07 October 2022

AB-InBev suspends production of Leffe in Russia and launches ersatz-Corona brand El Capulco

Russia | After AB-InBev's decision to manufacture Leffe in Russia caused an uproar in August, the AB-InBev-Efes joint venture reacted and, on 21 September, announced it will suspend production.

No reason was given, but it appears highly likely that AB-InBev feared western consumer boycotts if it continued to localise the production of popular western brands, like Leffe.

The Russian news agency RIA Novosti merely said that AB InBev and Efes are engaged in active negotiations on the future sale of AB InBev’s non-controlling stake to Anadolu Efes. “The suspension of the license to manufacture and sell certain brands in Russia could be part of a potential deal,” RIA Novosti said, without giving details.

What about the recently localised Spaten and Franziskaner brands?

Observers wonder if this is a hint that the licences for Bud, Spaten, and Franziskaner could also be revoked eventually?

For the time being, though, a decision was made to only suspend the production of the Leffe brand in Russia, AB-InBev-Efes was quoted as saying.

Take it for granted that the licences for AB-InBev’s brands are a major issue in the discussions. They constitute the bulk of the joint venture’s premium and super-premium offerings. Their departure would be a major blow to Efes once it is home alone in Russia.

One brand which will not be brewed in Russia is Corona Extra. Instead, AB-InBev-Efes decided to launch a new, Mexican inspired beer called El Capulco.

Substituting Corona with El Capulco

Some Russian beer commentators were amused, when AB-InBev-Efes, on 12 September, officially introduced a new beer called El Capulco in Moscow to a crowd of more than 100 bloggers and influencers. “El Capulco – what does this mean in Spanish?” they laughed.

Clearly, the light lager El Capulco is meant to replace the Mexican beer brand Corona Extra, which has disappeared from the shelves following Russia’s “special military operation” in Ukraine.

Visually distinct from the original, El Capulco’s label adopts a Mexican aesthetics by featuring lime, agave and sun symbols on its blue and white label. The beer contains agave extract and is produced at the joint venture’s Kaluga brewery near Moscow. The company also plans to launch a non-alcoholic version.

Will consumers fall for El Capulco?

AB-InBev-Efes boasted that this may be the first time a major brewer has introduced a new national brand in the past five years. Playing it safe, a 450 ml bottle of El Capulco retails for RUB 108 (USD 1.80), which is a premium price. A can of Amstel costs only half as much (RUB 55).

However, El Capulco is far cheaper than a 450 ml can of Spaten beer, a localised German beer brand, which costs nearly USD 3.00 in some supermarkets, or USD 1.80 when on promotion.

Still, this is no guarantee that the on-premise will fall for El Capulco. Observers say that some publicans have a negative perception of localised beer brands, refusing to serve them. It was also noted that due to the reduction in beer imports, regional Russian brewers have seen the sales of their draught beer offerings increase to such an extent that their capacities cannot even cope with demand.

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