BRAZIL: Price rises not to blame for tough Q1 - AmBev
AmBev has dismissed suggestions that price increases played a part in a poor first quarter domestically for the Brazil-based company.
The firm, which saw volumes in the first three months of 2008 in Brazil slip by 1.9% year-on-year, played down talk that price increases introduced in the last six months were a factor in the poor showing.
Speaking to just-drinks (13 May), Michael Findlay, head of AmBev's investor relations, said: "AmBev has a stated strategy of keeping prices in line with inflation. Usually we adjust prices once a year, so we're not raising our prices anymore (this year). We started raising some prices in the second half of December, and the remainder after Carnival (the five days before Ash Wednesday)."
While conceding that AmBev's products in Brazil, which include Brahma and Skol, are traditionally 30% more expensive than its competitors' equivalent brands, Findlay said the pricing issue was not a reason for the volume slide.
"The main reason for the volume decline was the weather in Brazil - in Rio de Janeiro, for example, it rained in more than 50 days in the quarter - that's a lot of rain. People in Brazil actually go out on the streets to drink," he said. "Secondly, there was the early Carnival. Historically, every year after Carnival, we have had a drop in volumes. This year, Carnival was two weeks earlier.
"Thirdly, there was the impact of food inflation on disposable income. We're not saying the pricing was a reason for the volume decline. That's life - it's almost like a non-factor.
"If the gap (between AmBev's prices and its rivals' prices) remains the same, it shouldn't be a factor going forward, it only has a very short-term impact, until our competitors close the gap back to what it was."
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