Brazil: Brewers bet on Q4 to recover lost volume

After a year marked by weakened beer consumption, the industry is placing its hopes on the fourth quarter, a crucial period for beverage sales. Companies are also expressing optimism for next year, driven by the upcoming World Cup, an event that tends to pack bars, especially across Latin America, due to its deep connection with football, Valor International reported on November 10.

Executives also pointed to a more stable pricing environment following a “game of musical chairs” scenario in the second quarter that left Ambev in a challenging market position. The latest beer inflation data show the product’s prices moving closer to the general inflation rate, signaling an easing of the price war.

Ambev closed the third quarter with a net profit of R$4.86 billion, up 36.4% from the same period last year. Total volume fell 5.9%, to 42.419 million hectoliters, leading to a 5.7% decline in net revenue, which reached R$20.85 billion in the quarter ending in September. In Brazil alone, beer volumes dropped 7.7%, to 21.556 million hectoliters.

Meanwhile, Heineken reported €8.712 billion in revenue for the July–September period, down 4% compared with the same quarter of 2024. Total volumes fell 4.3%, closing at 59 million hectoliters.

The Americas region, particularly Brazil and the U.S., was the main driver of Heineken’s volume decline, with an organic decrease of 7.4%, to 20.5 million hectoliters. According to sources, beer volumes in Brazil alone dropped about 10%.

“The third-quarter data confirmed what we’ve been seeing in the market over the past few months. It’s concerning to see the current level of decline across all companies,” said a source in the brewing industry.

The industry’s focus is now on the fourth quarter, responsible for the highest sales volumes of the year and marking the start of the peak season.

According to sources, the sector saw a gradual improvement in sales after July, the month of the sharpest drop. By mid-October, volumes had returned to positive levels. However, colder weather returned, particularly in the South and Southeast regions.

The recovery was also reflected in alcoholic beverage production data released by the Brazilian Institute of Geography and Statistics (IBGE). In August, production contracted 11.8%, while in July, the drop had been much larger — 15.4%. IBGE no longer provides product-specific data, but it is estimated that beer accounts for 90% of Brazil’s alcoholic beverage production.

Beer inflation data point to a cooling of the price competition. Market leader Ambev raised prices early, in April, while Heineken and Grupo Petrópolis followed suit between July and August.

According to IBGE, beer inflation for home consumption stood at 4.89% in September (12-month accumulated), while overall inflation reached 5.17%. Although still below the average, the result signals a continued recovery of beer prices. In July, the gap between beer inflation and the overall index was 1.94 percentage points; by August, it had narrowed to 0.51 point.

The improvement in the competitive environment was noted by Michel Doukeris, CEO of AB InBev. “Prices are now more balanced after a year when the gap between competitors was too wide,” he said.

Looking ahead, Mr. Doukeris emphasized the support the sector will receive from the World Cup, which tends to fill bars, particularly in Latin America, where football has deep cultural roots. The upcoming tournament will be jointly hosted by Mexico, the U.S., and Canada. Due to time zones, games in Brazil will take place at 1 p.m., 4 p.m., 7 p.m., or 10 p.m., which should encourage gatherings in bars and increase beer consumption.

“Next year will be special. We don’t have volume projections yet, but the outlook is positive, with less inflationary pressure on consumers. As for the weather, it’s hard to imagine it being worse than this year. The worst-case scenario is that it stays the same,” said Mr. Doukeris.

Ambev CEO Carlos Lisboa said the industry’s fundamentals remain healthy despite the recent setbacks. “This was the second quarter of industry weakness, and concern about the category is natural. The decline in on-trade [bars and restaurants] sales explains the lower volume. The last six months have been colder than usual,” the executive told market analysts in a recent earnings call.

According to Mr. Lisboa, around 70% of the volume decline in the quarter resulted from unfavorable weather, while the remainder stemmed from economic weakness in Brazil’s North and Northeast.

The slowdown in Brazilian demand led Heineken to project that its organic operating profit (before exceptional items and amortization) will grow closer to the lower end of its 4%–8% guidance range compared with last year.

In a conference call, Harold van den Broek, Heineken’s CFO, said part of the quarter’s negative impact came from larger inventories built up by buyers ahead of the company’s July price increase. The situation, he said, has now normalized.

Mr. Van den Broek added that despite Brazil’s challenges, industry prospects remain positive, with the biggest effects concentrated in value-tier portfolios. “The competitive environment is healthy. We believe the fundamentals, population growth, rising incomes, and the development of the premium category, are moving in the right direction,” he said.

Meanwhile, Grupo Petrópolis, owner of the Itaipava brand, said in a statement that the most recent third quarter was the worst in the industry’s history. To compensate, the company has increased its investments for the upcoming summer, the hot season, which accounts for more than half of annual sales.

“We’ll also make the biggest trade marketing investment in our history — a 50% increase compared to 2024. We’ll expand activations to three times more points of sale than last year,” the company said.