Heineken and Itaipava Grow, and Competition with Ambev Will Intensify Among the Beverage Giants

Written by Flavia Marinho

Published on 03/07/2021 at 10:06

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Is The Title Of The World’s Largest Brewery Under Threat? Itaipava Is By Far The Fastest Growing Company Among Alcoholic Beverage Producers And Heineken Remains The Old “Stone In The Shoe” Of Ambev

Seeing its market share decline over 13 years, Ambev invested in brand changes and product launches, such as Brahma Duplo Malte, which put the company back on the growth path, and today the brewery holds a 60% share. Even on the right track, the increasing competition in the market with Grupo Petrópolis, owner of the Itaipava brand, and Heineken could become a “stone in the shoe” for Ambev, and the competition will intensify among the giants supplying alcoholic beverages.

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The alert came from Bank of America in a report sent to clients and obtained by Money Times. According to the bank, Itaipava and Heineken may increase their combined capacity by over 30%, while demand is not expected to keep pace, meaning more competition and less profitability for all brands.

As a result, BofA maintained the recommendation below the market average (underperform), with a target price of R$ 15 for Ambev’s shares.

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The bank predicts that beer per capita consumption (PCC) will grow 3% per year over the next three years, which should help demand total 15.9 billion liters, still about 0.5 billion below the combined potential production of Ambev, Petrópolis, and Heineken, if they fully increase capacity within 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 from group executives, the company produced just 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 factory in Uberaba, which should allow Grupo Petrópolis to increase its capacity to 4.7 billion, 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 a market share of between 15% and 20%,” he states.

Heineken Is The Old “Stone In The Shoe” Of Ambev

The beverage giant 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 investments of R$ 1.8 billion and completion expected by the end of 2022.

“We estimate that this facility could be similar in size to the one in Paraná at around 1 billion liters,” he calculates. Additionally, the Dutch manufacturer is expected to open its factory in Ponta Grossa (Paraná) with 0.3 billion liters, from the current 0.7 billion liters.

“On the other hand, we expect Heineken to operate with lower idle capacity than Petrópolis, as the company recently pointed out that it was unable to increase volumes in 2020 due to capacity constraints,” he says.

The bank expects Heineken to produce 3.5 billion liters in Brazil in 2023, 40% of the expected volume from Ambev.

Heineken and Itaipava Grow, and Competition with Ambev Will Intensify Among the Beverage Giants

Is The Title Of The World’s Largest Brewery Under Threat? Itaipava Is By Far The Fastest Growing Company Among Alcoholic Beverage Producers And Heineken Remains The Old “Stone In The Shoe” Of Ambev

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Heineken and Itaipava Grow, and Competition with Ambev Will Intensify Among the Beverage Giants

Is The Title Of The World’s Largest Brewery Under Threat? Itaipava Is By Far The Fastest Growing Company Among Alcoholic Beverage Producers And Heineken Remains The Old “Stone In The Shoe” Of Ambev

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