E-Malt.com News article: 1799

Brazilian beverage company, Ambev, the world's No. 5 brewer, said on November 12 that it expected its domestic beer sales volumes to drop again this year after they fell more than expected in the third quarter, according to Reuters. "In light of the higher-than-anticipated volume decline during the third quarter 2003 and considering that volumes for October were weak on a year-over-year basis ... we expect overall volumes for 2003 to slightly decline related to 2002," Luiz Fernando, AmBev sales and distribution director told a conference call with analysts.

He said Companhia de Bebidas das Americas (AmBev) would do its best to battle the decline but added that the brewer "might" have also seen a one percentage point drop in its Brazilian beer market share in October.

Brazil's weak economy, a delay in rivals' decision to match AmBev's price rises, a heavy marketing drive by Brazilian brewer Schincariol and poor weather combined to hurt AmBev's sales more than expected in the third quarter. Brazilian beer volume sales, where AmBev makes the lion's share of its revenue, were 12 % weaker in the third quarter than they were over the same three months last year.

Its share of the Brazilian market, where it also competes with Canada's Molson Inc., dropped to 66 % at the end of September from 70 % at the end of June. The company has pinned its recovery in market share on a promotional beer sales program called "Festeja" which started in October at 250,000 points of sale, or 25 percent of the total outlets in Brazil that sell AmBev products, and is due to run until December.

But board co-chairman Marcel Hermann Telles said there was no magic recipe and declined to put a time frame on how soon its market share might bounce back. "It is going to take time, but we will respond in our own way," he said. "We will concentrate on the basic things that we know how to do, of course with redoubled vigor ... Everyone here is in a kind of war mood."

AmBev sold a little more than 58 million hectoliters (100 liters) of beer in Brazil last year, 1.7 % less than the 59 million hectoliters it sold in 2001.

The Latin American powerhouse, which has operations in Argentina, Uruguay, Paraguay and Venezuela, earlier this week posted third-quarter earnings before interest, taxes, depreciation and amortization, or EBITDA, that was more than one-fifth stronger than in the same period last year as it offset the weaker sales in Brazil with price rises and cost savings.


14 November, 2003