E-Malt.com News article: Peru: SABMiller fights against illicit alcohol

SABMiller is encouraging Peruvian fuel producers to buy locally produced ethanol as part of the group’s efforts to curb illicit alcohol — which accounts for almost a third of the total alcoholic beverages market in Peru, Business Day Live reported on November 24.

Illicit alcohol’s share of the market has fallen from 41% to 31% over the past 13 years, as more people can afford legal alternatives and as beverage companies extend their reach into new areas across the country.

But SABMiller’s Peruvian business Backus and other producers are trying to accelerate the process and reverse an entrenched culture, which is aggravated by the fact that illegal alcoholic beverages are up to 10 times cheaper than entry-level beers.

Illicit alcohol, a problem in various Latin American and African nations, is mostly made in Peru from ethanol derived from sugar cane, according to Felipe Cantuarias, Backus’s vice-president of corporate affairs.

Backus’s fight against illegal alcoholic beverages includes a recently launched entry-level beer brand, and campaigns with government and other producers to flag health risks associated with illicit alcohols.

It also wants buyers from Peru’s 10 major sugar cane suppliers to be placed on a public registry, while beer producers are putting a business case forward to government and fuel refiners on the merits of sourcing ethanol locally, Mr Cantuarias said.

By diverting much of the ethanol supply to new sources and cutting back on imports, thereby restricting supply, ethanol prices are hoped to rise in time.

Backus has about a 96% share of the Peruvian beer market, which in turn has a 62% share of the total alcoholic beverages market — meaning illicit alcohols are SABMiller’s biggest competitor in the Andean country. Peru is SABMiller’s second-largest market in Latin America behind Colombia.

In SABMiller’s other Latin American units, illegal alcohols in Colombia have a 23.6% share of the total alcoholic beverage market, while in El Salvador they account for 23.5% and 13.8% in Ecuador, Euromonitor data shows. SABMiller’s focus in Peru hinges largely on driving per capita beer consumption through encouraging more occasions and higher frequencies.


26 November, 2014