Latin America: Latin American beer markets tend to be dominated by one or two companies, which means greater returns per barrel than in China, where Anheuser-Busch has also established a presence, Reuters cited Mark Swartzberg,of Legg Mason in New York on March 9. "Latin America and China are the No. 1 priority among the major global brewers," said Mark Swartzberg, "Those two regions are much more appealing than the Middle East, Central Europe, other developing regions."

But he added: "Latin America is a market of the present; China is much more a market of the future." This is because Latin Americans, unlike the Chinese, already have a healthy appetite for beer, leading brewing executives to hope consumption will rise naturally with income. Annual beer consumption is around 50 liters per head in the region's three most populous countries, Brazil, Mexico and Colombia. This is three times Chinese consumption. And yet it still leaves plenty of room for growth, being only a third of what world champion beer quaffers in the Czech Republic and Ireland drink.

Markets in Western Europe and the United States, where consumption is usually already high, have tended to stagnate, thanks to competition from other drinks and fears over carbohydrate-rich beer's effect on waistlines.

Latin Americans are also younger than Europeans and U.S. residents, meaning more beer demand in the near future. "The age structure of the population in Latin America is very conducive to beer drinking, and penetration in terms of consumption per capita is low relative to higher income countries," said Denis Parisien of Standard New York Securities Inc.

Belgium's Interbrew created InBev, the world's largest brewer, last year when it bought Brazil's AmBev in a $9.7 billion deal. The world's second-largest brewer, U.S.-based Anheuser-Busch, has 50 percent of Mexico's Modelo, which produces Corona and other beers.

"There's a longer track record of foreign brewers failing in their entry in China, and China clearly is less consolidated than Latin America's major beer markets," Swartzberg said.

With its domination of markets in Colombia, Peru, Ecuador and Panama, Bavaria would virtually complete the Latin American beer jigsaw for its eventual winning suitor, with the exception of Venezuela's family-owned Polar brewery. "They (Bavaria) have near-monopoly position in the four areas in which they operate. They have very high margins. They have very good assets, and they are the only viable competition south of Mexico to the InBev stronghold," Parisien said.

Bavaria shares have soared 83 percent so far this year on talk that its controlling Santo Domingo family could sell out, with sources quoting possible prices as high as $9 billion for a company with an enterprise value of about $6.6 billion.

But not all beer companies have had a happy time south of the border. Molson, now Molson Coors Brewing Co., bought Brazilian brewer Kaiser in March 2002 for $765 million, but it has so far proved to be a drain on profits. Analysts say Molson might sell out of Brazil's third-largest brewer, which struggles to compete with InBev's distribution network. "I like to say they paid .... for the right to lose money," said Swartzberg.

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