The Dutch multinational Heineken announced on Monday (13) the purchase of Brazil Kirin, controlled by the Japanese group Kirin, for 664 million euros (R$ 2.2 billion). With the acquisition, Heineken becomes the second largest brewery in Brazil. After the conclusion of the deal, Brasil Kirin will be consolidated with Heineken.The transaction evaluates Brazil Kirin at 1.025 billion euros (R $ 3.3 billion), including debt. Brazil Kirin closed 2016 with a revenue of R $ 3.706 billion, against a revenue of R $ 3.698 billion a year earlier, and an operating loss of R $ 262 million, against R $ 322 million in 2015.
Kirin Brazil has 12 factories and its own distribution network. The company has a particularly strong presence in the North and Northeast, where Heineken has less exposure. The beer portfolio, which includes brands such as Schin, Devassa, Baden Baden and Eisenbahn, has a market share of 9.9%. Brazil Kirin also has a line of soft drinks, with a market share of 2% in the category.
Heineken operates five plants in Brazil and distribution is done by Coca-Cola bottlers. The company said it expects significant cost synergies with the acquisition, with efficiency gains in production, logistics optimization and sales, general and administrative expenses.
Completion of the purchase is subject to the approval of the Administrative Council for Economic Defense (Cade).
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Ask any Brazilian what is their favorite beer and you are likely to get one of these three answers: Skol, Brahma or Antarctica. Since we are talking about Ambev in this post, you must be guessing Ambev owns Skol, which is the dominant beer brand in Brazil. That’s partly right. Ambev does own Skol. But Ambev also owns Brahma and Antarctica. That’s right: they own all three dominant beer brands in Brazil. Together, these three brands have around 70% of the market share in Brazil. On top of that, the brand preference by the consumers’ taste gives Ambev a good pricing power and they have been able to smoothly pass cost increases to the consumers and to keep margins up.
Ambev also owns Premium brands like Antarctica Original and Bohemia. Premium beer has a good growing outlook in Brazil and Latin America over the next decades due to the growing countries’ middle-class.
Ambev is present in 14 countries in the Americas and they lead in 6 of the countries where they operate: Brazil, Argentina, Canada, Paraguay, Uruguay and Bolivia.
They also distribute Pepsi and Quilmes in most countries in South America, Budweiser in Canada and Brazil and Stella Artois in South America and Canada.
Easy Brazil Investing Rating
Ambev’s competitive advantage is built on its brands, distribution network and scale. All these factors along with the exposure to fast-growing markets, grant Ambev the highest EBI Rating: 5 stars.
Ambev – Companhia de Bebidas das Américas