Latin America Trade
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Mexican brewers reach deal to open up local beer market
Mexico’s two biggest brewers have agreed to open up the local beer market to end a dispute over the near duopoly Grupo Modelo and Cuauhtemoc Moctezuma have long enjoyed in Latin America’s second biggest economy.
Mexico’s Federal Competition Commission (Cofeco) said that Modelo, a unit of Anheuser-Busch InBev SA , and Cuauhtemoc, which belongs to Heineken NV , would have to pare back the exclusivity deals they have with clients in Mexico over the next five years or face heavy fines.
The directive follows a longstanding complaint from rival SABMiller, which has struggled to make headway selling its brands, which include Miller, Grolsch and Peroni, in Mexico.
The two Mexican brewers agreed to a set of conditions that include limiting their exclusivity deals in convenience stores and restaurants to a maximum of 25 percent of points of sale, reducing this to 20 percent over the next five years.
Failure to meet the conditions imposed by Cofeco could result in a fine of up to 8 percent of the company’s annual revenues, the watchdog said.
A spokesman for SABMiller declined to comment.
SAB has leading positions in the smaller Latin American nations such as Colombia and Peru, with much of the larger markets of Brazil and Mexico carved up by its two biggest rivals, AB InBev and Heineken.
AB InBev, the world’s largest brewer, this year completed its purchase of the half of Modelo that it did not already own, after settling a dispute with the U.S. Justice Department.
Dutch brewer Heineken acquired Cerveceria Cuauhtemoc Moctezuma, whose brands include Dos Equis, Indio and Sol, from Coca-Cola bottler Femsa in 2010.
Femsa, which has a 20 percent stake in Heineken, operates the Oxxo chain of convenience stores in Mexico and has exclusivity deals to sell the Dutch firm’s beers. Grupo Modelo has similar exclusive agreements with bars and restaurants. (Reuters)
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