January 15, 2010
In comparison with its global competitors, the Dutch brewer Heineken only plays a small part in the Latin beer market. An article in the Financial Times also pointed out that the company should diversify out of the the developed markets. With a young population, beer the most important beverage and a rising disposable income these emerging markets are the key to future growth.
Hello New World!
After getting more established in India, the acquisition of Mexican brewer Femsa opens up the doors to the Latin market. The deal includes the Mexican operations (with important exports to the US) and Femsa's Brazilian operations. These three markets (Mexico, Brazil and US) are the most important profit pools for beer in the world.
With this acquisition the company obtains a good position on the Mexican market. The strategy is to build out the national brands in the Femsa portofolio and also export these brands to the Hispanic market in the US. Further Heineken looks to position its core brand Heineken as a national brand in Mexico, which will require brand building.
And establishing the Heineken brand in Brazil will also be difficult because the group is heavily underrepresented (a market share of 9 percent) in comparison with Inbev AB, which controls 70 percent of the market.
In an already saturated market with heavy competition from both SABMiller and Inbev AB, which has the two top brands in Brazil, it will be a though challenge. But as Brazilian beer consumption is expected to rise 22% in 2008-2015, there is a chance for growth.