Femsa plans to follow Modelo and raise its beer prices. The move mirrors its rival Modelo's decision last week to increase prices for its beers in line with inflation.

On a conference call to analysts yesterday (28 February), the co-chief executive of Femsa's beer division, Jorge Luis Ramos, said: "We have in our plans to adjust our prices in line with inflation expectations." No date for the price increases was given.

Ramos noted that Modelo has not increased its prices across the board this year. "We have noticed that Modelo has already started a brand differentiation strategy," he said. "With leading brands, they are making some (upward) price adjustments around 10% but at the same time they are reducing prices of second and third tier brands."

Last year, inflation in Mexico was 5.19% and is seen falling to around 4% this year. In 2004, Femsa and Modelo engaged in a price war which cut into price increases implemented by both companies in the first half of the year.