Compañía Cervecerías Unidas S.A.’s Earnings Call Contradictions: Chile Beer Demand Outlook and Pricing Strategies Don’t Match

Date of Call: Aug 5, 2026

Financials Results

• Gross Margin: improved 76 basis points

Business Commentary:

Consolidated EBITDA Expansion:

• CCU delivered a solid 59.4% consolidated EBITDA expansion for the second quarter of 2026.
• The growth was primarily driven by a robust set of results in the Chile operating segment, which expanded EBITDA by 26.2%.

International Business and Wine Segment Performance:

• The international business operating segment posted a 25.8% lower EBITDA loss, while the wine operating segment contracted EBITDA by 61.9%.
• The international segment's improvement was due to revenue management initiatives, whereas the wine segment was sharply impacted by unfavorable global trends and a higher cost of wine.

Revenue and Volume Trends:

• Consolidated net sales grew 4.8%, largely due to a 6.4% increase in average prices in CLP, although volumes declined by 1.5%.
• The increase in prices was a result of revenue management initiatives across all operating segments, while volume decreases were due to market conditions in Argentina and the wine category.

Strategic Focus and Organizational Changes:

• CCU introduced the "Vamos por Más" strategy, focusing on increasing business focus, boosting operational synergies, enhancing agility, and accelerating transformation.
• These strategic pillars are aimed at generating growth and responding to new market demands and challenges, supported by planned organizational structure changes.

Argentina Market Challenges:

• Volumes in Argentina were below last year, with a high single-digit contraction in beer and water industries.
• The challenging business scenario was marked by social unrest and roadblocks, impacting operations in Bolivia as well.

Sentiment Analysis:

Overall Tone: Positive

• CEO Eduardo Ffrench-Davis expressed optimism: 'I am very optimistic for the future' and 'I am confident in the commitment that has always characterized all the CCU employees.' He stated the company is 'prepared with the strength for our 2027 and 2030 strategy plan' and 'Vamos por Más.'

Q&A:

• Question from Alejandro Fuchs (Itaú BBA): Could you elaborate on the competitive environment in Chile, especially on the soft drink market, and how do you see the rest of the year? Also, what do you expect for beer in Argentina for the rest of the year given sporting events?
  Response: In Chile, the soft drink market remains mature and competitive; CCU sees growth in better-for-you products like waters and juices where it has a strong market share. For Argentina, beer volumes are expected to see a recovery in the second half of 2026, with volume trends improving since March, though consumption remains volatile.

• Question from Fernando Oliveira (Bank of America): Could you give color on the targets for the new strategic plan in the medium term? How do you expect consumption in Chile to behave for the rest of the year and into 2027 considering the mega reform?
  Response: The new strategic plan (Vamos por Más) focuses on four pillars: focusing on businesses, boosting operational synergies, acting with greater agility, and accelerating transformation, aiming for profitable growth. For Chile, consumption trends are mixed; alcohol faces a downtrend but non-alcoholic better-for-you categories are growing. The approved tax reform is positive long-term for the economy and could boost consumption, but timing is uncertain.

• Question from Felipe Ucros (Scotiabank): Within the new strategy, are there plans to change the hedging policy? Is there a bigger transformation planned for the wine segment, and any changes for Colombia?
  Response: Hedging policy remains unchanged. For wine, the strategy involves integrating wines and spirits for consumer occasions and focusing on exports and production synergies to turn around the segment. Colombia is a core country for growth; the focus is on building brand equity and scale for profitable growth.

• Question from Thiago Bortoluci (Goldman Sachs): How satisfied are you with price points and price relativities in Chile? How will inflation and oil prices impact pricing decisions in H2?
  Response: CCU is in a strong position in Chile with good pricing and market share. Revenue growth management will use new tools like algorithms for trade promotion optimization to improve mix and pricing effectiveness in the second half.

• Question from Alvaro Garcia (BTG Pactual): How does the Nestlé water acquisition affect leverage, dividends, and the operating model? Does it give more flexibility on brand strategy?
  Response: The acquisition enhances net income with 100% ownership. Leverage increased to 2.4x but is expected to reduce towards the 1.5-2.5x target range. The dividend policy of distributing at least 50% of net income remains. The acquisition makes the water business more agile but the strategy for brands like Cachantún and Manantial remains consistent.

• Question from Rodrigo Alcantara (UBS): Can you explain the beer market share performance in Argentina and what is driving it? Also, when will Heineken Ultimate launch in Argentina?
  Response: Market share in Argentina is stable with slight gains in value share due to price increases. The new strategy for next year aims to gain more share. Heineken Ultimate is part of a strong innovation pipeline and is being integrated into various operations, with news expected soon.

• Question from Maria Paula Arua (Nestlé): What is the expected growth trajectory for Colombia moving forward? Will the strategy focus on premium brands or continue relying on the value segment?
  Response: Colombia offers significant growth potential despite a changing government. The strategy involves competing asymmetrically with a more diverse brand portfolio to improve profitability, moving beyond the current mainstream, value-focused approach.

• Question from Kevin Zavala (UBS): What components are driving the increase in distribution expenses? Which business processes are the first targets for digital investment?
  Response: Distribution expense pressure is driven by higher oil prices, partially offset by efficiency initiatives in logistics and restructuring costs in underperforming segments. Digital transformation will integrate end-to-end value chain processes (e.g., real-time control towers) to drive synergies, improve agility, and support growth.

Contradiction Point 1

Chilean Alcoholic Beverage Consumption Outlook

Different assessments of the near-term trend for alcohol consumption in Chile.

Fernando Oliveira (Bank of America) - Fernando Oliveira (Bank of America)

2026Q2: Chile’s per capita consumption trends are mixed. Alcohol categories face a downtrend, but innovation (e.g., ready-to-drink wines) may help turn it around. - Eduardo Ffrench-Davis(CEO)

Could you give some color on the medium-term targets under the new strategic plan, considering how consumption in Chile is expected to behave for the rest of the year and into 2027 given the recent mega reform? - Fernando Olvera (Bank of America)

2026Q1: Forecasting is difficult due to **consumer pressure from rising oil/gasoline prices** and the **volatile input cost environment** (aluminum, oil, plastic packaging). The company has implemented **price increases across the portfolio in late March/early April** to offset costs. - Felipe Dubernet(CFO)

Contradiction Point 2

Wine Business Strategic Intent

Contradiction on the company's strategic stance regarding its domestic wine business.

Felipe Ucros (Scotiabank) - Felipe Ucros (Scotiabank)

2026Q2: Facing global industry trends, CCU is **integrating wines with spirits** (especially in Chile) to meet consumer occasion needs and create synergies. - Eduardo Ffrench-Davis(CEO)

Regarding the new strategy, will there be changes to hedging policy, any bigger transformations planned for the wine segment, and changes for the Colombian business? - Fernando Olvera (Bank of America) - Follow-up

2026Q1: The company sees an opportunity for **consumer switching** from wine to other beverages like beer or low-alcohol ready-to-drink products. - Felipe Dubernet(CFO)

Contradiction Point 3

Argentina Beer Market Outlook

Contradiction on volume recovery timeline for Argentina's beer market.

Alejandro Fuchs (Itaú BBA) - Alejandro Fuchs (Itaú BBA)

2026Q2: Argentina’s beer industry saw high single-digit contraction in Q2... Volumes are expected to recover in the second half of 2026. - Felipe Dubernet(CFO)

Could you elaborate on the competitive environment in Chile's soft drink market and your expectations for the rest of the year, as well as your outlook for alcoholic beverages in Argentina, including any impact from sporting events this quarter? - Constanza González Muñoz (Quest Capital)

2025Q4: In Argentina, the beer industry saw a decline in 2025, but seasonally adjusted volumes improved 4% in Q4 vs. Q3, indicating gradual recovery... - Felipe Dubernet(CFO)

Contradiction Point 4

Pricing Strategy in Chile

Contradiction on pricing growth benchmarks for non-alcoholic products in Chile.

Thiago Bortoluci (Goldman Sachs) - Thiago Bortoluci (Goldman Sachs)

2026Q2: Revenue growth management is a key focus. Tools like trade promotion optimization (TPO) and proprietary algorithms... will help drive price more effectively by considering consumer sensitivity... - Eduardo Ffrench-Davis(CEO)

How satisfied are you with price points and relativities in Chilean categories, and are any segments requiring a strategic pivot, considering the impact of inflation and oil prices on H2 pricing decisions and the coverage of cost inflation by recent price adjustments? - Thiago Bortoluci (Goldman Sachs)

2025Q4: The strategy for non-alcoholic beverages is to increase prices at least in line with inflation. - Felipe Dubernet(CFO)

Contradiction Point 5

Chile's Beer Consumption Trend

Contradiction on the nature of beer volume declines in Chile.

Fernando Oliveira (Bank of America) - Fernando Oliveira (Bank of America)

2026Q2: Chile’s per capita consumption trends are mixed. Alcohol categories face a downtrend... - Eduardo Ffrench-Davis(CEO)

Could you provide details on the medium-term targets under the new strategic plan and your expectations for Chilean consumption through 2027, considering the recent mega reform? - Thiago Bortoluci (Goldman Sachs Group, Inc., Research Division)

2025Q3: The decline is more pronounced in wine than beer. Beer consumption per capita has actually increased over the long term. - Felipe Dubernet(CFO)