CCU and Postobon become trust busters
SABMiller’s monopoly in Colombia is coming under attack. In November 2014 it was announced that Postobon, Colombia’s major soft drinks maker controlled by billionaire Carlos Ardila Lülle, will be joined by Chile’s biggest brewer CCU to start selling beer in Colombia.
Postobon and CCU plan to invest USD 400 million, spread over three to four years, which includes the construction of a 3 million hl brewery near the capital Bogota, with capacity equivalent to about 15 percent of the current beer market.
Bavaria, SABMiller’s Colombia unit, which it bought in 2005, controls about 98 percent of the country’s beer sales, making the Andean nation the brewer’s biggest source of revenue after South Africa, it was reported.
The end of decades of security issues means Colombia has fast become a fertile hunting ground for consumer goods companies. No wonder, Postobon thinks it has a chance to expand beyond its core business by using its distribution network to sell other products.
Behind Postobon, SABMiller and CCU are three powerful Latin American families. Bavaria used to be owned by the Santo Domingo family which still holds a 14 percent stake in SABMiller. Alejandro Santo Domingo, who sits on SABMIller’s board, is the second richest Colombian according to Bloomberg’s ranking, while Mr Ardila Lülle’s USD 3.8 billion fortune makes him the nation’s third-wealthiest person.
For decades, the two families competed for control of Colombia’s drinks, aviation and media markets. In the 1990s, they broke a truce not to tread on each other’s businesses after Postobon had built a brewery, only to sell it a few years later to Bavaria when it failed to make a dent on the latter’s monopoly.
Now Postobon has returned to the beer market, having teamed up with CCU from Chile. CCU is controlled by the Luksic family, Chile’s richest, and Heineken. They have 50 percent each of the holding company that owns a majority stake in CCU. The company is the largest brewer in Chile and the second largest in Argentina.
Several observers believe that Colombia may face a new beer war. In view of SABMiller’s 98 percent market share, “war” may turn out to be an exaggeration. Once a single company enjoys full penetration of a market, cracking this kind of dominance is really hard, not matter how deep the attacker’s pockets.
It will be remembered that SAB in South Africa in recent years managed to repel a full frontal attack by Brandhouse (a joint venture by Heineken, Diageo and Namibia Breweries), thus protecting its above 90 percent market share of total beer.
Similarly in Peru, where SABMiller’s unit Backus faced off the Ajegroup, a local soft drink company, which aimed at 10 percent of the market when it built a brewery in 2007. Seven years later, Backus still controls about 96 percent of the Peruvian beer market.
Last but not least, in Venezuela, the local brewer Polar forced Brazil’s Ambev to admit defeat (AmBev closed its brewery in 2013), having seen its share of Venezuela’s beer market drop to less than 1 percent from 9 percent over seven years, it was reported.
However, on a positive note, it is to be hoped that the Colombian beer market will become more interesting and newsworthy in the near future.
