Japan’s Kirin Holdings has recently announced the purchase of a controlling stake in Brazil’s second biggest brewer, family-held Schincariol. It just shows what many in the market already know: that Brazil is one of the few countries in the world with major growth potential for brewers. In fact, Brazil now represents the world’s third largest market for beer (see chart below).

Brazilian beer consumption expanded by a thumping 11% in 2010, according to the Brazilian Brewers Association. According to WSJ, double-digit annual expansion is likely for years to come as Brazilian consumers take advantage of rising job opportunities thanks to sturdy economic growth. 
Here are the top five players in the market (with their estimated share of the Brazilian beer market):
1. Ambev: 70%
2. Petrópolis: 10.5%
3. Schincariol (Kirin): 10%
4. Heineken (Kaiser): 8.5%
5. Colonia: 1%

According to Wikipedia, the tradition of brewing in Brazil dates back to German immigration in the early nineteenth century. The first breweries date from the 1830s, although the brand Bohemia is claimed to be the first Brazilian beer, with production starting in 1853 in the city of Petropolis, Rio de Janeiro. Actually, Bohemia is the oldest Brazilian beer which is still under production (now owned by Ambev). Two important brands, Antarctica and Brahma, also owned by Ambev, started production in the 1880s. The most popular brands a few years ago were Skol, Brahma, Antarctica, Nova Schin, Kaiser and, more recently, Stella Artois, which is now made in Brazil. 
There are about 80 craft “microbreweries” in Brazil according to estimates by some of the leading craft brewers and beer enthusiasts.  Most are independent, but a few such as Devassa, Baden Baden and Eisenbahn have recently been bought by Schincariol, for instance. 

In an effort to illustrate the strength of the market, the chart below from a recent Ambev (NYSE: ABV) investor presentation shows that the largest player’s EBITDA has grown more than seven-fold over the past decade:

And as for Brazil itself, there’s a growing middle class. According to Ambev, 32 million more Brazilians have joined that income group over the last decade. To put that into perspective, that’s the equivalent of around 10% of the U.S. population.
Source: WSJ, Ambev, Wikipedia, Seeing Alpha
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