Craft brewers in Mexico are expected to benefit from the ruling

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.