 |
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| Trends: | 97
 |
1H98
 |
2H98
|
99?
|
|
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| $ Important Listed Companies | ||||
| Brahma, Antarctica, Antarctica Nordeste | ||||
| Other Relevant Companies | ||||
| Coca-Cola, Pepsi-Cola, Schincariol | ||||
| O The Brazilian Industry | ||||
| Brazil
produces around 8 billion liters of beer and 7 billion l of soft drinks p.a. Output is
steady the year round, although the industry builds up strategic stocks in the winter
months, gearing up for the summer (between 40 and 50% of beer sales take place between
December and March). Brewing’s basic raw material is malt, produced from germinated barley. Local consumption amounts to some 850,000 t p.a., of which Brazil produces only 30%. Most imports come from Canada, Belgium, Argentina and Australia. The country contains 47 breweries, responsible for 37,000 direct jobs. Brahma, via its Brahma and Skol brands, retains approximately 50% of the market. In the soft-drinks segment, the biggest sellers are colas (45%), guaranį (22%) and orange flavors (12%). Coca-Cola holds 87.5% of the cola segment (followed by Pepsi), while Brahma and Antarctica divide up the guaranį segment between them. In overall terms, Coca-Cola retains just over 50%. All in all, the sector turns over close to US$ 8 billion p.a. from beer and US$ 7 billion from soft drinks (factory-gate prices). |
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| m The Global Industry | ||||
| Brazil
is the world’s 4th largest beer-producer (1995), accounting for 6.3% of global
output. In terms of individual firms, Brahma is ranked 5th, although its Brahma Chopp brand
is second only to Budweiser (2.43 billion l in 1995, versus 5.02 billion for the
leader). The country is also ranked 4th in the world soft-drinks production list, behind the USA, Mexico and Germany. |
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| I Attention! | ||||
| Soaring interest rates and expectations of a drop in the pace of consumption growth are leading some important firms to revise their investment programs, contributing even more to next year’s expected recession. | ||||
| L Outlook | ||||
 |
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| Source: Abir, Sindicerv; Lafis projection | ||||
| Even
before the Asian and Russian meltdowns, Brazil was showing signs of coming out of its high
growth cycle. Now, with the repercussions of the crises and little hope of a solution in
the short term, its domestic market is suffering the effects of a series of recessive
measures and exports are being hit by the slow-down in global demand. If we assume a 1.2%
decline in 1998 GDP, beer consumption could drop to 7.94 billion l, 2.6% less than in
1997, although soft drinks should continue to move up, probably by around 6%, pushed by
sales of tubainas (cheap brands turned out by small-scale producers). During the next two years (1999 and 2000), we foresee little change on the international front and the recession in Brazil is likely to worsen, with beer consumption falling and soft-drinks growth slowing. Heightened competition in a shrinking market should squeeze margins, although this should be alleviated slightly by cheaper raw materials. |
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