E-Malt.com News article: 2057

Brazil’s biggest brewer, AmBev, has seen its stock recommendation cut by Investment house Merrill Lynch, which reduced its recommendation on the Brazilian beverages company to “neutral” from “buy” on January 16. The recommendation was supported by evidence showing that AmBev shares have appreciated 68% over the last 12 months, even as industry pricing dynamics have eroded. The company saw its market share gradually slip through 2003, as its main rival Schincariol aggressively advertised its Nova Schin brand. “We expect AmBev to retake market share, however, at the cost of higher promotional and advertising expense,” said Merrill.

AmBev is the world's fifth largest brewer. It has a leading position in the Brazilian beverage industry with approximately 70% of the beer market segment. AmBev is growing in other South American markets such as Argentina, Venezuela, Uruguay and Paraguay, and is expanding to Central America and Peru in 2003.

The Brazilian beer market is the fourth largest in the world and the largest in Latin America, with annual consumption of 85 million hectoliters in 2002, according to Euromonitor. The Brazilian beer market is characterized by a high proportion of on-premise consumption (outdoor bars and restaurants) in returnable bottles. Segments such as take home and super premium represent a small percentage of the market, therefore new opportunities for higher per capita consumption exist. AmBev's distribution network reaches over 1 million points of sale in Brazil.


20 January, 2004