Brazilian unit of A-B InBev faces investigation in Brazil
Companhia de Bebidas das Americas — better known as AmBev, the Brazilian unit of the world’s biggest brewer — is being investigated on suspicion of anticompetitive practices by the Brazilian Justice Ministry.
The ministry’s economic defense and protection department is investigating whether exclusivity contracts between retailers and AmBev, a unit of Anheuser-Busch InBev NV, impede the entry of competitors into the market.
The ministry said in a statement that it was also looking into whether the company was limiting competition by supplying retailers with refrigerators that can store only AmBev products.
In a separate investigation, the department will decide if AmBev’s promotion of its Puerto del Sol and Puerto del Mar brands about the same time a competitor introduced the Sol brand in Brazil was meant to confuse consumers, the ministry said. The Sol brand is distributed in Brazil by Cervejarias Kaiser SA, a unit of Fomento Economico Mexicano SAB.
Ambev shares fell 3.7 percent to 106.80 Brazilian reais (about $46) in trading in Sao Paulo, Brazil, the steepest drop since Nov. 25.
A spokeswoman for Ambev in Sao Paulo said the company had not been notified of the investigation and declined to comment further.
"AmBev, being the market leader, is always watched closely by government agencies," said Alan Cardoso, analyst at Agora Corretora in Rio de Janeiro, Brazil. "There’s always some noise with these investigations, but at first glance this looks like normal competitive practice."
AmBev controls about 70 percent of the Brazilian beer market, according to the ministry.
AmBev is a key part of the newly formed Anheuser-Busch InBev overnight pay day loans. Clutching a 68 percent share of the Brazilian beer market, one of the world’s five largest, AmBev contributes much of Anheuser-Busch InBev’s sales and profits.
Last month, Moody’s Investors Service tweaked its credit outlook on AmBev to reflect a somewhat rocky road ahead. AmBev is still solidly investment grade, but Moody’s moved its outlook to "stable" from "positive" to reflect "likely increased pressure on margins" from economics and competition in some of Ambev’s major markets.
Get more business news, blogs and opinionLatin America’s biggest brewer, Sao Paulo-based AmBev has leading positions in Argentina, Bolivia, Paraguay and Uruguay. It also has 43 percent of the market in Canada. Its business is now wrapped under the A-B InBev umbrella, so struggles or successes at AmBev could conceivably influence the fortunes of Anheuser-Busch and its St. Louis operations.
AmBev has some of the highest operating profit margins in the beverage industry, which give the company plenty of predictable cash flow. Analysts will continue to examine AmBev to determine impact on Anheuser-Busch.
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