Although most sectors were negatively impacted by the virus, FDI in beverages remained relatively healthy in some regions.
When it comes to greenfield FDI projects in beverages, GlobalData’s database shows there were 99 projects in 2020 – the year the pandemic was declared – down from 131 in 2019.
Out of the 230 beverages projects tracked over this two-year period, the majority (59.1%) were new and the rest were expansion projects.
What are the leading destinations for beverages FDI?
Western Europe was the leading region when it came to attracting FDI projects in beverages in 2019–20, playing host to 30.4% of all projects announced or opened globally. However, the number of projects into Western Europe in 2020 (35) remained the same as it was in 2019.
North America ranked behind western Europe, with 40 projects recorded across the two-year period. However, the region did see an increase in the number of projects – the only region to do so – with a total of 23 inbound FDI projects in 2020, up from 17 in 2019.
The US ranked as the leading investment destination for inbound beverages FDI in 2019 and 2020. The country even saw an increase in the number of projects in 2020, with 18, up from 13 in 2019.
The US saw most of its investments come from the UK (eight projects in 2019–20), the Netherlands (seven) and Canada (six).
In 2021, UK-based Diageo opened a whiskey distillery in Lebanon, Kentucky, US. The facility operates with 100% renewable energy and is the company's first carbon-neutral site in North America.
What are the top beverages FDI business functions?
Beverages FDI tended to focus on manufacturing or sales, administration and marketing operations in the 2019–20 period. Logistics and warehousing was the third-largest business function in terms of inbound projects. All three leading functions experienced declines in excess of 24% in 2020.
However, the fourth-largest business function – headquarters – increased by 40% in the period, from five in 2019 to seven in 2020.
The US was the leading destination for manufacturing operations, with 19 projects recorded in 2019–20, while Turkey and Brazil ranked joint-second with 12 each.
What are the top subsectors for beverages FDI?
Soft drinks, mineral waters and other bottled waters was the top subsector when it came to FDI projects in beverages in 2019 and 2020, with a total of 91 projects in the period, followed by the beer subsector, with 50 projects.
However, both subsectors saw a decline in the number of projects in 2020 by 37.5% and 38.7%, respectively. The only subsector to experience a rise in the number of projects was spirits, with 25 projects in 2020, up from 19 in 2019.
One of the most striking investments was in 2019 from Grupo Modelo, a Mexico-based brewing company and a subsidiary of Anheuser-Busch InBev, a Belgium-based drink and brewing company, which announced the opening of a brewing plant in the municipality of Apán, Hidalgo, Mexico.
Grupo Modelo – which produces the beer Corona – invested a total of $756m in the plant. The company facility has an initial output capacity of 12 million hectolitres and the possibility of expanding to 24 million annually. The facility has created 600 new jobs and it is estimated that 1,200 direct jobs will come when the plant runs at full capacity.
Where are the leading beverage investors located?
GlobalData's analysis shows that the US was the leading source market for outbound beverages FDI. US-based companies invested in 52 projects between 2019 and 2020, targeting greenfield operations in western Europe more than any other world region. A total of 16 projects were created by US companies in western Europe over the period, while 13 were created in central and eastern Europe and Commonwealth of Independent States countries.
Europe was also a key market for outbound beverages FDI. Germany and the UK ranked second and third, with a total of 19 and 18 projects over the period, respectively.
Many sectors are expected to have recovered quickly in 2021 as the post-Covid-19 era begins, and regions such as North America and western Europe might fair well soon in beverages FDI, as those regions were not as affected as others in 2020 when it comes to the number of FDI projects in the sector over the period. In fact, the health crisis brought about by the pandemic has seen alternative drinks such as hard seltzers join the market, showing that healthier beverages could bring promising opportunities to the sector.
This article originally appeared on our sister website Investment Monitor.