AB InBev Financial Results
In addition, a number of key brand names are both licensed to third-party brewers and used by companies over which AB
InBev does not have control. Although AB InBev monitors brewing quality to ensure its high standards, to the extent that
one of these key brand names or joint ventures, companies in which AB InBev does not own a controlling interest and/or
AB InBev's licensees are subject to negative publicity, it could have a material adverse effect on AB InBev's business,
results of operations, cash flows or financial condition.
A portion of the company's global portfolio consists of associates in new or developing markets, including investments
where the company may have a lesser degree of control over the business operations. The company faces several
challenges inherent to these various culturally and geographically diverse business interests. Although the company works
with its associates on the implementation of appropriate processes and controls, the company also faces additional risks
and uncertainties with respect to these minority investments because the company may be dependent on systems, controls
and personnel that are not under the company's control, such as the risk that the company's associates may violate
applicable laws and regulations, which could have an adverse effect on the company's business, reputation, results of
operations and financial condition.
AB InBev may have a conflict of interest with its majority-owned subsidiaries. For example, a conflict of interest could arise
if a dispute arises concerning an alleged contractual breach, which could materially and adversely affect AB InBev's
financial condition. A conflict of interest may also arise as a result of any dual roles played by AB InBev directors who may
also be managers or senior officers in the subsidiary. Notwithstanding policies and procedures to address the possibility
of such conflicts of interest, AB InBev may not be able to resolve all such conflicts on terms favorable to AB InBev.
The size of AB InBev, contractual limitations it is subject to and its position in the markets in which it operates may decrease
its ability to successfully carry out further acquisitions and business integrations. AB InBev cannot enter into further
transactions unless it can identify suitable candidates and agree on the terms with them. The size of AB InBev and its
position in the markets in which it operates may make it harder to identify suitable candidates, including because it may be
harder for AB InBev to obtain regulatory approval for future transactions. If appropriate opportunities do become available,
AB InBev may seek to acquire or invest in other businesses; however, any future acquisition may pose regulatory, antitrust
and other risks.
AB InBev entered into a consent decree with the U.S. Department of Justice in relation to the combination with SAB,
pursuant to which, among other matters, AB InBev's subsidiary, Anheuser-Busch Companies, LLC, agreed not to acquire
control of a distributor if doing so would result in more than 10% of its annual volume being distributed through
distributorships controlled by AB InBev in the U.S. AB InBev's compliance with its obligations under the settlement
agreement is monitored by the U.S. Department of Justice and the Monitoring Trustee appointed by them. Were AB InBev
to fail to fulfill its obligations under the consent decree, whether intentionally or inadvertently, AB InBev could be subject to
monetary fines or other penalties.
A substantial portion of AB InBev's operations are carried out in developing European, African, Asian and Latin American
markets. AB InBev's operations and equity investments in these markets are subject to the customary risks of operating in
developing countries, which include, amongst others, political instability or insurrection, human rights concerns, external
interference, financial risks, changes in government policy, political and economic changes, changes in the relations
between countries, actions of governmental authorities affecting trade and foreign investment, regulations on repatriation
of funds, interpretation and application of local laws and regulations, enforceability of intellectual property and contract
rights, local labor conditions and regulations, lack of upkeep of public infrastructure, potential political and economic
uncertainty, application of exchange controls, nationalization or expropriation, empowerment legislation and policy, corrupt
business environments, crime and lack of law enforcement as well as financial risks, which include risk of illiquidity, inflation,
devaluation, price volatility, currency convertibility and country default. Moreover, the economies of developing countries
are often affected by changes in other developing market countries, and, accordingly, adverse changes in developing
markets elsewhere in the world could have a negative impact on the markets in which AB InBev operates. Such developing
market risks could adversely impact AB InBev's business, results of operations and financial condition. Furthermore, the
global reach of AB InBev's operations exposes it to risks associated with doing business globally, including changes in
tariffs. The Office of the United States Trade Representative has enacted tariffs on certain imports into the United States
from China. If significant tariffs or other restrictions are placed on imports from China or any retaliatory trade measures are
taken by China, this could have a material adverse effect on global economic conditions and the stability of global financial
markets, and may significantly reduce global trade, which in turn could have a material adverse effect on AB InBev's
business in one or more of its key markets and results of operations.
Competition and changing consumer preferences in its various markets and increased purchasing power of players in AB
InBev's distribution channels could cause AB InBev to reduce prices of its products, increase capital investment, increase
marketing and other expenditures or prevent AB InBev from increasing prices to recover higher costs and thereby cause
AB InBev to reduce margins or lose market share. Also, innovation faces inherent risks, and the new products AB InBev
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