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Is the title of the largest brewery on the planet threatened? Itaipava is by far the company that grows the most among alcoholic beverage producers and Heineken continues to be the old “stone in the shoe” of Ambev
Seeing its market share falling over 13 years, Ambev invested in brand changes and new product launches, such as Brahma Duplo Malte, which put the company back on the growth path, and today the brewery has a 60% share. Even on the right path, the growing competition in the market with the Petrópolis Group, owner of the Itaipava brand, and Heineken can become a “stone in the shoe” of Ambev, and the dispute will intensify between the giant suppliers of alcoholic beverages.
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The warning came from Bank of America in a report sent to customers and obtained by the Money Times. According to the bank, Itaipava and Heineken can increase their combined capacity by more than 30%, while demand should not keep up with this pace, that is, more competition and less profitability for all brands.
As a result, BofA maintained its recommendation below the market average (underperform), with a target price of BRL 15 for Ambev shares.
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The bank predicts that per capita consumption (PCC) of beer will grow 3% per year over the next three years, which should help demand total 15,9 billion liters, still around 0,5 billion below the combined potential production of Ambev, Petrópolis and Heineken, if they fully increase capacity in four years.
Itaipava, is by far the fastest growing company among breweries
According to the bank, Grupo Petrópolis, owner of the Itaipava brand, is by far the fastest growing company among breweries. Based on statements by group executives, the company produced only 1,4 billion liters in 2011, less than half of the current 3 billion liters in 2020.
In addition, Itaipava announced the development, in two phases, of its plant in Uberaba, which should allow Grupo Petrópolis to increase its capacity to 4,7 billion liters, against the installed capacity of 3,6 billion liters in 2020.
“We estimate that the total beer market in 2020 was 14 billion liters, of which Petrópolis had between 15% and 20% of participation”, he says.
Heineken is Ambev's old "stone in the shoe"
The giant producer of alcoholic beverages Heineken also has an ambitious expansion plan in Brazil: it will build a new factory in the city of Pedro Leopoldo, in Minas Gerais, with an investment of R$ 1,8 billion and completion scheduled for the end of 2022.
“We estimate that this installation could be similar in size to that of Paraná at around 1 billion liters”, he calculates. In addition, the Dutch manufacturer should inaugurate its factory in Ponta Grossa (Paraná) of 0,3 billion liters, from the current 0,7 billion liters.
“On the other hand, we expect Heineken to operate with a lower idle capacity than Petrópolis, as the company recently pointed out the fact that it was not able to increase volumes in 2020 due to capacity constraints”, he says.
The bank expects Heineken to produce 3,5 billion liters in 2023 in Brazil, 40% of AmBev's expected volume.
