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E-Malt.com News article: 2404

Colombian brewer Bavaria said on March 23 it aimed to become the world's seventh-largest brewer within three years, up from its current ranking as No. 10, as Latin American populations grow and beer consumption increases, according to Reuters. After spending $1.1 billion on expansion and buying brewers in Peru, Ecuador, Panama and Costa Rica to double its output over the past three years, Bavaria will need no further acquisitions to take it to No. 7, President Ricardo Obregon said.

He said Bavaria, controlled by Colombian businessman Julio Mario Santo Domingo, was currently the 10th largest brewer in the world following the merger of Brazil's AmBev and Belgium Interbrew. "This is an absolutely feasible challenge, because the brewers which are in front of us don't produce much more than the 27.8 million hectoliters of beer products we produce and sell," Obregon told a news conference after a shareholders' meeting.

The company's shares rose 0.77 % on the Colombian Stock Exchange to 18,260 pesos after Obregon spoke. According to independent industry research body Canadean, Bavaria is only the 15th biggest brewer in the world, but Canadean listed Bavaria's total brewing at only 22 million hectoliters in 2003, considerably below Bavaria's own figure. The Colombian brewer has an advantage over its global competitors in that populations are growing in its Latin American markets and beer consumption per capita is relatively low, with room for expansion.

Bavaria dominates markets in Colombia, Peru, Ecuador and Panama. The company aims to reduce its total debt to $1.5 billion in two years, Obregon said, after acquisitions took its liabilities to $2.07 billion at the end of 2003. In a few years, with lower debt and more sales, the company might look to further expansion, Obregon said. The debt is made up mainly of bonds Bavaria has issued in Colombia and loans from the Andean Development Corporation.

Bavaria's sales jumped 65 % to 4.74 trillion pesos ($1.8 billion) in 2003, due to its acquisition of a controlling share of Peru's only brewer, Backus. But a strengthening Colombian peso hit net profits, which fell 73 percent to 101 billion pesos ($38 million). Exports currently make up a small share of Bavaria's sales, notably from exporting Peruvian brands such as Cusquena to the United States. But the company hopes to increase sales to the United States and Europe, and is considering plans for a new brand of premium beer to be sold throughout its home markets, Obregon said. Bavaria plans to invest $148 million in 2004.


26 March, 2004

   
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