Beer consumption in Colombia
SABMiller targets ‘sober’ Colombia
By Nicola Mawson , Consumer Industries Correspondent
Monday, October 8, 2007
BOGOTA — Brewer SABMiller aimed to grow beer consumption in Colombia in a bid to drive up the image of the brew against other alcoholic beverages to grow volumes, it said last week.
SABMiller bought a controlling stake in the Bavaria Group in 2005, valuing it at $7,8bn. Karl Lippert, president of its Colombia-based subsidiary, Bavaria, said Colombia was a relatively sober country.
Out of total alcohol sales, Bavaria had about 63% of the market. Lippert said there was upside to the growth, and the brewer aimed to reach about 68% market share of all alcohol.
The company had about 98% of the local beer market. Imported brands accounted for 0,5% of the market and contraband from Venezuela less than 1%. Bavaria aimed to grow beer consumption to 60l a person a year in five years from 45,4l.
It also aimed to boost its premium segment from 2% to between 15% and 17% of its portfolio by 2012.
The country, previously infamous for its illegal drug trade, was growing faster than the average for countries in the Latin American region with gross domestic product growth at 6,8% last year.
Private expenditure was increasing and more people were being employed, though there was still a large poverty gap, Lippert said.
Bavaria aimed to target its brands at specific consumer groups, particularly bolstering its sales of beer to women and pushing up home consumption.
The fragmented spirits industry, against which the brewer was pitching its premium brands, was not very competitive, Lippert said. Aguardiente, or firewater, had 11,4% of the market, but was losing share. Rum had 11,7% of the alcohol market.
Bavaria sales in Colombia were the 15th largest globally in terms of volumes and 13th largest in terms of profit.
Lippert said volume was expected to grow between 6% and 8% in the medium term.
Bavaria also expected to bolster margins by between 60 to 100 basis points and grow pricing between 3,5% and 5,5%.
The brewer aimed to produce 26,3-million hectolitres by the end of the 2008 financial year, an additional 5-million hectolitres.
Lippert said Bavaria’s biggest challenge was keeping up with demand .
Bavaria’s new $200m brewery in Valle had received favourable tax breaks that exceeded the cost of the brewery.
It was rebranding each of its beers with the aim of having 10 national brands. It had also streamlined its distribution network and was investing in refreshing the look of its brands.
SABMiller, which held 98,6% in Bavaria, aimed to increase its holding before it was delisted at the end of the month.
