Ajegroup launches its first beer

Latin America’s fast growing soft drinks company Ajegroup has introduced its Franca beer brand into the market with a 20 percent price discount.

Although the launch was scheduled for November, Peru’s multinational soft drinks company Ajegroup decided to push ahead with its plans to present Peruvian consumers with a beer offering. Accompanied by intense media attention, Cerveza Franca hit the shelves on 1 September 2007 in Lima. A beer war, or rather a beer price war, seems likely as the market leader Backus & Johnston, owned by SABMiller, which controls 92 percent of the market, and its rival, Brazil’s AmBev (8 Percent market share), have announced to respond in kind.

In keeping with the company’s policy of selling high-quality beverages at economy prices, Alfredo Paredes, the Ajegroup’s spokesperson, said that the beer would sell at a price point 15 percent to 20 percent below the competition’s. Initially, the Ajegroup had hoped to offer a beer that was up to 40 percent cheaper but that proved impossible for various reasons.

Ajegroup, one of Peru’s leading multinationals, currently makes and bottles soft drinks in Mexico, Peru, Venezuela, Ecuador, Costa Rica, Nicaragua, Guatemala and Thailand. Its most popular brand is called Big Cola.

Readers will remember that the Ajegroup’s first attempted foray into the beer market was in Mexico. Two years ago, it made public a plan to build a brewery. However, the Ajegroup had to scrap that project after Mexico introduced a law to tax beer sold in non-returnable bottles and cans at a much higher rate than returnable bottles. This proved an insurmountable hurdle for new entrants like the Ajegroup.

Therefore, the Ajegroup had the brewery built in Peru with a capacity of 260 000 hl beer. That investment is said to have hit USD 60 million already. After the first year, the brewery is supposed to run at 85 percent of capacity.

At a conference this year, Angel Ananos, whose family owns the Ajegroup, said that they were aiming for a tenth of Peru’s beer market. Calling it feasible, he said: “Taking 10 percent of the market that is growing at 20 percent is not too aggressive.”