Beer Market Overview in Latin America: Sales, Consumption, and Trends, Study notes of Marketing Management

Download Beer Market Overview in Latin America: Sales, Consumption, and Trends and more Study notes Marketing Management in PDF only on Docsity! BEER IN LATIN AMERICA: BEER LATIN AMERICA: Market Overview - Introduction This report analyses the market for beer in Latin America. For the purposes of the study, the market has been divided into four sectors: * Lager * Dark beer * Stout * Non-/low-alcohol beer Much of the information in this report is of a statistical nature and, whilst every attempt has been made to ensure accuracy and reliability, Euromonitor cannot be held responsible for omissions or errors. The forecasts given are estimates based on the state of the market at the time of writing and the most reliable sources of information available. Figures in tables are calculated from unrounded data and may not sum. BEER IN LATIN AMERICA: BEER LATIN AMERICA: Market Overview - Main Findings * The beer market in Latin America performed poorly in 2007, affected by the Brazilian currency crisis and associated loss in consumer confidence across the region. Wider availability of products stimulated demand among middle and high income consumers during the review period, and these consumers remain the ones more likely to experiment with products other than lager. * Total beer sales in Latin America amounted to 23 billion litres in 2007, marginally down over the previous year. In value terms, the regional beer market was worth around US$40 billion in the same year, down 7% over the previous year. * Brazil continued to generate the greatest volume sales in Latin America, due to its large population and an established tradition of beer-drinking. Brazil, however, was also one of the worst performing national markets in 2007, with a substantial fall in sales of standard lager - by far the most popular type of beer in the country. * Colombia saw the most dynamic growth over the 2003-2007 period, with sales increasing by around 11% in both volume and local currency constant value terms in 2007. The unstable political situation in Colombia was exacerbated by the financial crisis across the region, which impacted on consumer confidence, reducing expenditure on more expensive alcoholic drinks in favour of beer. * Lager dominated the beer market in Latin America, underpinned by the popularity of standard lager across all national markets in the region. The reason for lager's popularity is to be found in the fact it is more suited to the generally hot climate which prevails across most of Latin America, as well as being the type of beer typically favoured by southern Europeans, whose descendants populate the region. * Dark beer was the best performing sector in 2007, although progress was from a very low base. Dark beer remains largely a novelty drink in Latin America, and it tends to be drunk by better-off consumers in horeca outlets, who are prepared to experiment. * Similar to what is the case in Asia-Pacific, glass is the most popular packaging format throughout the region, as lager is traditionally sold in bottles across Latin America. Generally low levels of disposable income in real terms means that the majority of consumers follow the tradition of using returnable glass bottles in many of the major markets across the region. * AmBev was the leader of the regional market in 2007, commanding a volume share of around 29%. The company was formed after the merger of Brahma and Antarctica in Brazil in 2007. As a result, AmBev became the dominant brewer in the region and one of the biggest in the world. * "Other food stores" continued to be the most important format for the retail distribution of beer across Latin America, accounting for over 46% of retail sales in 2007. However, supermarkets/hypermarkets experienced the most robust growth during the review period, largely at the expense of "other food stores", with consumers increasingly attracted by the variety of products and competitive pricing characteristic of supermarkets. * Euromonitor forecasts that the beer market in Latin America will grow by nearly 5% in volume compound annual growth rate (CAGR) terms between 2007 and 2013, with strong performances from newer products such as stout and dark beer, although the most important 1 influence by far will remain lager. Real value growth will be lower, however, mainly due to intensifying competition between brewers as well as retailers. BEER IN LATIN AMERICA: Market Background - Taxation Most countries levied lower levels of tax on beer in comparison to spirits, which reflects governments' more relaxed attitude towards drinks with a lower alcohol content. In Brazil, IPI is a federal tax levied on domestic and imported alcoholic drinks. Rates vary according to the category of the alcoholic drink. On beer the rate is 80%. Merchandise and Service Circulation Tax (ICMS) is the state's value-added tax applicable to both imports and domestic products. ICMS varies from state to state in Brazil. For example, in S<176>o Paulo, the rate is 25%. Mexican import duties on alcoholic drinks currently stand at 20% ad valorem; additionally, there is a customs handling charge of around 1%. Excise taxes on beer are currently 25%, although the rate levied on spirits is 60%. IEPS (Impuesto Especial sobre Productos y Servicios - Special Product and Service Tax) rates stood at 22% for drinks up to 14% ABV; 30% for drinks between 14-20%; and 45% for drinks in excess of 20%. Alcoholic drinks were also subject to a VAT rate of 15%. Under the provisions of NAFTA, tariffs on beer are being progressively phased out, dropping to zero by 2006. This is significant, given the importance of the US market for high profile Mexican brands such as Corona. In Venezuela, on 1 June 2007 the former luxury goods tax of 16.5% was substituted by a 15.5% valued added tax (IVA). Beer production in Venezuela is controlled by the government. Argentina significantly reduced excise taxes on alcoholic drinks in 1993, in an effort to break the downward trend in formal sector sales and a concomitant increase in sales to black-marketers - know as contrabandistas - who undercut official products. Beer is exempt from excise taxes, while import duties are the same for wines, with varying levels depending on the country of origin, especially if they are sourced on Mercosur purchases. The only significant tax increase was a value-added tax hike from 18% to 21% in 1995. This increase, however, was not in every instance reflected by price increases at the point of purchase. In an intensely competitive environment, many manufacturers chose to absorb this 3% increment rather than transfer it on to consumers. Table 1 Sales Tax/VAT on Beer by Country 2007 % 2007 Brazil 25.0 Chile 22.0 Argentina 21.0 Venezuela 15.5 Colombia 15.0 Mexico 15.0 Source: Euromonitor from Official Statistics BEER IN LATIN AMERICA: BEER LATIN AMERICA: Market Background - Legislation The production of alcoholic drinks is closely regulated in most countries, with strict legislation governing the retailing of alcoholic drinks, as well as advertising and consumption. Nevertheless, the legislation governing the beer industry is relatively relaxed compared with spirits. Brazil introduced a number of new restrictions designed to reduce alcohol-related driving accidents in 2007. The most notable one was to prohibit the sales of alcoholic drinks at petrol stations in Rio de Janeiro. The sale of alcoholic drinks on highways in the state of S<176>o Paulo was also prohibited, following measures passed in December 2007. Alcoholism is a growing problem in Mexico, and a number of states are attempting to implement stricter controls in terms of alcohol consumption. A recent high profile example of stricter legislation was seen in the state of Tabasco, where the state congress approved a measure to ban the sale of chilled beer as part of a wider initiative to decrease alcoholism in the state. The sale of ambient beer remains legal; however. Tabasco, which has a population of around two million, has one of the hottest climates in the country. 2 Open beer bottles are not allowed to be shown with a hand touching them. Also, no commercial can feature people below the age of 25 years. There are further restrictions on what can be portrayed, but the most significant element of any advertisement is the message "Evite el exceso" - avoid excess - which has to appear either written in white letters during the commercial, or stated at least once. In Venezuela, the advertising of alcoholic drinks is not allowed in broadcast media such as radio and television. This ban is not applicable, however, to the cinema, print media or billboards. Advertisers are prohibited to use sports personalities for the promotion of beer. Brewers have attempted to side-step these restrictions by, for example, using the image of malta, a soft drink consumed by young people - which coincidentally shares its name and packaging to a brand of beer - as a way of circumventing the ban on television and radio advertising. Malta is a sweet drink targeted at young people and kids, and is highly recommended as a nutritious drink. Malta as a brand is used to sponsor sport, especially baseball, where people in stadiums typically drink a lot of beer. Argentina specifically prohibits advertising targeting individuals under 18 years of age; portrayal of drinking by minors; implying that the consumption of alcoholic beverages improves mental or physical performance; and the portrayal of drinking as a stimulant for sexual or violent behaviour. BEER IN LATIN AMERICA: Market Background - Drink-driving To combat the rising number of car accidents in the region, many countries have strict drink-driving legislation. In Brazil, the government recently started the Codigo Nacional do Transito (National Traffic Code), which levies stiff penalties on drunk drivers. Until recently, the police did not administer blood alcohol level checks, but this is now widespread practice. The implementation of the new code reflects the country's changing mood with respect to drink driving. Brazil is now attempting to prevent and punish driving under the influence of alcohol. Penalties for driving while intoxicated include fines, driving licence suspension and vehicle confiscation. Legislation additionally prohibits the sale of alcoholic drinks to persons under the age of 18. In practice, however, this restriction is rarely enforced. Social drinking in Brazil generally begins at the age of 15 or 16. Argentina also has severe restrictions applied to drivers of freight and passenger transport vehicles, such as trucks and buses, or vehicles transporting children, such as school buses. For drivers of these vehicles, any blood-alcohol level is sufficient to constitute an offence. The Anti-Alcoholism Law prescribed severe penalties for all drink- driving violations. Other measures of the Anti-Alcoholism Law addressed the population at large. The labels of alcoholic beverage containers were required to include the phrase, in Spanish, "Drink in moderation". Of greater significance was a three-tiered definition of drink-driving. A blood-alcohol level of greater than 500 milligrams per litre constituted drunken driving for any motorist, while blood-alcohol levels of greater than 200 milligrams per litre constituted intoxication for riders of motorcycles and similar two- wheeled vehicles. In other countries legislation exists, but is often not applied with great regularity, given levels of corruption and a lack of resources. BEER IN LATIN AMERICA: Market Background – Drinking Habits Generally speaking, beer-drinking in many Latin American markets is heavily influenced by US trends. Younger consumers are the driving force behind beer sales for the most part, and it was the emergence of a bar culture in the region which has helped foster sales in recent years. In Brazil, the majority of the adult population consumes alcoholic beverages, typically during the evenings or at weekend social gatherings. It is socially acceptable to consume alcohol during the day, but lunch time consumption is not widespread. Brazilians drink beer on most occasions, and with most meals. There are no social stigmas or class connotations associated with the beverage. Certain occasions - such as weddings - may be more appropriate for wine or spirits, but beer is usually offered alongside other types of drink, due to its popularity. Although mature, the market for beer in Brazil is robust, and the drink does not seem in danger of losing popularity to either wine or spirits in the near future. The habit of drinking beer is of course influenced by the climate, and 5 only in the south where it is cooler do Brazilians purchase significant quantities of darker beers and stouts. Argentinean beer drinking habits are increasingly influenced by US trends. This is reflected in many younger Argentineans' preference for beer rather than wine, the country's traditional preference regarding alcoholic beverages. In the context of Argentine food culture, this tendency is combined with the growing consumption of fast food. Young Argentine diners frequently choose beer as a beverage to accompany on-premise consumption of international fast foods, such as hamburgers and pizza. The growing market for beer is becoming particularly characterised by aspirational purchases, as younger consumers became aware of the image values of different brands as portrayed in advertising campaigns. Mexico is another country subject to American influence. As with their Argentine counterparts, young Mexicans - who account for a substantial proportion of the overall population - are the major consumers of beer. In the context of the alcoholic drinks market as a whole, the most obvious influence is seen in the country's bar culture, which at an upscale level very much seeks to mirror US formats. Aspirational purchases are also a key feature of the market, particularly in the 20-35 age band. During the downturn in the country's economy during the late 1990s, there was considerable down-trading. In practice, however, this meant a switch from a premium brand in one sector to a similar brand in a lower price segment. In many circles this would be seen as preferable to a switch to a lower-status brand. BEER IN LATIN AMERICA: BEER LATIN AMERICA: Market Size by Country Beer sales in Latin America amounted to nearly 23 billion litres in 2007, slightly down over the previous year. Many national markets - including Brazil and Venezuela - recorded a dip in volume sales in 2007, affected by the repercussions of the financial crisis which affected the region towards the end of the review period. In value terms, the beer market was worth nearly US$40 billion in 2007, having fallen in value by nearly 7% over 2006. This was mainly attributable to the devaluation of local currencies - especially the Brazilian real. In spite of a disappointing performance in 2007, Brazil generated the greatest volume and value sales in the region throughout the review period. The country accounted for around one third of total regional volume sales in 2007. Brazil's importance within the region was of course based upon its large population, which represented around 34% of the total regional population. This correlation between population and Brazil's share of the Latin American beer market was reflected in levels of per capita consumption, which, at nearly 46 litres in 2007, was just above the average figure for the region. Over the review period as a whole, Brazilian beer sales were poor, under performing the regional market. This was a direct result of an almost continuous fall in sales of the standard lager subsector, which is the key subsector in Brazil. The situation in Brazil was further exacerbated by the sharp fall in sales of premium lagers during 2007, a consequence of the after effects of the currency crisis. To illustrate the consequences of this, before the devaluation of the real, premium beer cost approximately 30% more than standard beer. The price difference after the devaluation was closer to 60%, in both retail and horeca outlets. While consumers naturally became more price-sensitive, beer distributors and retailers were also forced to be more cautious in terms of their attitude to marketing and promoting premium products. In contrast to Brazil, Colombia experienced robust growth in sales of beer over the review period, being undoubtedly the star performer within the region. The country saw a double-digit growth in both volume and local currency constant value terms in 2007 alone. As a result, there was a rapid increase in per capita consumption during the review period, up by 27 litres per head, indicating organic growth in the beer market. It is interesting to note that the position of beer in the Colombian market was strengthened by the economic difficulties the country experienced during the review period. Consumers moved away from wine and spirits in favour of less expensive beers, trading down within the beer market from more expensive premium products to cheaper standard lagers. Moreover, there was a trend which saw consumers shift from consumption of beer in horeca establishments in favour of buying through retail outlets and drinking at home. Other national markets such as Argentina and Mexico saw healthy growth in volume terms during the review period. Overall, many national markets in Latin America saw a widening 6 in the distribution of added-value beers, as well as a bigger consumer base for such drinks, compared with the situation during the early 1990s. Table 5 Sales of Beer by Country 2003-2007 Sales 2003 2004 2005 2006 2007 Million litres Brazil 7,739.0 8,042.5 8,172.3 8,160.1 7,876.3 Mexico 4,246.0 4,792.3 5,171.0 5,283.9 5,512.6 Colombia 1,393.6 1,709.0 2,067.4 2,246.1 2,503.8 Venezuela 1,601.1 1,493.4 1,719.9 1,902.2 1,717.8 Argentina 1,010.7 1,012.3 1,084.5 1,179.6 1,241.7 Chile 389.0 383.3 385.2 388.0 382.7 Other Latin America 3,411.2 3,474.1 3,772.0 3,851.1 3,723.6 TOTAL 19,791 20,907 22,372 23,011 22,958 US$ million Brazil 14,216 17,282 18,316 17,960 14,895 Mexico 3,108.3 4,325.1 5,577.4 6,046.8 5,982.4 Venezuela 3,107.8 2,208.7 3,494.3 4,743.4 5,061.5 Colombia 2,157.5 2,969.5 3,181.0 3,498.0 3,319.1 Argentina 1,860.7 2,165.6 2,349.8 2,511.9 2,622.1 Chile 744.6 760.6 806.5 834.4 766.5 Other Latin America 4,785.7 4,526.8 6,028.9 7,112.1 7,104.0 TOTAL 29,981 34,239 39,754 42,707 39,751 Source: Euromonitor Table 6 Sales of Beer by Country: % Analysis 2003-2007 % analysis 2003 2004 2005 2006 2007 % volume analysis Brazil 39.1 38.5 36.5 35.5 34.3 Mexico 21.5 22.9 23.1 23.0 24.0 Colombia 7.0 8.2 9.2 9.8 10.9 Venezuela 8.1 7.1 7.7 8.3 7.5 Argentina 5.1 4.8 4.8 5.1 5.4 Chile 2.0 1.8 1.7 1.7 1.7 Other Latin America 17.2 16.6 16.9 16.7 16.2 TOTAL 100.0 100.0 100.0 100.0 100.0 % value analysis Brazil 47.4 50.5 46.1 42.1 37.5 Mexico 10.4 12.6 14.0 14.2 15.0 Venezuela 10.4 6.5 8.8 11.1 12.7 Colombia 7.2 8.7 8.0 8.2 8.3 Argentina 6.2 6.3 5.9 5.9 6.6 Chile 2.5 2.2 2.0 2.0 1.9 Other Latin America 16.0 13.2 15.2 16.7 17.9 TOTAL 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor 7 BEER IN LATIN AMERICA: Packaging Glass was the most important type of packaging in Latin America throughout the review period, holding over 71% of total regional volume sales in 2007. The dominance of glass was mainly due to reasons of economy. Most consumers, especially those from low income groups, prefer bottled beer due to the fact that glass bottles are returnable and therefore the most economical option, a tradition prevalent in many countries, including Colombia and Venezuela. Colombia presented the highest proportion of sales packaged in glass in the region in 2007, with 92% of sales, despite the fact that bottles were losing share due to the increasing popularity of beer sold in the can format across the country. The can format was the second most popular packaging type in Latin America in 2007, accounting for 24% of total beer sales. The can format also saw the most dynamic growth in many national markets, including Mexico, Chile and Argentina during the review period. The format is gaining in popularity especially among middle and upper income consumer groups, who are prepared to pay for premium products. There was a notable sign that the can format cannibalised sales from bottles in some countries. In Chile, for example, the rise in consumption of canned beer was primarily aided by growth in sales of premium beer, which typically uses the can as preferred packaging format. The rise in preference for cans was significant over the review period, since they can be acquired individually or in packs, thus offsetting their significantly higher price of up to twice that of the larger size bottles in Chile. The keg format was relatively underdeveloped in the region, accounting for under 4% of total beer volume sales in 2007. In fact, kegs facilities are not commonplace in catering establishments in many countries, with bottled beer being the preferred format. Plastic and "others" were niche-packaging formats, with both manufacturers and consumers showing little interest in alternative packaging formats. Table 9 Sales of Beer by Country and Packaging Format: % Analysis 2007 % volume analysis Plast Can Glass ic Keg Others TOTAL Argentina 27.0 65.0 - 8.0 - 100.0 Brazil 26.0 69.0 - 4.5 0.5 100.0 Chile 18.0 77.0 - 4.0 1.0 100.0 Colombia 7.0 92.0 0.5 0.5 - 100.0 Mexico 32.1 63.0 2.8 2.1 - 100.0 Venezuela 13.0 86.0 - 1.0 - 100.0 Other Latin America 24.0 71.7 0.9 3.2 0.2 100.0 TOTAL 24.0 71.7 0.9 3.2 0.2 100.0 Source: Euromonitor Table 10 Company Shares of Beer 2006-2007 % share Local company 2006 2007 AmBev - 29.4 FEMSA Cerveza SA de CV 14.6 14.8 Grupo Modelo SA de CV 13.6 14.3 Bavaria SA 7.5 8.3 Empresas Polar 8.7 7.8 Cervejarias Kaiser do Brasil Ltda 6.2 6.0 Quilmes International SA 4.4 4.5 10 Primo Schincariol Industrias de Cervejas e Refrigerantes Ltda 2.8 3.2 Compania Cervecerias Unidas SA 2.8 3.0 Cerveceria Leona SA 2.3 2.8 Cisneros Group 0.8 1.2 Cia Cervejaria Brahma SA 21.0 - Cia Antarctica Paulista Industria Brasileira de Bebidas e Conexos 9.9 - Others 5.4 4.7 TOTAL 100.0 100.0 Source: Euromonitor BEER IN LATIN AMERICA: Market Shares Consumers in Latin America tend to be loyal to domestic and/or regional brewers. At the same time, local brewers are more active in the standard lager subsector, which is by far the most important type of beer in the region. International brewers tend to be market their brands mainly through the horeca channel, targeting consumers in middle and high income groups. Hence, the volume share taken by international brewers is limited, although their share of value sales would undoubtedly be higher. AmBev AmBev was the market leader in Latin America in 2007, accounting for nearly one third of total regional volume sales in 2007. The company's strength at a regional level was underpinned by its dominance of its domestic market, Brazil. Such was AmBev's dominance that it accounted for over 70% of volume sales in Brazil - the region's largest national market - in 2007. Aside from this, the company is also present in Argentina and Venezuela. AmBev, Brazil's largest beverage company and the fifth largest in the world, was established on July 1, 2007, as a result of the joint venture between the Antarctica and Brahma beverage companies. Brazil's Administrative Council in the Defence of Competition (CADE - Conselho Administrativo de Defesa da Concorrencia) approved the joint venture between Brazil's market leaders on March 30, 2005. The creation of the company in one of the world's largest markets is set to deter multinational brewers from entering or increasing their presence in Brazil, while the Brazilian company seems set on increasing its international presence, mainly by acquisition. Despite the doubts created by the company's monopolistic position in its domestic market, AmBev claimed that its creation would help Brazilian brewers to stay competitive in the international marketplace. FEMSA Cerveza SA de CV and Grupo Modelo SA de CV are the close rivals to AmBev in Latin America. In second place, FEMSA Cerveza has a wider geographical presence, both internationally and regionally, in comparison to AmBev. Both of these brewers, however, owe much of their regional share to their strength in the Mexican market, the second largest in the region. Multinational Players Multinational players started to seriously enter the beer market in Latin America during the mid-1990s, as levels of disposable income increased, economies stabilised and more consumers were willing to experiment with unfamiliar brands. Consumers in middle and high income groups were the main targets for multinational players. These consumers are usually well-travelled and are more likely to be attracted by internationally-recognised brands. During the review period, then, there was a noticeable increase in the numbers of consumers making aspirational purchases of international brands, mainly through the horeca channel. Grupo Modelo SA de CV was the only regional player to hold a recognised global presence during the review period. The company's flagship brands - Corona and Corona Extra - are not only the most important brands in Mexico, but also had a significant volume share at a global level during the review period. Growth in Grupo Modelo's total regional share was attributable to the continuous success of the Corona Extra brand, as well as significant sales increases for the Coronita and Pacifico brands in its own domestic market, Mexico. 11 There are many global players present in Latin America, although sales of their products tend to be limited through retail and horeca channels, mainly due to price and a lack of familiarity, as well as consumer loyalty to local brands. Although multinationals generally enjoy greater success through the horeca channel, the wider availability and cheaper prices characteristic of regional and domestic brands mean that they are not as popular. Industry sources indicate that it will take a significant investment in local production and distribution if international brewers are to acquire a significant presence in the region. BEER IN LATIN AMERICA: Distribution - Retail vs Horeca Trends Retail outlets were the most important distribution channel for beer in Latin America during the review period, holding over 55% of total regional volume sales in 2007. Unlike Asian consumers, consumers in Latin America generally prefer to socialise with their friends and families at home. On top of such ingrained drinking habits, the financial crisis which affected the region shook consumer confidence in many countries to the extent that spending out of the home decreased. Nevertheless, Euromonitor's Consumer Foodservice Database 2005 recorded an increase in the numbering of catering establishments in Latin America over the review period. The number of units grew by around 9% between 2003 and 2007, with Argentina and Mexico experiencing the most impressive growth. As economies recover in the years to come, the horeca channel will continue to provide the best platform for international brands. Brazil featured the highest proportion of sales through the horeca channel, with the channel accounting for 67% and 79% of total volume and value sales, respectively, in 2007. There were several factors contributing to this. Firstly, increased disposable incomes during the mid- and late 1990s meant that middle and high income groups could afford to socialise in pubs and clubs, whereas previously this occurred more in the home. Secondly, the establishment of microbreweries also helped fuel horeca sales growth for beer. Thirdly, sales of premium lager are especially strong in the horeca channel. This is because people are more willing to try new products and spend more money when they are drinking outside the home. As a result, horeca sales of beer are generally less affected by economic downturn than products from other industries, such as consumer durables, as people switch to lower-priced products such as beer, when their spending power is limited. Sales through the horeca channel accounted for around a third of total volume sales in Mexico, Colombia and other national markets in 2007. This indicated the lower levels of disposable incomes in these countries, which do not allow consumers to eat and drink out of the home on such a regular basis. Table 11 Retail versus Horeca Sales of Beer by Country: % Analysis 2007 % analysis Retail Horeca TOTAL % volume Brazil 33.0 67.0 100.0 Mexico 60.9 39.1 100.0 Colombia 68.7 31.3 100.0 Venezuela 71.4 28.6 100.0 Argentina 78.6 21.4 100.0 Chile 81.4 18.6 100.0 Other Latin America 67.2 32.8 100.0 TOTAL 55.3 44.7 100.0 % value Brazil 21.0 79.0 100.0 Venezuela 39.7 60.3 100.0 Argentina 43.2 56.8 100.0 Mexico 48.2 51.8 100.0 Chile 55.0 45.0 100.0 Colombia 59.6 40.4 100.0 Other Latin 12 Other Latin America 8,173.1 8,658.7 9,146.7 TOTAL 44,375 46,629 49,269 Source: Euromonitor Table 14 Forecast Sales of Beer by Country: % Analysis 2007-2013 % analysis 2007 2008 2009 2010 2011 2013 % volume analysis Brazil 34.3 32.6 31.4 30.2 29.0 27.9 Mexico 24.0 24.5 24.6 24.6 24.6 24.4 Colombia 10.9 11.8 12.7 13.6 14.6 15.7 Venezuela 7.5 7.5 7.5 7.6 7.6 7.7 Argentina 5.4 5.5 5.6 5.6 5.7 5.8 Chile 1.7 1.6 1.6 1.6 1.5 1.5 Other Latin America 16.2 16.5 16.7 16.9 17.0 17.1 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 % value analysis Brazil 37.5 35.9 34.7 33.5 32.3 31.0 Mexico 15.0 15.1 15.0 15.0 14.7 14.3 Venezuela 12.7 13.0 13.2 13.4 13.7 14.3 Colombia 8.3 9.1 10.0 10.8 11.8 12.9 Argentina 6.6 6.8 6.9 7.0 7.1 7.2 Chile 1.9 1.9 1.9 1.8 1.8 1.7 Other Latin America 17.9 18.2 18.3 18.4 18.6 18.6 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 Source: Euromonitor Table 15 Forecast Sales of Beer by Country: % Growth 2007/2013 % growth 2007/2013 CAGR 2007/2013 TOTAL % volume growth Colombia 12.4 79.6 Argentina 6.2 35.0 Venezuela 5.1 28.2 Mexico 4.9 26.9 Chile 1.8 9.3 Brazil 0.3 1.5 Other Latin America 5.6 31.5 TOTAL 4.6 24.9 % local currency constant value growth Colombia 13.8 91.1 Venezuela 6.8 39.1 Argentina 6.4 36.1 Mexico 3.4 18.1 Chile 2.1 11.0 Brazil 0.5 2.4 Source: Euromonitor BEER IN LATIN AMERICA: Market Forecasts by Sector 15 All sectors will see some growth over the forecast period, with an overall CAGR of around 4% predicted in both volume and value terms between 2007 and 2013. Lager will remain by far the largest sector in the beer market, with sales reaching nearly 29 billion litres by 2013, underpinned by growth in demand for standard lager. Consumers in the region - especially those of an older generation - will continue to remain loyal to domestically- produced standard lager, despite the fact that some younger middle-class consumers may start to consume larger quantities of imported premium lagers, which will become increasingly available in catering establishments and the horeca channel generally. Stout, the smallest beer sector in Latin America, will see robust growth over the forecast period, with a CAGR of around 6% in both volume and value terms between 2007 and 2013. Sales of stout are therefore predicted to surpass non-/low-alcohol beer by the middle of the forecast period. Chile will record the most substantial growth in this sector, due to several factors. Firstly, the increased availability of such products during the latter half of the review period allowed consumers - especially younger consumers - to experiment with what is a novelty product. Secondly, the distribution of stout is predicted to widen in the country during the forecast period. And thirdly, levels of disposable income will rise allowing younger consumers to pursue an interest in products with aspirational aspects. Dark beer will also register healthy growth in both volume and value terms over the forecast period, with a predicted volume CAGR of around 4%. Again, as in the case of stout, this will not be sufficient to take it out of niche status, although sales of dark beer will remain far higher than stout across the region. In Venezuela, industry sources indicate that the increasing popularity of premium products will be accompanied by growing demand for dark beer, especially from middle and high income consumer groups, who will be prepared to pay for novelty products. Non-/low-alcohol beer will remain very much a niche product in Latin America throughout the forecast period, although demand will be relatively stable in countries such as Chile, Brazil and Argentina. In Brazil - the largest national market - consumers showed growing interest in lighter beers during the review period, as they serve to quench thirst without the effects of alcohol, which is attractive to certain consumer groups such as women. Industry sources commented that this trend is the main hope for progress in sales of non-/ low-alcohol beer over the forecast period. Table 16 Forecast Sales of Beer by Sector 2007-2013 Sales 2007 2008 2009 2010 Million litres Lager 22,887 23,654 24,659 25,812 - Premium lager 1,454.6 1,489.1 1,539.0 1,606.4 - Standard lager 20,440 21,178 22,122 23,192 - Economy lager 992.1 987.3 998.2 1,014.0 Dark beer 64.2 65.5 67.5 70.1 Stout 2.5 2.6 2.8 2.9 Non-/low-- 4.8 4.8 4.9 4.9 alcoholbeer TOTAL 22,958 23,727 24,734 25,890 US$ million Lager 39,526 40,729 42,264 44,125 - Premium lager 3,811.1 3,886.0 3,989.0 4,120.4 - Standard lager 34,723 35,859 37,281 38,995 - Economy lager 991.9 984.4 994.3 1,008.8 Dark beer 203.5 209.4 217.4 227.1 Stout 10.0 10.7 11.5 12.2 Non-/low-- 11.0 11.1 11.2 11.4 alcoholbeer TOTAL 39,751 40,961 42,504 44,375 % CAGR 16 2007/ 2011 2013 2013 Million litres Lager 27,199 28,597 4.6 - Premium lager 1,684.1 1,752.4 3.8 - Standard lager 24,485 25,800 4.8 - Economy lager 1,029.2 1,044.6 1.0 Dark beer 73.7 78.0 4.0 Stout 3.1 3.3 6.2 Non-/low-- 5.0 5.1 1.4 alcoholbeer TOTAL 27,280 28,684 4.6 US$ million Lager 46,367 48,990 4.4 - Premium lager 4,265.5 4,427.6 3.0 - Standard lager 41,079 43,524 4.6 - Economy lager 1,022.6 1,037.5 0.9 Dark beer 237.7 253.3 4.5 Stout 13.0 13.9 6.8 Non-/low-- 11.6 11.8 1.4 alcoholbeer TOTAL 46,629 49,269 4.4 Source: Euromonitor 17