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BRAZIL: Premium beer gains traction in face of domestic stranglehold - study

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Domestic beer continues to dominate the Brazilian off-trade but premium labels are starting to carve out a foothold in the country, a new study has shown.

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Mainstream local brands account for 87.6% of the off-trade beer market in Brazil compared to 11.4% for premium and “strong” brands, according to Mintel research released yesterday (26 November). However, while standard domestic beer volumes decreased by 2%, premium and strong volumes grew by 18%, Mintel said.

Premium labels are about 90% international and are more expensive than standard local beers, Mintel said. Strong beers include those with an alcohol content over 6%.

"The premiumisation of the industry will be a key driver for market growth over the next five years, representing significant opportunities for the sector," said Sebastian Concha, research director, Latin America at Mintel, adding that the FIFA World Cup, due to be held in Brazil in 2014, will further boost demand.

“With a strong sporting prowess in Brazil and a product closely linked with sporting culture, beer manufacturers who can capitalise on local enthusiasm and blend this to ensure a premium product positioning stand to benefit,” Concha said.

The off-trade value of premium and strong beer climbed by 0.6% last year to BRL5.29bn (US$2.55bn) while the standard sector declined by the same amount.

The Mintel research also showed that international lagers are more popular among Brazil's younger generation, with 26% of 18-to-24-year-olds claiming to drink them compared to 13% of 35-to-44-year-olds.

Brazil is the third-largest beer market by volume consumption, behind China and the US, Mintel said. Volumes have jumped by 22% since 2007 to hit 12.7bn litres last year and are on course to reach 13.3bn litres this year, Mintel said.

Yesterday, a consultancy firm said AmBev, the Brazilian unit of Anheuser-Busch InBev, has overtaken Brazil's state-run oil company to be the country's most valuable company by market value.


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