2 in both those countries, but the gap between it and the market leader is much narrower than in Brazil. He sees Heineken’s operating profit in Brazil at less than half the level in Mexico and Vietnam by 2020. Heineken’s margins will be constrained by its small market share, says Andrew Holland, beverage analyst at Societe Generale, given that economies of scale in marketing, distribution and procurement are only available to high-volume breweries. Some analysts are skeptical of that sunny projection. He said the company hopes that within two to three years Brazil will produce profits on a par with Mexico and Vietnam, the brewer’s biggest money-spinners. (For a graphic on the Brazil beer market, see: tmsnrt.rs/2trxCwv)īrazil is already Heineken’s largest market in volume terms, Busain said in a telephone interview. “Most of their business today, volume-wise, is on the value side,” Brito said. A native of Rio de Janeiro, he sounded unfazed at a March news conference where he discounted Heineken as an immediate threat on his home turf. If InBev is worried about its Brazil lead evaporating, CEO Carlos Brito is not showing it. 2 player, with $25 billion, based on current exchange rates. The Brazil duel is a microcosm of a wider global jousting match between Ambev’s parent company Anheuser-Busch InBev NV, the world’s largest beer maker with $56 billion in annual revenue, and Heineken, the No. “We have plans to transform Brazil into one of Heineken’s top markets.” “Today we have a portfolio that allows us to play in all segments that matter in Brazil,” Busain said. It now plans to promote its mid-tier offerings, including Devassa, a mark acquired from Kirin, and Amstel, a Heineken brand that has been in Brazil only since 2015. Prior to the Kirin deal, the company had beers at the high and low ends of the market, but little in between. Heineken is also focusing on the mainstream market throughout the country, according to Marc Busain, the company’s Americas chief. While one of Brazil’s poorest areas, it is home to a number of sizeable cities, including Salvador, Fortaleza and Recife. The company is pushing hard into Brazil’s vast northeast, home to one-third of the nation’s 210 million people. The company is aggressively marketing its products in bars and street corner watering holes, spots where convivial Brazilians guzzle nearly half of the nation’s beer annually.Īnd it is trying to plug holes in its strategy, both geographically and in terms of product offerings, according to interviews with several executives, analysts, consultants, distributors and bar owners. That transaction doubled Heineken’s market share to nearly 20 percent.īut to catch Ambev, which still controls nearly two-thirds of the action here, Heineken has opened a multi-pronged front. Heineken made a big move last year with its $1.2 billion purchase of the money-losing Brazil operations of Kirin Holdings Co Ltd. While beer consumption has stagnated in much of the world, growth is still forecast for Latin America’s largest economy, which is why Brazil has become a key battleground for global brewers. The company also threw in new refrigerators, tables and chairs, all emblazoned with its familiar green logo with the red star.īar by bar, Heineken is fighting for a bigger share of the world’s third-largest beer market and an end to Ambev’s dominance in Brazil. Heineken paid him 90,000 reais ($23,000) for a three-year commitment to sell Heineken as its only big-name premium beer. The Dutch brewer wanted top billing for its products at the new location. Santi was launching another saloon in the same working-class neighborhood. Then last year, rival Heineken NV made him an offer he could not turn down. SAO PAULO/BRUSSELS, July 5 (Reuters) - Sao Paulo bar owner Arthur Santi has long served up boatloads of ice-cold Skol, one of Brazil’s most popular beer brands and a mainstay of brewing giant Ambev SA. (Repeats for additional clients with no changes to text)
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