Costa Rica: SABMiller wraps up Pepsi sales to improve beer’s image in the region

Brewing giant SABMiller has wrapped up the sale of its Costa Rican Pepsi franchise as it neared the end of a housekeeping process at its Latin American acquisition, Bavaria, Business Day published May 3.

SABMiller sold its Pepsi bottling operations in Costa Rica to Cerveceria Costa Rica, a subsidiary of Florida Ice and Farm Company. The brewer acquired the Pepsi operation when it bought Bavaria for $7,8bn in 2005, which provided it with access to Colombia, Peru, Ecuador and Panama.

Spokesman Nigel Fairbrass said the group disposed of the Pepsi operation as part of a tidy-up campaign to sell noncore assets it inherited in 2005. The group was focusing on improving beer’s image and on entrenching its portfolio in the region.

SABMiller, which posted revenue of $15,3bn in its past year, operates in more than 60 countries on six continents. Macquarie research head Julian Wentzel said Latin America was expected to contribute a quarter to SABMiller's earnings before interest, tax and amortisation when it presented its results this month.

Fairbrass said the company was well into integrating the acquisition and was focusing on the four countries where it had gained a foothold as a result of the Bavaria transaction. SABMiller had sold a Columbian juice business inherited from Bavaria, and would merge its two brewing entities in Ecuador, as it had done in Peru.

It was improving the presentation and branding of its products in the region as beer was "unloved" and viewed as a beverage of the lower end of society.

It would use the acquisition as a stepping stone for the region. "Latin America is a big growth engine for us."

Wentzel noted SABMiller was focusing on getting core business right and should complete integration by year's end.

Fairbrass said Costa Rica was a small part of the group's operations, and the Pepsi operation was "subscale". It would have required unjustifiable investment to grow to sufficient scale, he said.

Wentzel said the restructuring of the Bavaria business, through the sale of noncore assets, was secondary to SABMiller's core task of entrenching Bavaria as the leading brewer in the region.

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