Diageo unlikely to move for Schincariol

Diageo unlikely to move for Schincariol

Diageo has decided not to pursue Brazil's second largest brewer, Schincariol.

The Guinness brewer had shown interest in Schincariol, which has publicly put itself up for sale, but has decided to back off, just-drinks understands from a source familiar with the situation.

Late last week, a report by Bloomberg said that disagreements within Schincariol's ruling family has extinguished Diageo's initial interest.

Most multinational brewers will take a look at any beer asset that becomes available in what is a highly consolidated industry.

Heineken and SABMiller have also been touted as potential bidders for Schincariol. The brewer accounts for 11% of beer sales by volume in Brazil, putting it a long way behind the market leader, Anheuser-Busch InBev's AmBev, which has a 70% share.

However, Schincariol represents a rare opportunity to gain a footprint of any significance in Brazil, which is viewed as a strongly emerging beer market. Schincariol could be worth around US$2bn, according to a Sunday Times report published in April this year. However, Bloomberg reported that a sale might fetch as much as $4bn.

Diageo declined to comment on the matter.