Anheuser-Busch InBev moves in on Schincariol

Anheuser-Busch InBev moves in on Schincariol

Anheuser-Busch InBev's AmBev division is moving in on rival Schincariol's heartland in north-east Brazil, as it seeks fresh growth in the country.

Should Kirin Holdings succeed in taking a controlling stake in Schincariol, Anheuser-Busch InBev will be waiting. The Budweiser brewer's AmBev unit is pouring extra resources into the north east of Brazil. 

In terms of national market share, AmBev accounts for around seven out of every ten beers sold in Brazil, while Schincariol accounts for little more than one in ten. However, Schincariol is particularly strong in the north-east of the country.

In its half-year results announcement yesterday, A-B InBev said that this region "continues to show some of the highest growth rates in the country". Despite 1% drop in beer volumes for AmBev's Brazil business in the first half of 2011, the group pointed to growth in the north. 

JP Morgan analyst Alan Alanis said today that, in the north east, extra capacity "was a source of [AmBev] market share gains in a territory where Schincariol is strongest".

AmBev expects to open a new brewery in the state of Pernambuco in the fourth quarter of 2011. The brewery is one reason why AmBev expects to see some fresh momentum in its Brazilian beer sales going into 2012. In addition, the new brewery will "ease some of the pressure on capacity and logistics costs that we have been facing in the past", the brewer said.

Brazil's beer market has waned in the first half of this year, due in part to strong sales during last year's FIFA World Cup and also due to slower economic growth in the country. However, price rises helped AmBev's net sales in Brazil to rise by by 7% in the six months to the end of June, to BRL8.49bn. EBITDA, excluding one-off items, rose by 10.7% on the same period of last year, to BRL4.19bn, boosting results for parent group A-B InBev.

On a conference call yesterday, A-B InBev's CEO, Carlos Brito, highlighted the opportunity for premium beer in Brazil. Currently, premium only accounts for 5% of beer market volumes. "Compared to other markets, that's very small," said Brito, adding that the group will launch Budweiser in the country within the next three weeks.