LATAM’s frothy beer market has potential to grow further
The specialist gave an overview of LATAM’s main markets. Mexico is “highly profitable”, albeit “duopolistic”, with a pricing war between Heinekin and ABI, while Colombia is “monopolistic, but wildly profitable”. Brazil, as the world’s third-largest beer market, comes out top. Two decades ago, ABI was dominant here. “Heineken, through acquisitions and good fortune, gained market share… so that’s a huge evolution in a huge market.” The specialist also gave a high-level overview of Heinekin’s standing in the Caribbean and Central America.
Challenges for Heinekin here include the fact that many of its acquired assets were “not up to standards”, meaning “major” CAPEX is required. In addition, consumption is predominantly on-premise, which makes distribution costs higher, although the specialist believes “that will evolve… over time”. However, the other differences include bigger pack sizes and on-premise recycling, “so a plus and a minus there”.
Moving on to the topic of craft beer, “it’s really not discussed at great length as a material threat.” Likewise, hard seltzers do not appear to be gaining traction. But a category that does have potential is low and no alcohol beer. “Without question, they will emerge. They won’t grow at a fast rate as they will in developed markets, but they will be part of the portfolio.”
To access all the human insights from Third Bridge Forum’s Heineken – LATAM strategy & market share opportunities Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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