Beer Giants Courting Latin Brewer

The world’s giant brewers hope young and thirsty Latin Americans will bring faster profit growth than aging, carbohydrate-wary consumers in Europe and the United States.

But brewing heavyweights, realizing that trying to introduce their globally famous beers to Latin Americans would only bring them a niche market, are competing to buy local brands instead.

Drinkers tend to be stubbornly loyal to traditional brews, and distribution networks are hard to replicate, especially in poor countries with tough geography and bad communications.

Now the largest remaining independent brewer in South America, Colombia’s Bavaria, is being hunted by the world’s top four brewers -- InBev, Anheuser-Busch Cos., SABMiller and Heineken -- analysts and sources familiar with the situation said.

“Latin America and China are the No. 1 priority among the major global brewers,” said Mark Swartzberg of Legg Mason in New York. “Those two regions are much more appealing than the Middle East, Central Europe, other developing regions.”

Annual beer consumption is about 50 liters per capita 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 beer quaffers in the Czech Republic and Ireland drink.

Latin Americans are also younger than Europeans and U.S. residents, meaning more beer demand in the near future.

With its domination of markets in Colombia, Peru, Ecuador and Panama, Bavaria would virtually complete the Latin American beer jigsaw for its eventual buyer, with the exception of Venezuela’s 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,” said Denis Parisien of Standard New York Securities Inc.