Clipping of news on Brazilian Culture, Law and Citizenship
01/02/2015
This article was translated by an automatic translation system, and was therefore not reviewed by people.
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Measure could compromise the volume of sales
The need of the Brazilian beverage industry to adjust the prices of its products amid the current macroeconomic scenario of the country may hinder industry sales in the first half of 2015. Given the prospects of rising inflation rates and slowing income, companies and associations are unanimous in defining the next year as "challenging". In the opinion of analysts, despite the more sensitive consumer price changes, companies must pass on higher taxes and costs for the final product, which can compromise the volume of sales.
"Everyone has a macroeconomic view that the first half will be difficult. The year 2015 will be challenging, but our expectation is that the resume growth sector from the second half of the year," he told Broadcast, news service real-time Agency State President of the Brazilian Association of beer industry (CervBrasil), Paul Petroni. According to him, companies must be agile in adapting to changing economic and political environment of the country.
"The first half of 2015 is likely to be the most challenging, just because the industry will have to undergo an accommodation tax issue and cost pressures," said the vice president of Brazil Kirin marketing, Douglas Costa. In an interview with Broadcast, the executive considered that the adjustment of the percentage of drink prices in 2015 will depend on the competition. "If consumers start taking your buying decision based on price, this obviously represents an impact on margins and tends to intensify the sector's competitiveness", said Costa.
Result of long negotiations with the federal government, the new tax model incident on the cold drinks segment (which includes beer, water, soft drinks and sports drinks) should begin earnest in January. It is not clear what the real tax increases, but experts point out that the readjustment of rates has been postponed from April this year. Thus, it is expected that high to occur at the start of 2015.
The devaluation of the real against the dollar should also weigh on the beverage industry costs. In the production of beer, for example, about 30% to 40% of inputs are imported, especially for cereals and for aluminum, used in the packaging.
According to market analysts, given the expectations of higher costs in 2015, many companies have sped up the increase in drink prices later this year. According to a survey of Bank Of America Merrill Lynch in November Ambev, the largest manufacturer in the country, adjusted by about 10% the values of their beers. "However, most of the bars and supermarkets failed to pass the high and must wait until the carnival to readjust them, which shows the sensitivity of consumers on prices," comment in a report, analysts Fernando Ferreira, Isabella Simonato and John Adams. With higher prices, the expectation is that drinks this summer sales fall below the observed volume between the period from December to March.
In addition to the slowdown of the Brazilian economy, the beverage industry must also face a difficult comparison basis. This year, the sector benefited from seasonal factors, such as the late carnival and hosting the World Cup, which helped pull sales, especially of beers. The expectation of CervBrasil is that the production of the drink end the year with growth of about 5% against a fall of 2.6% recorded in 2013. "In 2015, we still have to overcome the World Cup event, but is not impossible, "said Petroni.
premium segment
To circumvent the fall of consumer purchasing power, Brazilian companies are betting on expansion segments with greater ability to price adjustment if the premium beers. According to analysts, as are geared for classes A and B, sales of specialty beers tend to suffer less from the downturn in the economy.
According to the Director of Finance and Investor Relations Ambev Nelson Jamel, while the total volume of beer sales in Brazil reached only 0.2% in the third quarter of 2014, sales volume of the brands Budweiser, Stella Artois and Original percentage recorded double-digit growth. According to Costa, this year the specialty beer market grew by 25%. The Brazil Kirin operates in the segment with brands Baden Baden and Eisenbahn. "Despite a small volume, this segment has a yield to 5% higher than the mainstream segment," he said.
Source: Season Business
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This article was translated by an automatic translation system, and was therefore not reviewed by people.