Cia. de Bebidas das Americas is casting Megan Fox against James Bond and Playboy to boost beer sales amid slowing consumption in its Brazilian home market.
Latin America’s largest brewer, known as Ambev, hired the U.S. actress as a celebrity spokeswoman at Brazil’s Carnival next month. She will go up against Tokyo-based Kirin Holdings Co. (2503)’s Playboy-branded brew and Heineken NV (HEIA)’s Heineken, which is being pushed by 007 actor Daniel Craig.
Premium brands in Brazil such as Budweiser are pivotal for Sao Paulo-based Ambev amid a stagnant local market and a loss of global share for parent Anheuser-Busch InBev NV. (ABI) Budweiser has won 11.5 percent of Brazil’s premium-beer sales since debuting in mid-2011, bolstering revenue and helping Ambev post the best five-year annualized total return among beverage-industry peers.
“They are the dominating player,” said Daniel Isidori, who manages Threadneedle Asset Management Ltd.’s Threadneedle Latin America Fund, which owns an undisclosed Ambev stake and had assets of 855.9 million pounds ($1.35 billion) as of Dec. 31. “They are the most active of the companies regarding marketing and also they are price leaders.”
Brazil accounted for 58 percent of Ambev’s 22.7 billion reais ($11.4 billion) in global beer revenue in 2011, according to data compiled by Bloomberg. Beer was the biggest portion of the company’s 27.1 billion reais in sales.
Ambev has a 70 percent share of Brazil’s beer market, the world’s third-biggest, with 10 percent each for Kirin and closely held Grupo Petropolis and 9 percent for Heineken, according to London-based researcher Mintel Group Ltd.
Lauren Torres, an HSBC Holdings Plc analyst in New York, estimates that Ambev’s domestic market share has stayed in a range of 68 percent to 70 percent since 2008. AB InBev, the world’s largest brewer, saw its global share drop to 18.2 percent in 2011 from 19.9 percent in 2008, based on data compiled by Bloomberg. Ambev’s local dominance makes premium sales a priority, Torres said.
“To get from 70 to 80 or 90 percent is harder,” she said. “It’s more important to make more money than just to sell more beer.”
Ambev’s 2012 revenue probably rose 16 percent to 31.5 billion reais, the average estimate of 15 analysts surveyed by Bloomberg. That compares with a projected 1.8 percent gain for Leuven, Belgium-based AB InBev to $39.7 billion, based on 31 projections.
The five-year annualized total return for Ambev was 35 percent, the most among 16 beverage producers, based on data compiled by Bloomberg. The shares rose 45 percent in the 12 months ended yesterday to 92.57 reais, compared with a 4.1 percent drop in the benchmark Bovespa index. AB InBev climbed 48 percent in the same period.
Ambev rose 0.6 percent to 93.17 reais at the close in Sao Paulo trading.
Tatiana Katibian, a spokeswoman for Ambev, didn’t return telephone and e-mail requests for comment.
While premium brands make up 20 percent of sales in the U.S., the world’s biggest beer market, they account for only 5 percent of consumption in Brazil, according to an Ambev presentation to investors. The segment probably will grow 1 percent a year, HSBC’s Torres estimated.
That would match the pace of expansion in Brazil’s broader beer market, based on estimates from Ambev and Mintel Group. Growth in per capita consumption fell to 2 percent in 2011 from 7.6 percent a year earlier, and probably slid further to 1 percent in 2012, the firm estimated.
With beer sales growth likely to run at about the same pace, premium brands are “one of the primary pillars of profitability for the next few years,” said Lucas Marangoni, a Mintel Group analyst. “With the increase in purchasing power of the Brazilian consumer and greater maturity in relation to the differences between beers, the trend is that the movement is accentuated and Brazilians start to spend more on premium beers.”
The challenge for Ambev and its premium-brand rivals is a slowing economy. Growth in Brazil’s gross domestic product probably slid to 1 percent in 2012, based on data compiled by Bloomberg, from 2.7 percent in 2011 and 7.5 percent a year earlier. GDP expansion may run at a 3.5 percent rate in 2013.
“The Brazilian consumer will continue to consume more, but not on the same scale as previously seen,” Marangoni said.
Fox, who starred in Hollywood’s “Transformers” movie series, will have company in the celebrity marketplace when she appears for Ambev at Rio de Janeiro’s Sambadrome parade grounds, the heart of the Carnival celebration. The festivities precede the start of Lent, which begins with Ash Wednesday on Feb. 13.
Kirin’s Devassa Playboy brand -- Devassa means “depraved” in Portuguese, and Playboy is a tie-in to the U.S. men’s magazine -- hired local actress Alinne Moraes as an endorser after spending 100 million reais in 2010 to promote its blonde beer, Devassa Bem Loura, with the help of hotel heiress and socialite Paris Hilton. Heineken’s TV commercials include appearances by Craig, the latest actor to portray the James Bond Agent 007 character.
Simone Grazielle, a spokeswoman for Kirin, declined to comment for this story, as did John-Paul Schuirink, a spokesman at Heineken, which entered the Brazilian market in 2010.
“The brewers are looking to trade up consumers to premium brands with increased marketing and brand promotions,” HSBC’s Torres said in a written response to questions. “The Brazilian consumer has increasing disposable income and a growing interest in branded/aspirational products.”
Ambev’s size and its array of brands in Brazil gives it an advantage in trying to boost premium sales, Isidori, the Threadneedle fund manager, said in a telephone interview from London.
“It’s very difficult to compete with a company that has presence for quite some time that has very well-known brands and is very active in marketing,” he said.
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