Brazil's AmBev, the world's fifth-biggest brewer, faces a tough time breaking into the Peruvian beer market, which is almost entirely controlled by Union de Cervecerias Peruanas Backus & Johnston , the sole domestic brewer, according to analysts. In mid-July, Colombian brewer Bavaria raised its stake in Backus to 74 % of the voting stock, Reuters said. Backus sells the brands Cristal, Pilsen and Cusquena. However, AmBev has said it sees plenty of growth potential in Peru where annual consumption of beer per capita was 22 liters in the 5.6 million hectoliter, or $400 million, market. Analysts put Brazilian per capita consumption at about 50 liters.

Meanwhile, AmBev has posted recently that it is to buy two soft drink plants and improve its distribution in the Andean country. AmBev, said the deal with Embotelladora Rivera would give it PepsiCo Inc's franchise agreement in Lima and northern Peru and use of the Peruvian bottler's carbonated soft drinks (CSD) sales network. "In Northern Peru, sales and distribution of beer and CSD will be carried out by Embotelladora Rivera and, given the company's extensive distribution network covering over 140,000 points-of-sale, AmBev will be able to significantly reduce its time-to-market in the beer business," it said in a statement.

AmBev said northern Peru and Lima, the capital, accounted for about 82 % of the fizzy soft drink business and 80 % of the beer business in the Andean country. "I'm not going to enter into whether that distribution network is good or not, but to have a network already set up saves a great deal of time," said Daniel Pasquali, an analyst at Fator Doria Atherino brokerage. "That's all a route to easier beer sales."

The bottler deal comes after AmBev announced in February that it would spend $38 million over 12 months to build a brewery in Peru, a departure from its strategy of buying rivals out since the formation of the company in 2000.

15 October, 2003