The global flareup of the Delta variant of Covid-19 has weighed on the stocks tied to socialization and entertainment, including Brazilian brewer Ambev (ABEV, Financial). Further, inflationary pressures—spawned by the commodity rally, drought and a weaker currency—have challenged Brazil’s nascent economic recovery and pushed input costs higher for many companies. Amid this difficult backdrop, Ambev (a subsidiary of Anheuser-Busch InBev) has reaped the benefits of its conservative management and strong balance sheet, aggressively bolstering its already-dominant market share in many South and Central American markets. We believe the company is poised to benefit from favor-able demographics and attractive consumption trends once the Brazilian economy gets back on track.
From the First Eagle Investment (Trades, Portfolio) Global Value Team's third-quarter 2021 commentary.
