Peru: SAB Miller Peru sees 10% sales growth

Brewing giant SABMiller Plc said it could invest more than $100 million in its Peruvian unit by March 2008 to raise production and consolidate its dominant market share in the country, Reuters reported March 20.

Speaking at the Latin American Investment Summit in Lima Peru on Tuesday, SABMiller Peru chief executive Robert Priday forecast 10 percent sales and volume growth this year for its Peruvian brewery Backus y Johnston, which posted 1.569 billion soles ($490 million) in sales last year.

His forecast would be double the 5.1 percent increase in sales revenue posted in 2006, but lower than the 12.3 percent growth in sales volume last year, as measured in hectoliters.
Reuters Pictures

The rapid expansion of the Peruvian economy was fueling 2007 sales growth, Priday said. Peru's gross domestic product grew 8 percent last year, its fastest rate in 11 years.

In tandem with the growth, will be an 8 percent increase in Peru's per capita beer consumption from last year's 33 liters (8.7 U.S. gallons) per capita consumption.

Peru has one of the lowest beer consumption rates in Latin America, making it an attractive market, he added.

Last year, SABMIller invested $102 million in Peru and Priday saw even more investments this year.

"Investment (in Peru) could be more than $100 million," he said. "I can't give you an exact figure, but it will be higher than that of 2006."

SABMiller moved into Peru in 2005 when it completed its acquisition of Colombian-based Bavaria, which owned Backus. Backus produces the Cristal, Pilsen, San Juan and Cusquena brands and has the biggest share of the beer market in the country, analysts said.

Priday declined to give figures for SABMiller's current market share in Peru.

Brazil's AmBev, a unit of Belgium-based InBev, in 2005 launched its Brahma brand in Peru. Analysts say it has won 18 percent of the market in the capital, Lima, home to a third of Peru's population.

Priday ruled out price cuts this year after what industry analysts termed a price war set off by Ambev's entry into the market.

"We can't continue with reducing the price like occurred in 2005 because there has been an increase in the prices of raw materials like barely and corn of between 30 and 40 percent," he said.

In February, Backus reported an 84 percent rise in fourth- quarter net profit to 34.4 million soles ($10.8 million). For 2006 as a whole, it posted a 40 percent rise in net profits to 407 million soles ($128 million).

($1 = 3.18 soles)

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