have been lifted in the country, and we are glad to see that people have gradually returned back to normal life with strong consumption sentiment. We also improved our operational leverage supported by a strong top line recovery. This led to a strong double-digit EBITDA growth with a solid margin expansion.
In India, the business environment further improved as the number of COVID cases and corresponding restrictions significantly reduced. We continue to outperform the industry with our Premium and Super Premium portfolio, recording strong double-digit growth. We developed our non-alcoholic beer segment catered to local consumers, adding new flavors with the launch of Budweiser 0.0 Green Apple and Hoegaarden 0.0 Rosee.
Now, I would like to pass it over to Iggy to take you through our financial results in the first 3 months of the year. Over to you, Iggy.
Thank you, Jan. Good morning, everyone. As Jan mentioned earlier, the COVID restrictions in China pressured our volumes, which declined by 2.7% in APAC despite a strong performance in other markets. We expanded revenue per hectoliter in all key markets, driven by continued premiumization as well as revenue management initiatives. Revenue per hectoliter grew by 4.3% and revenue grew by 1.5% in the quarter. Overall, EBITDA grew by 7.6%, and our EBITDA margin expanded by 198 basis points, reaching the highest EBITDA margin since our IPO.
Cost of sales increased by 3.1% and by 6% on a per hectoliter basis, mainly due to commodity price escalations and a higher proportion of premium sales. This was partially offset by efficiency initiatives and supported by our hedging policy.
SG&A decreased by 7.9% due to agile investment reallocation and cost management initiatives in light of the recent COVID restrictions in China, coupled with a softer comparable in South Korea from commercial investment phasing in the first half of last year.
Normalized profit attributable to equity holders increased to $304 million, a 28.8% improvement versus the same period of last year. The profit attributable to equity holders was $302 million.
Before we open the floor for Q&A, let me briefly provide some additional details to contextualize the key financials in China, given the impact of COVID restrictions in the quarter. Volume declined by 4.3% due to the stricter restrictions in the last 2 weeks of March. Revenue per hectoliter increased by 3.2%, driven by ongoing premiumization as well as proactive revenue management initiatives. Despite the impact of COVID restrictions, both revenue and EBITDA landed above pre-pandemic levels.
And with that, I'll pass it back to Anna for the Q&A. As always, Jan and I are here to answer any questions you may have.
[Operator Instructions] Your first question is from Lillian Lou, who's from Morgan Stanley.
Jan and Iggy, and I hope you are all well in Shanghai. I have 2 questions, both about China. Maybe I will ask the first one first. So, obviously, we're all focused on the near-term impact of the COVID, especially in some areas which appear to be significant, both Jan and Iggy just mentioned. So we wanted to understand, especially in March and April, how big it was on the different China, especially on the on-trade channel and at the same time, how is off-trade channel trending? And also by region, how do we see the things are moving in different regions, especially Eastern region with Shanghai is still experiencing the lockdowns and also Southern area where things seems to be better? Any color on this? I will ask the second question later.
Sure, no worries. Lillian, I hope you're doing well. Let me maybe try to give you some color and a couple of numbers that we can share on the recent months, right? So as we mentioned, we started the year with healthy sales volumes and despite the kind of the CNY phasing, which was 2 weeks earlier. But when we got into March, I would say the COVID restrictions really started to impact the business environment more significantly, I would say, as of mid-March when we -- and when we look at the total quarter, the impact that started mid-March, actually, in our estimates, made the industry decline low single digits in Q1. And, of course, we would be disproportionately impacted because as you probably followed, both from a channel and a geographic perspective, but APAC is more situated in the channels and the provinces that were more impacted than average in China. So our volume declined 4.3%.
From March on, the province is where we have a stronger presence. So we're talking about Guangdong, Fujian, Jilin, Heilongjiang, they were pretty heavily impacted. When we look at nightlife, we estimated around 100 cities, nightlife was fully closed at the end of March. And when we look at the opening rates, just for information, right, we estimate that at the end of March, about 42% of nightlife was open. About 86% of Chinese restaurants was open and about 96% of the in-home channel. So off-trade would have been opened at the end of March. So if you -- if we would just isolate the last 2 weeks of March, which I think is an interesting indication for you to get a sense of the numbers, our total sales to retailers, so the STRs, as we call it, they dropped high teens in the last 2 weeks of March and Premium and Super Premium would be impacted more heavily just because of the channel and the geo mix with all the restrictions ongoing.
Now, we take a look at April again, share some numbers, right? I would say that cities like Shanghai, Heilon and provinces like Heilongjiang and Jilin, they are still under restrictions, right? Many other cities are also going through some sporadic lockdowns. If we look at the end of April, it's pretty similar to the end of March. So we estimate about 38% of nightlife was reopened and about 82% of Chinese restaurants was reopened and also 96% of the in-home channel. However, on the better news side, I would say that in the regions where the lockdowns were lifted, we did see gradual improvements in the reopening rates. So, for example, especially Guangdong recently in the last couple of weeks and Fujian in the last week, we do see the reopenings accelerating, and we see consumer demand coming back. So, obviously, these are important provinces for us. So that's more recent in the last 1 or 2 weeks.
At the same time, you would have seen in our press release that, of course, COVID continues to bring uncertainties, but we also -- we have now more than 2 years' experience in this, right? So our teams have been very agile. We reallocated commercial investments across channels and across provinces, depending on where the impact would be. So if you look at, for example, the e-commerce channel, we actually gained market share in the e-commerce channels because we reallocated resources there. And this kind of cost reallocation and just the overall management, I would say, despite the challenging environment, we still achieved the highest EBITDA margin in China since -- also in China. So APAC, overall, but also in China since the IPO because of this commercial agility and the cost efficiency initiatives. So I hope these kind of numbers give you a little bit of context, Lillian, for -- on your question.
So second question is also about China. I think in addition to revenue or sales impact, I want to understand a little bit further about the whole operation disruption from all this lockdown in different areas, especially we all understand that there is a logistic bottleneck. So how do we see the sequential changes since April, that they actually also improve? And also, how big was the logistics impact to the operation at the peak, I think, probably at the end of March or early April?
I think different than many other companies, when I talk to some peers of different industries, I think their main focus is on logistics and supply chain. And they've seen a lot of disruption in their businesses. But when I look at our business, actually, thanks to our strong business footprint across the country, we actually, in short, quite a good business continuity. So as you might remember, we have about 30 breweries across China. And we cover different geographies very well, and we are typically located quite close to our wholesalers.
So also most of our breweries are equipped with cross-brewing capabilities, and that allows us, not only operational efficiency, but also it minimizes the impact of COVID restrictions as our teams work together with local governments and just with our wholesalers and the supply chain to find solutions for the many different potential problems that can exist and they also work with our suppliers to find different sources of raw materials. And they've actually, with all their hard work and their actions, they've been able to essentially minimize any impact of COVID restrictions on our footprint.
So we did need to put a couple of breweries in closed loop management so that we could ensure just the freshness of our beer, but also supply service -- guaranteed supply service levels. So we've been pretty much safeguarded from any significant disruption in the supply chain. Our focus is mostly on the sales channels and the consumer demand.
Your next question is from Xiaopo Wei, who's from Citigroup.
I have 2 questions as well for China. I will ask one by one. The first question, Budweiser APAC has been very good in [ actually ] react to the market dynamics. And as Jan just mentioned, that the COVID situation is very fluid in China. And given the current development, will the company continue to implement a like-for-like ASP hike in the rest of the year? That was the first question.
I hope you're doing well. As to your question, let me maybe answer a little bit more forward looking, right, because on Lillian's question, I kind of gave the last couple of months' feedback. When we look forward, we do expect several regions in China to be under COVID restrictions as a dynamic zero COVID policy has been confirmed by the central government as a key direction. So with this current dynamic zero policy, we do believe that there will continue to be sporadic lockdowns, but with shorter periods in the future. So we expect them to continue at a regional level in different cities, but we expect them to be sporadic, and we expect them to be shorter, right, I would say, Shanghai is probably the exception together with Jilin versus where we see many other cities, when we look in Guangdong, for example, probably the Shenzhen and the Guangzhou experience was much shorter, and they were able to essentially go back to dynamic zero COVID at a community level much quicker than the other provinces were able to do.
What we see as well, based on our past 2 years experience is that, typically, we expect consumer demand to recover relatively quickly once the restrictions are lifted. That's what we've seen in the last couple of years. So on the short term, we do expect some sporadic lockdowns to continue but shorter periods and different by city. Of course, on the midterm and the long term, we remain optimistic on China. Obviously, because there is such a big room for premiumization with the middle-class households in China expected to quadruple in the next, let's say, 7 to 8 years, by 2030. And we see our business momentum continue. We continue to see a very big potential for our portfolio and our go-to-market that's completely structurally intact in our perception.
Then when you look at the price increases, we always kind of evaluate closely pricing opportunities, and that happens region by region and channel by channel. If you remember, last year, in the fourth quarter, we already increased prices early on in the Core+ segment that was in November, November, December, that was ranging from 3% to 10%. We also increased price on Budweiser in the month of December at the time was close to the CPI as a benchmark. And then in Q1 this year, we actually just executed a nationwide price increase on the Core and Value segment, which we usually do in that period, typically 1st of April kind of periods. So we executed it around March and April. We executed a mid single-digit increase on the Core and Value segment across China.
So we do just want to kind of focus on premiumization is, as you probably know, Xiaopo is more important as a driver of top line growth in China than rates. So we do expect premiumization to continue to be the primary driver of top line growth and our financial performance. But even with that, we did take significant price increases in the last 4 to 5 months, I would say. And also, you probably would have seen that even in Q1, when we had this impact on nightlife and restaurant venues because of the COVID restrictions, we still grew revenue per hectoliter by 3.2% in China.
I hope that answers your question, Xiaopo.
The second question is about competition. As you've already seen some reopening, like you mentioned in Guangdong, Fujian and -- but is there still new lockdown in Beijing, I mean, the competition landscape is going to be more sophisticated than previous years. What is the company's strategy on A&P investment? Did you see any price competition in the market which is opening?
Xiaopo, basically, we remain very agile in our commercial investments, and we reallocate resources very quickly between channels and geographies. And our team kind of had to become quite specialized in last couple of years. So, for example, we typically prioritize in-home channels, of course, when we see restrictions popping up in different cities. And typically, in-home remains open in most regions, right, with some exceptions.
Our first quarter sales and marketing percent of net revenue was actually lower than in Q1 last year. And that is because we quickly saved and reallocating investments across channels and geographies. And, of course, in Q2, we do expect, as you would normally do sales and marketing to ramp up a little bit because we gear up for summer, right? Summer is a very important period for us. And as you probably know, April is one of the smaller months within Q2. So we do expect with the reopening to happen, hopefully, soon that we will still have kind of a good situation there. And, of course, this helps us as well just reach these high EBITDA margins in China because this cost management continues to apply our cost-connect-win approach where we do reduce indirect overheads, but we also reinvested savings in our commercial plans.
On pricing, as I mentioned, we did take price in different channels and segments and geographies, basically across all of our price tiers in our portfolio. And on the competitive pressure, we have not seen any significant competitive pressure different than before COVID restrictions would have been implemented. So I would say a relatively normal environment. Question Xiaopo.
Your next question is from Clement Xu from DBS.
My first question is about China. So regarding our expansion blueprint of Premium and Super Premium products in various Chinese cities. Could we have some more color on our latest progress? Have we seen a market share improvement in these cities? And the recent COVID disruption, has it changed our plans or targets? I'll ask my second question later.
So, as you probably know, our expansion strategy is pretty detailed, right, because we take into account regions with high consumer demand based on our market maturity model. So in our expansion playbook, we really tailor our strategies and also the tool kits city by city. So in previous calls, I think we expanded on our success in expansion cities last year, where Budweiser was expanded in more than 50 cities and we got above 30% growth in these cities. And very similarly, for Super Premium, we expanded in more than 30 cities, and we achieved also close to 30% growth in these cities.
So when we look at 2022, in the full year results call, we disclosed that for Budweiser, we are targeting more than 70 cities for expansion and for Super Premium more than 45 cities expansion. We did not change these targets, right? Because we -- I mean, given we only see a short-term impact of the COVID restrictions, we remain committed to our strategy and our investments into China because we believe we are uniquely positioned with our portfolio and go-to-market and expansion strategy to really be successful in this market.
So if you look at Q1, of course, you would expect some impact of the COVID restrictions even if we continue to be resilient in our expansion strategy. So if you look at Budweiser, in the -- Budweiser did grow volume in all kind of in the totality of the expansion cities. When we look at the cities that were not impacted by COVID, of course, Budweiser continued to grow strong double digits. And very similar with Super Premium continue to grow double digits in the markets that are not impacted by COVID. So expect to see a short-term impact where there is restrictions, obviously, because of the channel structure and geographic impacts. But we do see a very healthy continuation of the reaction of the market on our expansion and where there is no significant COVID restrictions. So, we continue to believe in this strategy, and we are quite nimble to react when restrictions get lifted to continue to invest. I hope that answers your question, Clement.
Yes. That's very clear and helpful. My second question is about our vision of 20% volume contribution from our low and non-alcoholic beer by 2025. So what is the achievement that we have seen so far? Are we expecting a faster growth of such segment in areas like India because given its special customer preference? And if so, what would be our strategies for different APAC regions?
Sure. Actually, you're referring to one of our commitments in the Smart Drinking portion of our ESG strategy. So within ESG, we have 8 different priorities, strategic priorities. And like we shared in the webcast last week, we actually -- one of the 8 is called Smart Drinking. And within Smart drinking, we took different commitments. And you're right, one of our commitments is to have more than 20% of our total volume contribution coming from low and non-alcoholic beers by 2025.
So we -- basically, if you look at our portfolio, we see the non-alcoholic beer market continue to evolve rapidly. And when you look at our current offerings, we already have many non-alcoholic and low alcoholic products in our portfolio. So some examples across Asia would be Budweiser 0.0, Cass 0.0, Hoegaarden 0.0, they've been launched in several of our markets. And you're right, we have a special attention on this segment in India because this is a country with a higher demand for low and low alcoholic products. And so, we tailor our offerings for the local demand. So when you look at Q1, we already launched Budweiser 0.0 2 years ago and Hoegaarden 0.0 last year and actually in the first quarter of this year, as you might know, the second quarter is actually the peak season in India as an industry. So we launched before the peak in Q1, new flavor options for Budweiser 0.0, which is a green apple flavor. And for Hoegaarden 0.0, we launched the Rosee flavor, which is our most successful kind of a fruity flavor for -- within the Hoegaarden portfolio.
We also went outside of beer, right, in last year -- end of last year, we launched a non-alcoholic energy drink with Budweiser Beats, which is also going very well. And as you might know, non-alcoholic offerings in India, they get a much wider access to distribution because for alcoholic products, there is only about probably around 55,000 stores in the whole country that we are selling alcoholic beers in, but 0 actually gives an opportunity to get distribution in many more stores because of regulation.
On top of that, of course, if we look at South Korea, we also have some important products there and a larger this year. So we launched Cass 0.0 last year. It is actually sold in one of the biggest e-commerce channels in the country in Coupang. And we already sold more than 2 million cans there in the last 8 months since launch. And these products are also exempted from local excise tax, which is supporting the profitability of this segment as well.
And, of course, next to NapLap or no-al and low-alcohol products, we also have other commitments in terms of raising awareness of alcohol responsible consumption, no drink no driving. And we also continue to improve the alcohol literacy on labels to avoid any harmful consumption. I hope that answered your question, Clement.
Your next question is from Lynn Wu, who's from Bank of America.
I hope you're doing well. I'd like to focus my 2 questions on South Korea. The first one is on recovery momentum. So we had a very strong performance in South Korea in Q1 and gained market share in both in-home and on-premise channels, which is very encouraging. I wonder if you could maybe share with us a little bit more about the observations of the most recent 2 months on the pace of demand recovery, especially after COVID policy eased significantly in March. What's the consumption sentiment like on the ground? And how is it impacting our volume growth, both in-home and on-premise, as well as impact on revenue per hectoliter? And how are we seeing industry demand versus pre-COVID level? And are we expecting demand to potentially be back to normal in the coming few quarters? And how are the competitive dynamics also changing in mid-reopening? This is my first question. I'll pause here and ask my second one later.
I hope you're doing well. I'm actually quite excited to talk about South Korea, right? I mean, I have been since several quarters. But I think this quarter, we really see a confirmation of the underlying momentum now combined with industry recovery, really delivering strong results as we anticipated. So, if we look at the COVID situation in South Korea, it has significantly improved in the first quarter of this year. As you might have followed, daily COVID cases in South Korea, they peaked over 600,000 cases per day in mid-March. So it was a very high number of cases, right?
But since then, it has been declining since mid-March and today, in the last week is around less than 50,000 cases per day. But in parallel, the government has -- in South Korea has continued to relax the restrictions. So as they were going up in the peak in the month of March, they continue to relax the restrictions, let's say, hour by hour almost in terms of opening or closing time of the on-premise. And in their new Living with COVID policy, it really facilitated further easing of the social distancing restrictions and it has improved significantly our operating conditions.
And to the point that actually recently on April 18, all the COVID-19 restrictions have been lifted in the on-premise. So today, since 2 or 3 weeks now, nightlife and restaurant venues have opened without any restrictions on operating hours. There is also no limit anymore on the number of people gatherings. And actually, since this week, since May 2, there's also no more any mask requirement in the other spaces. So really, let's say, almost back to normal from a restrictions perspective in South Korea. As a result, the industry has improved in Q1 versus last year. We do see strong consumer sentiment.
If you -- to your question on pre-COVID level, it is still lower than pre-COVID level just because of the timing of the restriction easing, right, which kind of happened throughout the first quarter and up until mid-April, which actually gives us even better reasons to believe for the next upcoming quarters. There's quite some room to continue to improve and get back with the industry to pre-COVID levels.
If we look at our commercial momentum and competitive environment, we see a strong continued momentum like we've been seeing in the last number of quarters that the underlying business momentum is very strong. So we continue to gain share both in the on-premise and in the in-home channels, mostly led by all new Cass and HANMAC innovation, and we remain very optimistic on the strong business momentum we are seeing in South Korea currently. I hope that answers your question, Lynn.
Yes. That's very encouraging to hear. And my second question is related to the trend of revenue per hectoliter and more specifically on price hikes. So we raised prices in South Korea for Premium products in January and for Cass in early March. I wonder how is the market reacting to our price hike so far, including the progress of cost to pass, I guess, price through to consumers, as well as the impact on the sales volume of these products? And have we seen any changes to our channel inventory levels? And related to that, how should we think about the full year benefit from price adjustments versus potential challenges from channel mix shift? And in terms of channel, what's your revenue or volume share from on-premise last year? And what's your expectation for this year?
So I think it's another reason to be kind of happy to talk about South Korea this quarter because in the cost inflation environment that we were in, in terms of commodities, we were able to take price in South Korea. Revenue per hectoliter grew by low single digits in Q1, mostly driven by revenue management initiatives because we see a price increase. We already took price in Premium, as we mentioned last call in 1st of January this year. We took about 10% Premium brands in the in-home channels. But in the quarter Q1 this year, we also took price on the core segments by 7.7% for our domestic brands, effective from the 8th of March.
So I would say probably just under half a month of price increase impact was embedded in the first quarter net revenue per hectoliter. And the impact will be more significant in our financials in the coming quarters. And, of course, it's quite relevant because it's been nearly 6 years since we have taken price on our domestic beer brands. So it's been an important kind of movement.
At the same time, the Korean government continued its annual CPI excise adjustment system. So the new excise tax went up by 2.5% effective on the 1st of April. And if you look at the last 2 years, you're right, the channel mix is important in South Korea. So, of course, it was kind of the one silver lining we had when there were COVID restrictions is that net revenue per hectoliter in South Korea is actually benefited from a channel mix perspective because in-home channel typically increases and the can mix is, of course, higher in-home and it has a higher net revenue per hectoliter than the big bottles that are typically sold in the on-premise.
So, as the channel rate starts to return to normal as the restrictions are lifted, we will no longer have this channel mix benefits in South Korea, but we are -- if you look at the revenue management initiatives that I just discussed, which we implemented in the first quarter, they will benefit the net revenue per hectoliter this year and more than offset any channel mix deficit we will get in the upcoming quarters. So that's kind of the color I can give you on -- in [ steam ] South Korea, Lynn, I hope that answers your question.
Your next question is from Lee [indiscernible] from Goldman Sachs.
Firstly congratulations on the solid first quarter results despite the tough environment. I've got 2 questions. One is specifically about Korea and the next one is on group level. I will go one by one. We have seen our significant EBITDA margin expansion for [ Clear ] this quarter, but still way below the first quarter '19 level, given we are seeing continued pricing actions and product launch in Clear. In your view, what is the more normalized EBITDA margin level for Clear and also East region in the mid-term?
I hope you're doing well. Let me maybe pass this question to Iggy. Iggy, can you take this one?
Sure, yes. While we don't provide guidance for EBITDA margin, I can say the following. Take a look at Q1 of this year, our EBITDA margin in South Korea expanded significantly, it's mainly from the improved operational leverage rather with a strong top line recovery that Jan shared earlier as well as, of course, the impact of commercial investment phasing in the first half of last year in 2021, following the launches of All New Cass and HANMAC as well. And while we don't disclose the EBITDA margin for APAC East in the quarter, you can see that the overall margin for APAC expanded almost 200 basis points, 198 basis points to be precise, which is, of course, aided by the very strong performance in South Korea.
I think beyond that, what I would say is, we don't see any structural impediments to EBITDA margin expansion in APAC East. Operational leverage improvement as the industry continues to recover as well as, of course, the full contribution of the recent price increases, which Jan mentioned, which, of course, are not fully reflected in Q1 results given their timing are both generally favorable drivers for continued EBITDA margin expansion. So I hope that answers your question, Lee.
That's clear. And secondly, in the view of continued global cost inflation, what measures we have been taking for cost control? So unit cost was up 6% in the first quarter. How do you look at it from a full year perspective, taking into consideration our hedging policies and cost locking measures?
Yes. I'll take this one. So maybe let me start with the fact that commodity price increases are not new, right? We've been increasing across many of the categories that are relevant to the business, including aluminum, barley and carton and fiber board for almost 2 years. And as you can imagine, given our hedging policy, it gives us a bit of time to formulate types of initiatives, which will help us to mitigate the impact of the commodity escalations.
So maybe let me show some examples of the ways in which we've been mitigating cost-related risk thus far, we've executed many efficiency initiatives to manage consumption. And these are, of course, very helpful in offsetting the commodity price increases. We lowered our water usage by more than 20% versus a 2017 baseline, which also, of course, supports our efforts in sustainability. And we would have shared in our most recent press release that the Nanning Brewery is actually a reference in water usage, not only in China but also across the global AB InBev network of breweries. We also focus on lowering energy and other fluid usage, as well as many initiatives, not only within our breweries, but also within our logistics footprint and upstream in partnership with our suppliers.
Then another group of cost controls would hinge on leveraging, of course, the global footprint of AB InBev. This gives us, of course, both the flexibility to adjust sourcing options as needed, but it also gives us the opportunity to ensure global scale provides us the best pricing market. So as a result, as you mentioned, the cost on a per hectoliter basis increased 6%, which was significantly lower than the double-digit increase we saw in most major raw material and packaging material categories. And this was even despite the reduced operating leverage in China from the COVID restrictions, which we mentioned earlier. While we don't provide any specific guidance for cost escalations, either at the group or regional level, we do see that the principles behind our cost of sales performance will continue to drive our results moving forward.
And then finally, not part of our cost control, but really important nonetheless. Our continued premiumization and revenue management initiatives will play a critical role everybody to offset increased raw and packaging material costs. So I would say we've got confidence that we'll continue to deliver on both our best-in-class revenue management capabilities and our cost efficiencies, and this will help optimize our performance. So I would say, therefore, we don't see the current escalations in commodities, a structural headwind, but more a transient effect.
We have time for one more question. Our final question will come from the line of Melody Zhou, who's from CICC.
It's Melody Zhou from CICC. Congratulations on such a surprising results. And I have 2 questions, and I'm going to ask them one by one. My first question is, how is the progress on the digitization front? This is my first question.
I hope you're doing fine. On digitization, let me just remind the kind of key priorities we have there or the key purpose of this. We really want to expand our commercial capabilities via digitization essentially to sell more volume, connect with more customers, increase ROI and offer more services. So these are really the 4 things we want to achieve. If we look at the BEES platform, which is our digital B2B platform that we've been working on since the last 18 months, we are really getting ready to scale up. And we actually took advantage over the last couple of months to accelerate the scale up beyond what we initially planned.
So, if you look at the trade marketing, investment and the digital engagement module, which we had in market a little bit longer, we reached more than 500,000 customers who adopted these for their business, and that's really a tool to help us invest in store level but also check the execution in-store via digital tools. If you look at the transactional functionality, which is for order taking and transactions, we are expanding the success of BEES platform from the 2 initial pilot cities where we saw success in 2021. If we look at the end of March, we are now covering 28 cities already. So on a couple of months' time, we really expanded already to a much larger number of cities. And when we look at the end of March, we are now at about actually more than 20,000 customers that are placing their orders via the BEES platform, and we would expect that to scale up significantly in the next couple of quarters.
And my second question is about the overseas market. So do you have any update on your business in the India market?
Sure. In India, in Q1, there was actually even an earlier surge of the COVID peak, which really peaked in, let's say, end of January, early February. And since then has decelerated very quickly. And daily cases on, let's say, 1.3 billion people is now less than 5,000 per day across India. So really very low levels of COVID presence for the moment. And as you might know, India has administered more than 1.8 billion COVID vaccines. So they now cover more than 90% of the eligible population with 2 doses. As a consequence, we've seen a significant reduction of restrictions in India throughout the first quarter, especially in March. And so, we see further improvements in our business trends there and also mostly driven by premiumization.
When you look at our Premium, Super Premium portfolio, these brands grew by strong double digits in India. Their volume rate continued to increase significantly in our total portfolio. If we look at Budweiser, which is the #1 premium brand in India, it also outperformed the industry and continues to increase its market share. And overall, we achieved revenue and EBITDA growth in the quarter versus last year.
When you look at the longer term in India, we remain very optimistic on the long-term potential of the Indian market, not only because of the demographic advantage, but also just growing prosperity there and then a lot of premiumization trends that are there in India, where we are very well positioned with our Premium, Super Premium leadership in India to capture the future growth in the markets with the higher margins in this segment versus average in the market.
Thank you so much for your detailed explanations. It is very helpful, and please take care in Shanghai.
Thank you. This concludes our Q&A session today. I would like to turn the conference back over to Mr. Jan Craps for the closing remarks.
Thank you, Anna. The first quarter of this year shows our financial resilience and commercial agility. Although we are facing short-term impacts in China from COVID restrictions, both our underlying momentum and the potential we see in the market remain. Moreover, we are optimistic on the operating environment and our strong business momentum in South Korea and India. Our commercial strategies remain to lead and grow the category through premiumization and expansion, to leverage digitization to unlock new business opportunities and to optimize our business to combine top and bottom line growth while leading ESG initiatives.
Our greatest strength continues to be our people. Our culture of dreaming big and operating with ownership is more relevant and stronger than ever. We remain focused on our commercial strategies and our sustainability goals.
Thank you very much and look forward to speaking to all of you very soon. Thank you.
Thank you. This concludes today's results call. Please disconnect your lines. Thank you.