Category Archives: Brazil

Interesting Numbers from the World of Beer

Item 1: People keep asking me why I see a bright future for craft beer in Brazil despite all the significant obstacles – lack of distribution infrastructure, high prices, no “cold chain” of delivery in which the beer is kept cold from brewery to consumer – and sometimes I wonder about it myself.

Then I come across an article like this one in The Globe and Mail newspaper and it all comes together. In case you don’t want to read the whole story, or the link breaks because the Globe puts the story behind their pay wall, here’s the gist: With 50 million Brazilians joining the middle class in the last decade, that segment of the population is now about equal to the percentage that is poor, about 30% each.

This new middle class is aspirational, and they want to spend their money on items to which they previously had not enjoyed access – the story highlights perfume and cell phones – like craft beer. I’ve seen the gestation of this at bars like Melograno and FrangÓ in São Paulo and I expect to see a lot more of it on my next visit, whenever that might be.

Item 2: I continue to hear American brewers fret about the number of breweries popping up in their country, worried about the so-called “bust” that they think must surely follow the boom. Too many breweries, too many SKUs (brands listed with distributors) and too confusing for beer drinkers are a few of the concerns I regularly hear voiced.

Umm, folks, ever heard of the United Kingdom? It’s a land of about 62 million people, where the total number of breweries just surpassed 1,000! And while they have their own issues to deal with over there, I’ve not yet heard much in the way of griping about the number of breweries and possible saturation of the market.

To put that in perspective, to achieve the same ratio of breweries per capita, the United States would have to add about 2,900 breweries to their existing total, more than doubling the number in place today.

Item 3: This is not so much a numbers thing as it is a bit of a rant. Although it does relate to Item 2 above.

Yesterday’s Shanken News Daily carried a story headlined “Craft Controversy: Rotating Drafts Spark Concern Among Brewers,” in which it was suggested that “some craft brewers are beginning to show concern that the very diversity that they have long promoted…may actually be damaging to their companies and the craft beer category.”

The piece goes on to quote Bob Sullivan, vice president of sales and marketing at Kansas city’s Boulevard Brewing – a craft brewery I know and quite like and the tenth largest craft producer by volume in the U.S. – as saying that bars which rotate their draft taps rather than sticking with a specific line-up of brands are hurting the industry by not giving breweries an opportunity to build their brands.

More egregiously, the story quotes Jim Gray, national draft director at the beer importer Crown Imports, purveyors of Corona and Tsingtao, among other brands, as complaining that “retailers who are focused on rotating draft handles aren’t focused on building brands” and that these beer sellers are only interested in “the shiny new toy that is offered to them each month.”

Here’s a piece of advice for you, Jim and Bob and any other salesperson out there trying to flog draft beer: The job of the licensee is to keep their customers happy, not to build brands. (Ahem, that’s YOUR job.) And if customers want variety in their beer selection, as a vastly growing contingent of beers drinkers do, well, that’s just the new playing field. Get used to it!

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Good News/Bad News for Craft Beer in Brazil

If you’ve had a chance yet to look at the Emerging Markets chapter of the new World Atlas of Beer, you’ll know that my co-author and I are quite bullish on the future of craft beer in Brazil. With a fast-growing middle class, rapidly improving craft breweries and both the summer Olympics and football’s World Cup around the corner, we can’t help but think that things look bright for the country’s ever-expanding premium beer segment.

Since I’m writing about Brazil, I figure I might as well add a gratuitous cover shot from the Brazilian edition of The World Atlas of Beer.

And apparently we’re not the only ones.

The global research firm, Mintel, has just come out with a report that suggests “strong and premium beer” are the big growth segments in Brazil, with data showing sales had improved 18% year-on-year to 2011.  In the report, Sebastian Concha, research director, Latin America at Mintel, is quoted as saying:

“The fact that premium beers are gaining more market share from the standard beer sector highlights the changing consumer mindset in Brazil and how beverage habits relate to this. Huge opportunities lie with Brazil’s hosting of key live sports events in the coming years. With a strong sporting prowess in Brazil and a product closely linked with sporting culture, beer manufacturers who can capitalize on local enthusiasm and blend this to ensure a premium product positioning stand to benefit.”

Now, admittedly, by “premium” Mintel means primarily imports and niche domestic brands like the Kirin-owned Devassa and Heineken-owned Kaiser Bock, but it doesn’t take much imagination to figure that the crafts should be able to capitalize on this movement, as well. After all, what was then just InBev unwittingly helped along the rise of craft beer in North America by promoting the hell out of its imported brands.

Which, unfortunately, is also where the bad news comes in. Moments after I received the Mintel report, I also found in my inbox a news item about the intent of Anheuser-Busch InBev’s Brazilian division, AmBev, to open a chain of bars called Nosso Bar across the country. Organized via a semi-franchise arrangement, the bars will reportedly present a clean and gender-neutral image and be designed, of course, to fiercely promote AmBev brands such as Brahma and Sköl.

To be clear, I don’t believe that the latter news in any way outweighs the former — I remain convinced that the future is bright for Brazilian craft beer, despite the barriers the breweries still must overcome — but with AmBev and the other large breweries seeing great revenue potential in South America, the road ahead will likely be anything but smooth.

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