SABMiller, Heineken linked to Schincariol

SABMiller, Heineken linked to Schincariol

SABMiller is tentatively emerging as the frontrunner to acquire Brazil's Schincariol, but family politics and tax issues appear to have made all potential buyers wary.

While the attention is on Foster's Group, Brazil's Schincariol has probably caught the eye of more multinational brewers in recent weeks.

From what I have gleaned from the industry, several of the 'usual' suspects have taken a look at Schincariol, including Diageo, Heineken and SABMiller. Of these, SABMiller is perhaps slightly ahead, while Diageo is understood to be out of the race.

Heineken, while having made little secret of its desire to expand in Brazil, has shown some interest but could face regulatory problems on the distribution side, because of its existing deal with Coca-Cola FEMSA in the country. 

Spokespeople for all three companies have declined to comment on Schincariol when contacted by just-drinks.

Their interest comes as little surprise, though. The global beer industry is already highly consolidated and Brazil is one of the world's hottest beer markets. Of course, Anheuser-Busch InBev's AmBev runs the show in Brazil, with around a 70% volume share. This makes Schincariol, the second largest brewer with an 11% share, one of few remaining opportunities of scale in the country.

This is not the first time that family-owned Schincariol has been subject to takeover speculation. "The difference this time is that the family members are interested in selling," one analyst with knowledge of the situation told just-drinks today (6 July).

A sale is not a foregone conclusion, however. There are still reports of disagreements between family members and, subsequently, there is some uncertainty in the trade as to whether the whole business is for sale. Added to that, there is a suspicion that Schincariol is still carrying a potential tax liability, which relates to a fraud scandal that emerged back in 2005.

Although Schincariol offers a sizeable slab in AmBev's backyard, the brewer is not positioned at the premium end of the beer market - the segment that most overseas brewers are looking to tap in Brazil. 

"It's a weak number two and its beers are not even at the mainstream level, they are bottom-end," said Sanford Bernstein analyst Trevor Stirling. "If someone like SABMiller was to get it on the cheap, then that's fine. But they will not be paying a premium valuation."

There are clearly some important issues to overcome.