UBS on ABI:

Beer Brazil – top line momentum remains very strong

We believe the beer industry remains strong and AmBev's Q3 09 market share evolution is extremely good reaching 69.4%, +210 basis points y/y according to
Nielsen, and touching its previous “holy grail” of 70% in September.

We now forecast 7% volume growth for AmBev in Q3 y/y, broadly in line with the 7.5% reported in H1. We note that Q4 comparables are also easy y/y. We have raised our H2 09 organic volume growth assumption from 3% to 7%.
AmBev has seen a little bit more in the way of price discounting in Q3 (mainly Petropolis and Schincariol), but this has not impacted market share as innovation
is helping to defend and increase market share. Competition has done some "copy cat" innovation (for example 1 litre bottle and 310ml can by Petropolis) and Femsa/Schincariol are likely to follow suit at some point. We expect Q3 revenue/hl to continue depressed as we saw in Q2 (where it was - 0.5% y/y) due to negative packaging mix, the excise phasing will continue to drag, but the impact of the malt sale was mainly felt in Q2 09. We assume flat
revenue/hl for Q3 09, picking up in Q4 09. A further price increase in Q4 islikely and will be rational over a period of time (AmBev prices in line with CPI
of 4-5%). AmBev believes that its innovation will give it greater pricing power.

H2 09 Latam North EBITDA estimate

Based on the more positive beer volume growth outlook we have raised our assumption of low single digit EBITDA growth for Latin America North to +9% in H2 09 (having reported +12.9% organic EBITDA growth in H1). In H2, the
degree of COGS/hl deflation will slow, no material change expected in A&P/net sales (Q2 09 did see a big step up) and bonus provisioning will continue to step
up.