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.
- Is Brown-Forman doing a Jack Daniel's in Ireland?
- Is Brown-Forman at the end of the SoCo road?
- Is time right for TWE to move for Diageo's wines?
- Are we kidding ourselves over craft spirits?
- Will a sexed-up SABMiller tempt AB InBev?
- Diageo secures Xerox Corp CFO as finance head
- Tesco pulls several Carlsberg SKUs in UK
- Diageo, Treasury Wine Estates quiet on wine sale
- Former Pernod Ricard exec joins Wakefield Wines
- Inver House Distillers posts FY profits leap
- The IWSR Duty Free/Travel Retail Summary Report 2015
- Future growth opportunities for global spirits
- Global gin insights - market data, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research