Conquering the challenges: AB InBev's Brazil business
Across 2020, beer volumes were up 5.6% (global volumes for the company were up 1.6%) , also outperforming the industry. The company also saw revenue growth of 7.1% in 2020 and an increase of revenue per hectolitre of 2.8%. It has also gained market share in Brazil.
"Our beer business in Brazil delivered a strong top line performance this year in a challenging environment. We grew beer volumes in both the year and the fourth quarter, gaining market share in both periods according to our estimates," notes CEO Carlos Brito.
"Our premium portfolio outperformed the industry. We stabilized the performance of our core brands, and we delivered highly successful innovations, such as Brahma Duplo Malte."
But company now faces FX headwinds in 2021; alongside added pressure from a redesigned Heineken & Coca-Cola distribution partnership in the country announced last week - alongside the existing challenges of the pandemic. Brito, however, says the work done in 2020 will help it looking forward.
"Brazil has always been a very competitive market with many players. That has always been the case. It [the new Heineken/Coca-Cola distribution partnership] doesn't change the number of route-to-market players in Brazil. It's still the same number. It's just a reshuffle of brand in between two systems. So, it's too early to say.
"But it's good to see that we have momentum in Brazil. Last year, we gained share for the full year and fourth quarter, that we had the biggest innovation in the market with our Brahma Duplo Malte, that our high-end brands outperformed the overall market, and that our core brands stabilized in a big way. So we're very happy with our performance in Brazil. We're focused on our business and will remain doing so."
Innovation
AB InBev credits its innovations in Brazil as a big part of 2020 success: powered primarily by the February launch of Brazilian subsidiary AmBev's biggest ever launch, Brahma Duplo Malte.
The beer has a distinct flavor profile thanks to a blend of Pilsen malt and Munich malt. It became the leader of the core plus beer segment in the country after just five months in the market. Meanwhile, Skol Puro Malte beer (‘which has the density of a pure malt beer and the refreshing lightness of a traditional Skol beer’) was launched in late 2018 and has since followed up with new innovations such as Skol Beats 150 BPM and Skol Beats GT.
Such successes are down to accelerated innovation across the company, with the time it takes to get a new product to market going down from two years to 100 days. This has been the case for Brahma Duplo Malte and Skol Pure Malte, according to Brito.
AB InBev now plans build on the brand's success and roll out Brahma Duplo Malte to seven new markets in 2021.
In Brazil, the company's main brands include Skol, Brahma and Antarctica, while it also sells international heavyweights Budweiser, Bud Light, Stella Artois, Corona and Beck’s. As is the case globally, big brands benefited from consumers' return to known and trusted products during the pandemic.
Ourisde of beer, the company has driven its functional beverages portfolio forward with Do Bem Antioxidant Infusion and For/Me, a line of functional shots, created in partnership with Paolla Oliveira - a Brazilian influencer celebrity. In the non-alcoholic category it launched Guarana Antarctica Natu.
Digital
Like other major players, AB InBev is boosting its investments and drive into digital – and AB InBev says Brazil is a market that shows the strategy is paying off.
Ze Delivery, a courier platform to deliver beer in 40 minutes cold to the doorstep, has grown a lot because of the conditions in which consumers were subjected to with the stay-at-home orders. This service is now present in all 27 Brazilian states.
"We continue to advance the digital transformation of our business with the accelerated expansion of BEES and direct consumer initiatives, such as Ze Delivery, which fulfilled more than 27 million orders in 2020," notes Brito.
And it’s about taking events and activations online as well, with AB InBev’s ‘lives’ concert series activating top brands and innovations – such as Brahma Duplo Malte – which delivered more than 350 concerts and 678 million views in 12 weeks.
