© Jasper Juinen/Heineken
Heineken has agreed to acquire Kirin’s struggling Brazilian business for €665 million, having previously confirmed interest in Kirin Brasil.
The acquisition will make Heineken the second largest beer company in Brazil, it said, with a stronger commercial platform from which to capture future growth.
The deal will transform the Dutch brewer’s existing business across the country by extending its footprint, increasing scale and further strengthening its brand portfolio.
Brasil Kirin Holdings was created in 2011 with the $2 billion acquisition of Schincariol. It produces beers under brands including Schin, Baden Baden, Eisenbahn and Devassa.
Heineken chairman and CEO Jean-Francois van Boxmeer said: “This transaction marks a step-change in scale in an exciting beer market, building on our success to date in the premium segment and strengthening our platform for future growth. It reiterates our commitment to the Brazilian market and confidence in our ability to generate attractive returns over the long-term across all segments of the market. I look forward to welcoming our new colleagues from Brasil Kirin into Heineken and working with them to take the combined business forward.”
Beer volume in Brazil was 139 million hectolitres in 2015, making the country the third largest market globally.
Whilst the macroeconomic environment has been challenging over the last few years, the longer term looks more positive, with a growing population and improved GDP prospects. In addition, the premium segment of the beer market, which has outperformed the broader beer market in recent years, has a relatively low share compared to many other markets.
Heineken first entered the Brazilian market with the acquisition of Femsa Cerveza in 2010, including all of Femsa’s Mexican beer operations as well as it US and other export businesses, in a deal that valued the company at €3.8 billion.
Since then, Heineken has increased its market share to around 10%, led by its flagship beer brand Heineken in the premium beer segment. At the same time, the brewer has continued to build scale with the Kaiser and Bavaria brands, and has recently seen strong success with the roll out of Amstel in the mainstream segment.
Heineken currently operates five breweries in Brazil, along with a strategic distribution partnership with the region’s Coca-Cola bottlers, and will inherit a further 12 production plants from Kirin Brasil along with its own distribution network.
Heineken expects the deal to consolidate its existing position in the Brazilian market and strengthen its ability to accelerate additional premiumisation, particularly with its Heineken and Sol brands. It also expects to be able to ‘broaden its reach across the country’.
Last week, Brazilian beer brand Skol retained its position as the most valuable brand in Latin America, fending off Mexico’s Corona in second place.
© FoodBev Media Ltd 2021
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