Brazil: AmBev to invest $2.4 billion in Brazil over 5 years

AmBev, the Brazilian unit of global brewer InBev, said it would invest about 5 billion reais ($2.4 billion) over the next five years in Brazil to expand in a growing market, Reuters reported March 28.

Brazil's leading brewer made the announcement on Wednesday, the same day it said it would buy local beer company Cintra for $150 million. AmBev already has close to 70 percent of the country's beer market.

AmBev said it needed the record level of investment to expand its production capacity, especially in northeastern and central-western Brazil to take advantage of the country's accelerating economic growth and growing beverage market.

"It is the biggest investment announced by the company since Ambev's creation" nearly seven years ago, the statement said.

The Cintra deal, which also serves to expand capacity, will give AmBev control of two plants in the key states of Rio de Janeiro and Sao Paulo. It still has to be approved by regulators.

The transaction does not include the Cintra brand name or its distribution network, but AmBev will retain the option to buy those assets at a later date.

The acquisition of Cintra will help AmBev block rival Schincariol's attempts to make headway in the state of Rio de Janeiro. Though Cintra has just 1.12 percent of the national beer market, its market share in Rio is almost 6 percent, according to market research firm AC Nielsen.

AmBev Corporate Relations Director Milton Seligman said after the Cintra announcement the company has to expand its brewing capacity by more than 5 million hectoliters a year. Cintra's capacity is 4.2 million hectoliters of beer and 1 million hectoliters of soft drinks.

($1=2.07 reais)