E-Malt.com News article: 2678

Peru: Cia. de Bebidas das Americas, South America's largest beermaker, said on May 20 it faces at least a three-month delay in starting beer operations in Peru as more than a dozen lawsuits seek to block construction of a brewery in Lima, Bloomberg revealed in a statement.

Ambev, which is being acquired by Interbrew SA, can't open the $40 million plant while courts weigh allegations the brewery will cause environmental damage, Juan Vergara, head of AmBev's international operations, said in an interview in Lima. AmBev is relying on production from the plant to inaugurate sales in Peru's $350 million beer market. The plant, about 13 miles south of Lima, was scheduled to open in the third quarter. “We have found ourselves mired in a bunch of legal obstacles, in a very well orchestrated plan to delay our building the factory,'' Vergara, 44, said.

AmBev, seeking to diversify revenue outside its home market of Brazil, where it accounts for two-thirds of beer sales, is expanding across Central and South America, seeking to take sales from established brewers with almost total control of their markets. UCP Backus & Johnston SA, a unit of Colombian brewer Bavaria SA, sells 98 percent of the beer in Peru, and AmBev aims to capture 6 percent of that market by 2007, Carlos Bembhy, the company's head of operations in the country, said in an interview in January. AmBev's volume sales in Brazil, its core market, fell 6.2 percent in the first quarter.

The 17 suits against AmBev claim the Hauchipa plant threatens the water quality of a reservoir that serves Lima, Marco Palacios, the lawyer representing most of the plaintiffs said. AmBev said in court documents it has complied fully with all Peruvian environmental laws and regulations.

The Sao Paulo-based company is moving into Peru after eight years of declining beer consumption in the Andean country, making its goal for market share even harder to attain, said analysts such as Susana Meza of Centura SAB in Lima. Peru also has the highest average beer prices in Latin America, with 67 cents a liter, according to Ac Nielsen data.

``It's not easy for them to try to break with the monopolistic nature of the Peruvian beer market,'' Meza said in a telephone interview. ``Still, AmBev has learned from its experience in other markets that they need to push forward with their strategy of offering better prices and new products to grab market share from Backus.''

AmBev's push into Peru is already hurting Backus' profit, which fell in the first quarter after the Lima-based brewer cut retail prices and increased expenditures on advertising to shore up its market, Meza said. She has a ``hold'' rating on Backus shares.

AmBev invested $40 million in the estate for the factory in Huachipa, Vergara said. The $35 million spent in October 2003 to buy Embotelladora Rivera SA, Peru's biggest Pepsi Cola bottler, gives Ambev a ready-made distribution channel to get its beer on retailers' shelves, the Colombia-born executive said. “The big distribution network will help them go ahead with a rapid expansion into Peru,'' Meza said.

Interbrew SA, the brewer of Beck's and Stella Artois, agreed to buy control of AmBev in March to create the world's second- largest beermaker in a transaction valued at $11 billion. The transaction has been marked by congressional probes in Brazil, complaints by AmBev minority shareholders and suits against Interbrew.

Fomento Economico Mexicano SA sued the Belgian company to block a plan to transfer its stake in both the Mexican company's beer unit and in a jointly owned U.S. distribution company to AmBev.

AmBev preferred shares were unchanged yesterday, closing at 525 reais, a 29 percent decline in 2004 compared to a 16 percent decline by the benchmark Bovespa stock index. AmBev ordinary shares yesterday rose 26.49 reais, or 2.4 percent, to 1,112 reais, a 75 percent gain in 2004.


21 May, 2004