Brazil: Sao Paulo water shortage affecting Ambev’s operations

Brazil is taking all the measures to deal with the worst water crisis that it is facing in the most populous regions of the country. It is experiencing the most severe drought since 1930. The water problem is affecting operations at many companies, and Ambev SA, the nation’s largest beer maker, is no exception, Inside Trade reported on February 9.

Sao Paulo, one of the biggest cities in Brazil, is on the verge of diminishing water supplies within 45 days. The system from where it gets half of its drinking water will run dry if there is no rain in coming one month. The Cantareira water system supplies water to ten million people in Sao Paulo. As of now, water levels are less than a quarter of total capacity. The concerns are aggravating as once the water levels decline below 20%, the water utility will face severe problems in transferring water between reservoirs.

The problem of water supplies has resulted in interrupted operations at Ambev SA’s factory in Campinas region. The beer producer has now no choice, but to shift the production elsewhere. There isn’t enough water to meet the operation requirements at Ambev’s facility. The impact is more adverse on all the facilities operating in Interior Campinas region than in Sao Paulo. They are in a state of alert, which means that they may have to shut down production till the time water supplies don’t get normal.

The Cantareira System contributes almost 60% of the total water needs in the Campinas region. It is the third biggest industrial park of Brazil and accounts for 7% of the country’s economic growth. As of now, the supply is limited, which implies that factories in the region will continue to use high levels of chlorine to purify water supplied from ‘low-running’ rivers. It has considerably raised the production costs of Ambev SA and other companies.

11 February, 2015