Mexico: Mexico's Femsa, owner of the country's No. 2 brewer that makes Sol and Tecate beers, plans to increase prices for its brews in line with inflation this year mirroring moves by its local rival Modelo, Reuters commented on March 1.
Modelo, brewer of Corona beer, announced last week it increased average domestic beer prices in line with expected inflation. Inflation in Mexico was 5.19 percent in 2004 and is seen falling to around 4 percent this year.
"We have in our plans to adjust our prices in line with inflation expectations," Jorge Luis Ramos, co-chief executive of Femsa's beer division, told analysts on a conference call on Monday. He gave no timetable for the price increases.
Femsa was expected to follow its larger rival with a price increase as it did in 2004. Together Modelo and Femsa have a near duopoly in the Mexican market. They waged a price war with heavy discounts for customers in October and November last year which cut into the price increases that were implemented in the first half of 2004. Ramos said rival Modelo has not increased prices across the board in 2005. "We have noticed that Modelo has already started a brand differentiation strategy."
"We have noticed that with leading brands they are making some (upward) price adjustments around 10 percent but at the same time they are reducing prices of second and third tier brands," Ramos said.
Femsa beer executives also told the conference call there were no plans to build a new brewery in the next three to four years as it still had additional capacity available.
Femsa also has a soft drinks unit, Coca-Cola Femsa, The company is known as KOF and is the world's No. 2 Coke bottler. Together, the beer and Coke companies make Femsa the largest beverage company in Latin America.
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