Analysis - Grupo Modelo, Heineken to lose volumes to Mexico craft sector
Craft brewers in Mexico are expected to benefit from the ruling
Grupo Modelo and Heineken are likely to lose “modest” volumes to craft brewers in Mexico after the opening up of the country's beer market, but the two global brewers will see some “net positive”, according to an analyst.
In a note to clients today (17 July), Bernstein analyst Trevor Stirling flagged that last week's ruling from Mexico's Federal Trade Commission did not cover convenience stores and hotel chains in the country, or force Modelo or Heineken's Cuauhtémoc Moctezuma unit to change existing supply agreements. “This is potentially the best outcome for Heineken and Modelo and even a net positive as they will benefit from reduced amortisation of trade loans and lower discounts. Part of this would be no doubt re-invested in trade support and A&P (advertising and promotions),” said Stirling.
The settlement will also mean a faster move from a “distribution-led strategy to a brand-led strategy” by the brewers in Mexico, the analyst said. Modelo and Heineken wanted this, Stirling said, “although they will lose modest volumes to craft brewers in large conurbations”.
SABMiller, which sparked the probe after lodging a complaint in 2010 based on allegations of "monopolistic practices" in the market, heavily criticised the outcome earlier last week.
Grupo Modelo S.A.B. de C.V. (GMODELOC) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been ...
Heineken N.V. (HEIA) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been compiled by Global...
Asia Pacific Breweries is Heineken’s joint venture in Singapore, with a variety of brands and consumer beverages that enjoy prominence in their local markets. The venture is crucial to the firm's grow...
Heineken, the world’s third largest brewer and leading cider producer, continued its aggressive acquisitive expansion in 2012 with the purchase of Asia Pacific Breweries. This profile considers the ex...
- Pernod's Portman Group penalty - a coincidence?
- A tobacco analogy soft drinks will want to embrace
- Comment - Coke Life: Hit or Miss?
- just The Preview - SABMiller's Q1
- Cognac plays the waiting game in China
- Pernod Ricard swings at Portman Group
- Remy posts Q1 sales drop as Edrington loss bites
- Bacardi to fight US football team legal action
- C&C Group steps down as Portman Group funder
- Distell to take 26% stake in spirits firm KHEAL