Business Context and Reporting Period
This Form 6-K filing by AMBEV S.A. (Ambev) covers the month of September 2019, specifically dated September 20, 2019. The document serves as a notice regarding related party transactions required under CVM Instruction No. 480/09. The filing details agreements between Ambev and its subsidiaries (Cervecería Chile S.A. and Industrias del Atlántico, S.A.) and Cervecería Modelo de México, S. de R.L. de C.V. (Cervecería Modelo), a company controlled by Ambev's indirect controlling shareholder, Anheuser-Busch InBev SA/NV (AB InBev).
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the reporting period. The only financial threshold mentioned is that the related transactions disclosed involve amounts higher than R$50,000,000.00.
Material Changes and Transaction Details
The primary subject of the filing is the import, licensing, and distribution of "Corona Products" (Corona, Coronita, and Modelo Especial) in Brazil, Chile, and Guatemala. Key terms include:
- Counterparty Relationship: Both Ambev and Cervecería Modelo are under the common control of AB InBev.
- Pricing Mechanism: Ambev compensates Cervecería Modelo with a price composed of cost plus a mark-up, determined based on the regional position of the brands in each country.
- Strategic Context: The transaction supports Ambev's long-term strategy to expand its premium segment. The filing notes that Corona led Ambev's 2018 performance in the premium segment in Brazil, growing more than 75% compared to 2017.
Management Commentary, Risks, and Governance
Management asserts that the transactions comply with arm's length business assumptions. Pricing was based on conditions previously practiced with independent distributors or conditions observed by other AB InBev-controlled companies, supported by a transfer price study from a renowned audit and consulting firm. Regarding governance and risks:
- Independent Decision Making: Cervecería Modelo and its managers did not participate in Ambev's decision-making or negotiations. The decision was made independently following the Policy on Transactions with Related Parties.
- Board Approval: The Related Parties and Antitrust Conducts Committee analyzed and recommended the transactions. The Board of Directors approved them, ensuring that no board members related to Cervecería Modelo or AB InBev participated in the discussions or resolutions.
- Strategic Justification: The acquisition is justified by the high consumer receptivity of Corona Products and their alignment with value creation strategies.
Investor Verification Checklist
- Verify the specific monetary value of the transactions exceeding the R$50,000,000.00 threshold in subsequent financial reports.
- Confirm the impact of the Corona Products distribution on Ambev's premium segment growth in Brazil, Chile, and Guatemala in upcoming quarters.
- Review the transfer price study methodology to ensure continued compliance with arm's length standards.
- Monitor for any changes in the governance structure regarding related party approvals involving AB InBev subsidiaries.