Budweiser Brewing Company APAC Ltd
HKEX:1876
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Budweiser Brewing Company APAC Ltd
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Welcome to the 2022 9 Months 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 9 months ended 30th September 2022 can be found in the press release published earlier today and available on the Hong Kong Stock Exchange and Budweiser APAC's website.
Before proceeding, let me remind you that some of the information provided during this result 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 condition 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 the new information, future events or otherwise. For a discussion of some of the risks and important factors that could affect Budweiser APAC's future results, see risk factors in the company's prospectus dated 18 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 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 9 months 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 all are safe and well. We continue delivering top and bottom line growth year-to-date, thanks to our diverse geographic footprints and the strength of our portfolio. These unique attributes helped us partially offset the impact of COVID restrictions in China and escalating commodity costs. At the same time, we accelerated our business momentum in South Korea and India, where we delivered double-digit top and bottom line growth driven by industry recovery and market share growth.
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, especially regarding our performance in the third quarter this year. In China, the COVID restrictions in Q3 were heavily focused on markets where Premium, Super Premium segments are most developed, including the Southeast region with Fujian and Zhejiang, the Northern region with Beijing and Tianjin and the Northwest region. China still rose 3.7% in Q3 on a year-on-year basis, supported both by a favorable comp and revenue per hectoliter declined by 2% and it showed 1.6% revenue growth.
Despite the ongoing headwinds, our strategy and underlying momentum position our business in China for future sustainable growth. We continue to see underlying premiumization with revenue growth from our Premium and Super Premium segments compared to the same period last year and pre-pandemic levels, both on a quarterly and a year-to-date basis. We also progressed our other strategic pillars. On the expansion front, Budweiser and Super Premium portfolio grew by double digits in expansion cities outside of regions, impacted by COVID restrictions in the first quarter.
In the meantime, we pushed further forward on digitization. With our BEES B2B platform now expanded to more than 90 cities and generating more than RMB 1 billion in net revenue year-to-date. In the month of September, BEES accounted for more than 10% of our revenue. We continue to drive premiumization and innovation with a launch of 059 Coastline in Fujian, a new locally inspired craft beer brands. It is good with local ingredients such as Dahongpao tea from Wuyi mountain and mangos from Xiamen. And alongside the brand's launch, we also opened a craft brewery in Fujian in July, providing both locals and visitors with unique craft beer destination. It is just 1 way we are continuing to provide new offerings and drink experiences in China.
In South Korea, our revenue grew by double digits, driven by continued market share growth and industry recovery. Revenue per hectoliter grew by mid-single digits with strong support from revenue management initiatives implemented earlier in the year for our core and premium products, which offset a channel mix impact from a volume shift from in-home to on-premise channel. Despite a tougher comp from commercial investment phasing, EBITDA increased by double digits with an expanded EBITDA margin.
In India, we continue to outperform the industry. We have now recovered to above pre-pandemic levels. In the third quarter, we achieved strong double-digit growth in volume, revenue and EBITDA, with India now the fifth largest market globally for the Budweiser brands.
Before I wrap up, let me walk you through the solid progress we have made towards achieving our 2025 sustainability goals. At our Wuhan brewery, we have in sport new lightweight solar panel [Technical Difficulty] industry and in ABI's global network. This will reduce our carbon emissions by about 4,000 tons per year. In addition, our corporate ESG achievements continue to be recognized with Bud APAC recently securing 3 grand awards at the Hong Kong ESG Reporting Awards for Best ESG Report, Excellence in Environmental Positive Impact and the Carbon Neutral awards.
I will now pass it over to Iggy to take you through our financial results. Over to you, Iggy.
Thank you, Jan. Good morning, everyone. As discussed earlier, we had top- and bottom-line growth in the first 9 months of 2022. Total volume grew by 1.4% with a strong performance in South Korea and India, partially offsetting the impact of COVID restrictions in China. Revenue and revenue per hectoliter grew by 4.3% and 2.9%, respectively, driven by revenue management initiatives in South Korea and continued premiumization in India, which partially offset the unfavorable channel shifts in geographic mix in China.
Another challenge we're facing this year is commodity inflation, which has been materializing in the form of a strong double-digit increase in raw material and packaging costs. We offset rather a significant proportion of the cost pressure through efficiency initiatives and optimize sourcing. The cost of sales in the first 9 months of the year increased by 9.9% and on a per hectoliter basis by 8.5%.
Overall, normalized profit attributable to equity holders in the first 9 months of the year was USD 878 million with normalized earnings per share growth to $0.0664.
Now let's take a look at our performance in key markets. In China, year-to-date volumes declined by 2.2%, with a revenue per hectoliter increased by 0.7%, while normalized EBITDA declined by 5.9%. In the third quarter, it was a slightly different picture with volumes increasing by 3.7% due to the recent heat wave and the low base, leading revenue to increase by 1.6%. The Revenue per hectoliter declined by 2.0% due to the impact of the COVID restrictions on geographical and channel mix.
In East Asia, volumes increased by 10% in the first 9 months of the year as we continue to win market share in South Korea, supported by the strong performance of our innovation, All New Cass throughout the summer. Revenue and [Technical Difficulty], and normalized EBITDA expanded by 30.2%.
With that, Jan and I are here to answer any questions you may have.
[Operator Instructions] Our first question is from Xiaopo Wei from Citigroup.
First of all, thank you so much for organizing Investor Day in Korea in December. We are all very thrilled to meet you physically again. I have 2 questions, one about China, the other one about South Korea, I will ask one by one. The first one about China, how and when China will open has been the most frequently asked question by our investors this year. And it's never been easy to make a macro [indiscernible] China. We appreciate that the company has been focusing what you can do yourself rather than the external factors.
So my question is what your playbook in China in terms of product and channel strategy in the following 2 totally different scenarios, scenario 1, slower-than-expected China reopening scenario 2, faster-than-expected China opening? I will pause here before asking you the next question momentarily.
Thank you, Xiaopo. And thank you as well for the advertising for our Investor Day on the first of December. I appreciate it. Thank you for your question. I think let me say this on the COVID restrictions in China. Just to give some context, when I go back to the first quarter, the COVID restrictions did significantly impact our -- both our channels and geographies. So when we had the last call in Q2 results, we said that we closed the month of June with a channel reopening rate about 91% for nightlife and 98% for Chinese restaurants. So -- and in that period, in June, we achieved high single-digit volume growth.
If now we update it for July and August, the reopening rate was adjusted down to about 75% to 80% for nightlife, and above 95% for Chinese restaurants. What we saw then is that our underlying Premium, Super Premium sales to retailers, what we call STRs, they increased by mid-single digits in July and August combined, just to give you an idea, of the bounce back of our volumes. In September, though, in the lead-up to the Party Congress, the reopening rates dropped significantly, and nightlife went down to about 60% reopening rates. CR was also back to this 95%. And so due to these increased COVID restrictions, we saw our Premium and Super Premium sales for retailers declined versus last year in the month of September. So there you see how the channel impact can impact our performance.
If you look at the geographical lens, mostly the restrictions we are concentrated in our premium footprint in Q3 especially Southeast, Fujian, Zhejiang, North Beijing, Tianjin and then the Northwest area. Northwest for us, of course, is also overlapping with nightlife concentration. If we look forward, we continue to expect sporadic, but shorter lockdowns with the current dynamic zero policy. The government is basically addressing the policy with the science-based and targeted epidemic control and trying to balance between people's health, but then also epidemic control, economic and social development.
So what that means for us is, you're right, we are focused on the things we can control. right? And so we have really refined our resource allocation way of working in terms of commercial investments and our overall resources. And we developed this digitized tracking platform, which really allows us to very quickly calculate the COVID impact by channel, by city and allocate in a dynamic way, so that we shift our investments and overall also can adjust our investment level based on the COVID levels in different channels and geographies.
On top of that, we also shifted -- we increased the flexibility of our execution of our campaign. So for example, for the ongoing FIFA World Cup campaign, we have reduced the fixed costs of the campaign, but we have shifted it to more flexible investments, so that we can execute in a different way, but we are much more flexible depending on the situation on the ground. Beyond that, we continue to invest in digitization, which is quite a strategic investment for us, and we continue to ramp up the scale-up of our BEES platform. And of course, what is also very important for us is our easy expansion both in the channel and a geographic lens to diversify our footprints and make us less vulnerable and less dependent on these specific channels and geographies that are more premium. So I hope that answers your question, Xiaopo.
My second question about South Korea. In my observation, you have done an excellent job in Korea since Korea's re-opening. What are your key takeaways from Korea's re-opening so far? For example, what has changed and what has changed before and post the COVID? Any enlightening key takeaway from Korea that could help you to navigate the current situation in China upon further re-opening down the road?
Yes, I think it's an interesting question, Xiaopo indeed, we have seen very strong results in Korea and [indiscernible] as well as to how a reopening can drive our business results very strongly. So as you know, the government lifted all the COVID social distancing rules in the middle of April this year. And since then, the industry has been recovering and especially Q3, very strong summer consumption.
So when we look at, first, maybe the industry side, continue to recover with the improving operating environment. If we look at the trends there, especially, of course, the on-premise channel has seen a very strong recovery with the easing of the restrictions. So we've seen a strong double-digit growth in the on-premise in South Korea. And we found that the channel split between on-premise and in-home channels is actually quickly returns to pre-COVID levels.
People also show a very strong desire to recon. So we really see a big ripe in South Korea. People really wanting [Technical Difficulty] to Korean restaurants and nightlife channels in South Korea. And the great moment [Technical Difficulty] action with our consumers and made a very [indiscernible] summer campaign that really struck.
In the macroeconomic context, in South Korea, we did see frugality as an increasing trends. And with our Cass brands we basically adopted the OBPPC strategy in the in-home channel which was quite interesting, because we leveraged -- OBPPC basically allows us to offer the right pack at the right price in the right channel. And so in the summer, we launched a new pack for Cass, which was a 375 ml 6-can pack, bundle pack in the CVS channel. And we also launched a 2-liter PET bottles, across channels to incentivize the consumers to purchase in larger quantity, which really went along the way with the summer peak and also the re-opening, people getting back together.
So maybe a last point on that is South Korea, which I think is quite interesting is that the beer industry recovered strongly, but it is still below pre-pandemic levels of 2019, so we are cautiously optimistic that there will be continued improvements in the future in South Korea. So thank you for your questions, Xiaopo.
Our next question is from Lillian Lou of Morgan Stanley.
Good morning, Jan and Iggy. I have 2 questions. Maybe I ask the first question first. This is about China. I understood that was COVID interruption, our Super Premium and Premium is under a little bit pressure given the lockdown especially from the on-trade. So how have you observed the underlying demand trend putting aside this channel impact? And which channel discounting happen again, in the industry when there is cost, less cost pressure and also if the demand continues to trend weaker under current economy situation? That's my first question.
Thank you, Lillian. Thank you for your question. So I would probably say that First, maybe -- and I know you would have seen it in the press release, but we estimated the China industry increased in the third quarter and so did our volumes. So I mean, overall, I think, it stresses that the beer industry is quite resilient in the current circumstances. And I would say this resilience also applies to premiumization in China because despite the COVID restrictions, which have increased throughout Q3, especially in the last month of Q3, we did see that Premium and Super Premium revenue grew versus last year, but also versus a pre-pandemic level, and that's true both on the quarter and a year-to-date basis.
On top of that, in markets where we don't have COVID impact typically our expansion markets. Budweiser and the Super Premium brands grew double digits. So we continue to see a very strong underlying demand of consumers in China for our products. We believe that and based on consumer research, we believe that our Premium, Super Premium beers, even if they are relatively expensive versus mainstream and core brands in the beer market in China, they are affordable luxuries, right? And these are the small luxuries that can play a role as emotional stimulus that can bring people comfort and reward in difficult times. And we do see that the consumer demand for Premium beer brands remain strong.
If you take the more longer-term look, we remain very optimistic about the market in China. And that's essentially driven by the growth in the middle-class households driven by -- which is really driving the premiumization. We expect the middle class households to quadruple by 2030. So -- and at that time, we'll be about 2x the number of middle income households of the U.S. So it really shows that China today is already the biggest beer market in the world, but we believe it will continue to grow in premiumization based on the underlying disposable income growth of these households.
And of course, we see our business momentum and potential structurally intact. We don't see any kind of channel discounting beyond any historical levels. Our inventory levels are also in line with historical levels. So we don't really see any concerns on that. I would say typically Budweiser want to be developed in the nightlife and on-premise channels. They want to be developed in the higher income regions where Premium, Super Premium is stronger. Of course, during COVID, we would have been a little disproportionately impacted by the COVID restrictions [indiscernible] longer term there are strong parts of our position and our strategy, and we continue to believe that it will drive our performance in the future.
My second question is about the FIFA marketing. How is the plan for FIFA and what's the impact in fourth quarter this year when the event happens in our top line and also our sales and marketing budgeting.
Yes. So we're quite excited about the FIFA World Cup. It only happens once every 4 years, right? So -- and this year, we again have a very strong campaigns in the lineup. First, maybe on Budweiser, right, these are the global sponsor, official sponsor of the FIFA World Cup since many years, more than 30 years now. And we are launching a full channel integrated marketing campaign under the theme, which is this World Cup is yours to take. It's quite an interesting campaign, and you might have seen some of the commercials at the start before the earnings call and we translate this brand campaign into very strong trade execution.
So in China, for example, we are partnering with our e-commerce platform partners, including JD and Tmall, but also with the O2O companies like Meituan to drive very strong consumer conversion at the right occasions.
Also, in addition to Budweiser, you probably know that we also have the rights to leverage the FIFA World Cup for our local brands. So we typically pick 1 local brand for the market. For China, for example, we do that for Harbin. For Korea, we do it with Cass. Cass is obviously the #1 Korea brand launches recently last week, an interesting FIFA World Cup campaign, another theme of you can play together with Cass.
So in the campaign, there are special cans and bottles with special theme. And there is a different number on each of the can design with numbers from 0 to 10, and then we stimulate people to play with our friends and family and use the packaging, the cans and the bottles as a tool to play games while they're watching the World Cup. So it's really a 360 integrated media campaign to support the product sales, of course.
If you look at the marketing execution, of course, we expected to further uplift brand power and drive our sales. From a commercial investment point of view, we remain very agile to quickly and efficiently reallocate resources based on the external environment. So of course, it is mostly relevant for China. If you would look at our commercial investment level, both in Q3 and the year-to-date periods. If you would look at our sales and marketing, percent of net revenue was actually lower than the same period last year, both on a quarter and year-to-date basis. That's because we quickly saved and reallocated investments between regions and channels impacted by COVID with the digitized cracking platform that I was alluding to a little bit earlier.
To your question of looking forward a little bit, if we look at Q4, we actually believe that the sales or marketing expresses investment as a percent of net revenue will remain similar or even below the Q4 of last year. Just to give you a little bit of a sense there, so we expect it to be a very powerful campaign. I think the creative that you see is very strong. We believe it will drive great execution and brand power. At the investment level, we have the plans built as such that we are very flexible and the [indiscernible] level, we believe, will be either similar or below Q4 last year. So thank you for your question, Lillian.
Your next question is from Chen Luo from Bank of America.
Hay, Jan and Iggy. I have got 2 questions. So first, I will start with the China part. So we understand that the negative product mix shift in China was largely due to the channel and geographic impact from COVID in Q3, but have we actually also observed any signs of consumers trading down? Or is there any market share changes within the Premium or Super Premium segment that may warrant our attention? I just stop here for the first question.
Thank you, Luo Chen, and good to hear you. Thank you for your question. So maybe first, in APAC, net revenue per hectoliter increased by 0.8% in Q3 and 4.3% on the year-to-date basis. And you're right, when we look at the China level, revenue per hectoliter declined by minus 2% in Q3 and minus 0.7% on a year-to-date basis.
To your question, whether it's driven more by COVID or trading down or market share changes, it is really mostly driven by COVID restriction impacts to the channel and geographic mix. And both of these actually this time disproportionately impacted Premium and Super Premium volumes. So -- and obviously, it was partially offset by a positive impact of our revenue management initiatives, as you know, we did take price in the last 12 months.
Despite having a significant impact from the channel closure, we do see a continuing underlying premiumization. And as we mentioned, both -- Bud and Super Premium continued to grow versus last year at pre-pandemic levels. and also in the expansion cities where there is no COVID restrictions, we continue to see both Bud and Super Premium grow double digits versus last year.
What is also interesting in the regions where we see COVID restrictions lifting, we see a recovery momentum that is very fast when the channel restrictions are lifted. So actually, the recovery is very quick. So that is also very encouraging for us. And if you look at -- I mean, the short term, of course, the quarter was impacted by the external environment. But as I was saying earlier, we remain very confident in our strategy and the underlying momentum for future sustainable growth.
So we -- I mean, as you know, we don't give short-term guidance for Premium, Super Premium growth, but we are very optimistic on the midterm business prospect China. [indiscernible] based last I was alluding to earlier. And we do see business momentum and the potential in China, structurally intact as per our prior discussions. And I do hope in the Investor Day to go a little bit more in detail on the key drivers there, and we'll give some color to that as well, Luo Chen.
And moving on to South Korea, the market has done really well over the past few quarters. And -- but we still understand that the current margins are below the pre-pandemic level. So when do we expect the APAC East margin to go back to the 2019 level? And what would be the underlying key drivers?
Good question, Luo Chen. Let me give this one to Iggy to answer.
Thank you for the question. So obviously, we don't disclose an EBITDA margin, either freight back to Easter for Korea and the quarterly [Technical Difficulty], but let me maybe give you some context on the results year-to-date and the drivers of those results, which I think will help a little bit to think through kind of the evolution of the EBITDA margin. So both for APAC East and for South Korea, top line and EBITDA have increased by double digits year-to-date. And specifically in the third quarter, of course, we had a tougher comparable from commercial phasing, and there's continued commodity cost pressure, as we've discussed previously. But even despite that, EBITDA margins have been expanding year-to-date as well.
The drivers of the recovery are important. If we look at the EBITDA growth, it's really led by strong volume and net revenue per hectoliter performance. If we look at it on the volume side, they've been growing double digits. So that's been supported, of course, by the industry recovery, which was alluded to earlier, but also performance of All New Cass.
In terms of revenue per hectoliter, it expanded mid-single digits. And so this was the consequence of the revenue management initiatives that we took earlier in the year. So of course, the core price increase in March as well as premium in the in-home channels at the start of the year. And then, of course, this more than offset any channel mix impacts that we see from the volume shift from in-home to on-premise, of course, as the industry recovered. And as Jan mentioned, people went back towards connecting socially.
However, as Jan mentioned, the industry has not yet recovered back to pre-pandemic levels, which is one of the reasons we see more room for further recovery on the top line side as well. But I think if we look at the drivers for EBITDA margin, specifically, right, in APAC East, we still expect them to continue to be rate first and foremost, then cost efficiencies and then premiumization.
So in the case of rate, the annual CPI excise adjustment system, which is now 2 years old, makes a significant difference. This is where the government, again, increases the excise tax every year based on the previous years. And this creates a much more manageable annual price increase environment, right? So it's already occurred for 2 years. And I think you've seen the impact of that based on our price increases this year and more modestly last year, which again, of course, kind of fell under the radar, but it was still important.
In terms of cost efficiencies, productivity gains and operational efficiencies in both fixed and variable costs will continue to be an important part of the EBITDA margin story. Here, we continue to apply a cost-connect win methodology or approach to reduce indirect overhead costs and invest them where they drive top line growth. It's been part of the story of the success of All New Cass in the rest of the portfolio.
And then a reminder again on premiumization, right? We still believe South Korea will continue to premiumize. If we look at it, the overall industry there is still significantly under-indexed, right, with about 25% premium by volume weight as compared to more mature markets, right? If you look at North America and Europe, as an example, in these markets, it's sometimes upwards of 40%.
So if I look at all the drivers in detail, I don't see, Luo Chen, any structural reason why margins can return to pre-pandemic levels. There are mainly transient reasons, so mainly commodities and FX. So we expect the commodity prices and currency headwinds, both of which tend to be cyclical and there are, in many ways, already beginning to retreat, particularly on the commodity side. As these normalize to 2019 levels, and the remaining industry recovery is complete, we should continue to see an EBITDA margin recovery in APAC East and in South Korea. So I hope that answers the question.
And we also look forward to the Investor Day in Korea. Meanwhile, I noticed that we also introduced our 059 Coastline craft beer in Fujian, and this was also mentioned in our announcement. So actually, I also tasted the beer, really good for both the tea flavor and the fruity flavor. I hope, 1 day when China reopens, we can also host another Investor Day in China, so that investors can have the opportunity to taste our beer and also to see the world-class facilities and use to market there.
Thank you for the kind words, Luo Chen. We could not agree more, we look forward to hosting here at one point, and we look forward to seeing you in South Korea as well.
Our next question is from Anne Ling, Jefferies.
I have 2 questions here. Let me start with the first one. Speaking on the cost side, cost of goods, are we still maintaining our double-digit increase in terms of cost per hectoliter for 4Q? And I know it's still -- it's a bit early, but based on the current trend, what some of the commodity prices coming down, what is your expectation in terms of like the cost per hectoliter year 2023? Given that no cost like -- if we look at the packaging cost like glass, aluminum, I think the trend has been coming down globally. So -- and also, in addition, what is your outlook for barley in your view in the upcoming harvest?
Thank you for your questions. Let me pass this question to Iggy as well to answer.
Sure. Thank you, and thanks for the question, Anne. So maybe let me start with 2022. Year-to-date, cost on a per hectoliter basis actually increased less than double digits. It actually increased by 8.5%. And if we look at Q3 specifically, it was increased by 7.4%. And so as you're aware, this is partially driven by a hedging policy. Again, we designed it to provide us a 12-month rolling horizon. Of course, we have flexibility in exceptional circumstances, but given it reduces the volatility in input costs, it allows us to better manage them. And that's a bit the story here, actually.
So while we don't give a specific guidance on our costs on a per hectoliter basis, we did share on several occasions that we expected commodity escalations to be most pronounced in the second and third quarters of this year and then to normalize a bit more in the fourth quarter, more similar to the first quarter this year. Again, given commodities can represent between 1/3 or 2/3 of our cost on a per hectoliter basis. If we were not to take any actions, you could have expected cost per hectoliter to increase by about 10% to 15% in the first quarter and about 15% to 20% in both the second and third quarters.
If you recall, actually cost per hectoliter increased by 6% in the first quarter at 12.3%, if I recall correctly, in the second quarter and $7.4 million in the third quarter. So it was actually a bit better than the straight translation of commodities into our costs. And this, of course, is the impact of those continued cost management initiatives that we execute. But as well in Q3, in particular, by the operational leverage improvement we had in APAC East with that significant industry recovery in the quarter that we discussed earlier. If you look at the rest of the year, commodity specifically in the fourth quarter look to be more normalized. So again, should be a bit better than Q2 and Q3 and more in line with the first quarter.
Going back to costs on a per hectoliter basis for 2023 in this case. We could expect a continued escalation in commodities given the market rates actually in 2022 year-to-date have been higher than those of 2021. However, to a much lesser magnitude, right, is the year-over-year escalation has been more muted. If you look at current spot pricing, but to your point then, supports that.
So for example, last quarter, we would have discussed the retreat in aluminum, right? from $4,000 per metric ton peak back to around $2,400 per metric ton, if I recall correctly. And actually, pricing has been fairly consistent at or below this level over the past few months, closer to $2,300, $2,200 per metric ton.
Barley, on the other hand, has been a bit more volatile. And this has been driven by unfavorable weather as well as an overall malting barley acreage reduction in the market. But of course, this is where global sourcing flexibility goes a long way towards helping us to quickly adjust sourcing origin, which proves very helpful in terms of managing costs and reducing any risk of supply security. Just as a reminder, of course, malting tends to be done locally, which also helps to reduce volatility.
So we don't see any raw material cost increases, again as a structural headwind, but a temporary one. we do see a more muted escalation next year. And either way, given the hedging policy and the approach we take to managing costs, we continue to look to mitigate any cost-related risk with other initiatives beyond purely cost ones, right? So in addition to that, we'll continue to work on premiumization and revenue management as a hedge for any additional increases we'll see next year. So I hope that answers the question. Thank you so much, Anne.
And my last question -- my second question here. It's about China. Is it possible like to share with us some of your key brands performance?
Sure. Thank you, Anne. Let me maybe start by talking about Budweiser then. I mean, as you know, Budweiser is about half of our total revenue in China. So -- and even if it's by far the #1 premium brand in China, we still see a lot of growth potential, right? For example, in expansion [indiscernible] it's well below 50% distribution coverage today in China.
If you look at Q3, the last quarter, Budweiser grew low single-digit revenue versus last year, mid-single-digit revenue versus pre-pandemic level, that's despite all these channel closures and geographic impacts in our key regions. Additionally, interesting to note as well that we have 3 significant innovations on Budweiser in terms of occasions, so we have Budweiser Supreme, Bud Light in Guangdong and Budweiser Magnum. And all of them continue to grow double digits in the quarter versus prior year. And as I was mentioning earlier, we also are very excited with the FIFA World Cup campaign, plus the earlier CNY that we expect in Q4 or the impact of the campaign to feed into Q4, so this campaign should help us as well continue to do well on Budweiser.
On the Super Premium and Premium, the top brands there also grew mid-single digits versus last year. And that's despite having an even higher weight in the nightlife channel for these brands than Budweiser has and interesting there is that also our fruit innovations because we launched both fruit innovations on Hoegaarden and Corona to target the consumer trend over the SHEconomy. Actually, these innovations also grew double digits versus last year. Corona, this is a [indiscernible], the pineapple [indiscernible] variance oriented to the female target audience.
And then on Hoegaarden, these are the fruity variants and these fruity variants, they are now already more than 10% of the Hoegaarden brand's volume as we speak in China. So this just to give you some taste of the different brands in China. And thank you for your questions.
I'm sorry that I cannot join you your upcoming Investor Day in Korea, but definitely hope to meet up with you next time in the future event.
Thank you, Anne. And as you know, it's a hybrid event. So even if it's difficult to travel. We understand that. And anybody from the team is welcome also to join in a hybrid way.
Yes, I definitely will.
Our next question is from Lee Liu Goldman Sachs.
So this Lee from Goldman Sachs. I also have 2 questions, and I'll ask one by one. So firstly, on China. We noticed some channel feedback recently actually on the price hike actions to some SKUs, I think also applying to multiple brands under Budweiser APAC, so would you please help to share some colors on the upcoming and recent price actions in Q4 and potentially for next year? And how do we look at pricing trend in 4Q for China?
Sure. Thank you, Lee. Thank you for your question. You're right. So we just announced that first of November, we will plan an increase of our prices for both the Premium and the Super Premium Segments in China. This will benchmark the PPI on an average level, I would say, across channels and brands. So for context rights, we have typically historically let the segments that we lead in terms of price increase. So this November, we will do the Premium and the Super Premium segment. Historically, we have taken the Core and Value segments in the month of March or April, so pre-summer last time we did that was mid-single digits.
Of course, I always give the context is that for China, rate increase is only a small part of our revenue per hectoliter contribution. The primary driver, of course, should continue to be the top line growth that is driven by premiumization, so driven by mix. But thank you for your question, and that's accurate, Lee.
So the next question is clear. We are really encouraged to see the strong recovery and also the on-premise volume have been growing much faster. So would you please share some color on the competition dynamics in the second half, especially in the on-trade channel? How do we handle the potentially intensified competition in to the channels, while there's strong recovery? And how do we cope with this marketing investment pace in the second half and in next year?
Sure. Thank you, Lee. So yes, in South Korea, we are quite excited with the performance has been driving there. We achieved share gains both in the on-premise and in-home channels and of course, overall as well, and it's really been led by the success of our recent innovations. And if you look at All New Cass, for example, in the on-premise, our volumes have grown double digits -- strong double digits, led by strong performance of Cass on the one hand, but also HANMAC, which is the third biggest brand in Korean restaurant channel.
In the in-home channel, we've seen a successful execution of our OBPPC strategy that I was alluding to earlier on Cass, which were launched in Q2 last year, but we continue to deliver incremental market share gains in the in-home channels. And then overall industry, I just want to reiterate that, yes, there has been a significant recovery already, but we are still below pre-pandemic level at the industry level. in terms of recovery. So we remain optimistic about further improvements in the future. I'm looking forward to seeing you in South Korea.
Our final 2 questions will come from the line of Melody Zhou, CICC.
It's Melody Yuelang Zhou from CICC with [indiscernible] team and I have 2 questions, and I'm going to ask them one by one. The first one is about China new brewery, so could you please share us the purpose of opening the new craft brewery in Fujian? This is my first question.
Sure. Thank you, Melody, and great to hear you again. Good afternoon. So we actually did 2 things in Fujian in the last couple of months. We just meshed in. So let's say, we kind of started using the capacity expansion that we announced last quarter or a couple of quarters ago in Fujian. And this extra 2.5 million hectoliter that we just started using in Fujian helps us to drive the growth of our Premium and Super Premium segments and brewing in that part of China. And of course, continues to make Fujian the largest brewer in Asia from a beer point of view.
The second thing you're right is that it's actually driven by our craft brand launch, which I was happy to hear Luo Chen advertised a little bit earlier because we're also quite excited by these new brands. It's called 059 Coastline. So this craft brand, 059 because as a zip code of Fujian and then coastline because, of course, Fujian is a beautiful long coastline is very known -- very well-known across China for the beautiful coastline. So it kind of fits well to be inspired by the Fujian province.
And we use local ingredients, as I was mentioning earlier, actually, today, we just won our first medal with the Dahongpao tea infused beer, which is quite innovative. There's not many peers around the world even that are infused with real tea and the Dahongpao tea from Wuyi mountain is quite famous across China and even worldwide. So we are very happy to work together there with the local tea growers or tea farmers and won the first gold medal in a Japanese beer competition.
But beyond that, what is interesting to know as well is that the brewer there is a female brewmaster as it actually comes from that area from Wuyi mountain. So it's quite nice as well to see the inspiration being led by the local team, who wants to innovate and use all the local ingredients.
So we got a very good first reaction from consumers there in the last 3, 4 months. The [indiscernible] that we opened linked with the brewery is already quite a hot place to visit. So we expect it to attract a lot of visitors from within Fujian, but also outside of Fujian. It's a beautiful province to discover. And so the capacity will be up to 100,000 hectoliter, which is quite a sizable craft brewery because we expect this part of China to continue to grow strongly in double digits growth from a craft beer perspective.
So we expect to continue to drive new offerings and be close to consumer interest. And as you know, in the Super Premium parts, people want more offerings to continue to have new experiences and innovations, and that's why we will offer with a 059 Coastline there. [indiscernible] your question.
It sounds pretty good, and I cannot wait to visit it. And my second question is about India performance because so many of our institution investors are so surprised about it, such a great performance in India. So given our successful performance in India, do we expect our strong growth in terms of volume and revenue to continue in India?
Thank you for that question on India, Melody. We're quite excited with our business in India. Q3, we saw strong revenue -- strong volume revenue and EBITDA growth, all driven by premiumization and also industry recovery with an increase in consumer demand. So maybe first point to see on India is that we are very excited and optimistic about the long-term potential of India because, of course, they have a demographic advantage, right? There is not many countries around the world with well over 1 billion potential consumers, but also the growing prosperity. As you know, the Indian economy just became the fifth largest economy in the world. And I think most analysts would expect it to become a top 3 economy in the next 10 years. And the premiumization trend is very obvious in India as well.
If you look at our portfolio, we are basically very well positioned with Premium, Super Premium there. If you look at the third quarter, just to give you an idea of the growth we have there is Premium and Super Premium doubled versus last year in the third quarter. So it's not just double-digit growth, it is a doubling of the total size of the segment -- of our brands in the Premium and Super Premium segment in India. And the volume weight within our total portfolio, of course, continues to increase in India as well for Premium, Super Premium.
If you compare to pre-pandemic level, so before 2020, right, so if I compared to 2019, Q3, Premium, Super Premium grew strong double digits as well. Budweiser is the #1 Premium brand in India, continues to outperform the industry, increased share in India, and it actually made India now the top 5 market for Budweiser globally within the total ABI global footprint. So I can tell you the India team is quite ambitious to continue increasing that rank in the next coming years.
Next to Budweiser, the team is already also seeding the [ high-end ] company in the Super Premium brands. So we localized Corona and Hoegaarden brewing a couple of years ago, which allowed us to go to more, let's say, attractive price points for the consumer because there is no longer this import tax to be paid on these brands. And so since then Corona is now available in over 15 states in India.
We also see a big opportunity for wheat beer, so we launched Hoegaarden flavors as well very recently with Rosée and Nectarine. And so combined with a couple of local craft brands that we launched, we believe that this will continue to drive Super Premium growth as well, even if it is relatively nascent there, you can see us basically copy the moves that we did in China several years ago. We basically use the same playbook in India and we're very excited with that.
So also there in India, it is a smaller part of our business. So we typically don't cooperate a lot in our quarterly updates, but we'll try when we see you in South Korea to cover a little bit more in our Investor Day about the longer-term potential of our Indian business, which I think can be quite exciting as well to cover in a little bit more detail. Thank you for your question, Melody.
Well, thank you so much for the detailed answer. And also, I really hope I can meet you in Korea Investor Day if our part is [indiscernible]. And also I'm very looking forward to have an Investor Day in Mainland China in the near future.
This concludes our Q&A session today. I would like to turn the conference back over to Mr. Jan Craps for the closing remarks. Please go ahead, sir.
Thank you, Anna. In closing, I would like to officially like formally invite all of you to our very first Investor Day since the IPO, which will take place on December 1 that will be -- it will be hosted on a hybrid format. So both physically in South Korea, but also virtually via live streaming and you can contact our IR team or find more information on our Budweiser APAC website, where you can find all the details to register.
So thank you again for joining us today for the call. And I look forward to speaking to all of you again very soon. Thank you.
This concludes today's results call. Please disconnect your lines. Thank you for participating.