Brazil, Latin America's largest beer market, is set to continue offering strong opportunities for brewers. With a youthful population of around 200 mn , and with incomes set to rise, the country is a promising prospect for investment in the beer sector . Moreover, Brazil's economy is picking up , with our Country Risk team forecast ing 3.5% real GDP growth in 2013. The country tops BMI ' s Food & Drink Risk/Reward R atings for the Latin American region in Q213, and low - cost discretionary sectors such as beer are set to be benefactors of rising affluence among an increasingly dynamic consumer base.
We expect alcoholic drink sales in Brazil to rise 10.5% year-on-year in 2013, with beer sales posting strong growth over our forecast period to 2017. Indeed, we forecast a compound annual average growth rate of 10.3% to 2017, indicating promising opportunity for investment. Beer consumption per capita is also projected to increase from BRL361.73 ( US $170.16) in 2013 to BRL526.07 ( US $233.81) in 2017, confirming strengthening demand. Paired with increasing disposable income from a rising middle class, premium isation is expected to be targeted, presenting further opportunities for returns on investment.
|Good Outlook For AmBev|
|Brazil - Beer Value/Volume Sales|
AmBev , Latin America's largest brewer, is a strong example of success in the region. With more than two - thirds of the beer market, the company generates 80% of its sales from beer. T he company's focus on value over volume is promising, in our view, signalling steps towards premiumisation, with greater scope for the companies' premium products such as Budweiser. Changing consumer trends in this direction provide further potential for greater revenue, and as disposable incomes increase , so will preferences towards premium products.
The beer sector in Brazil , however , is not without risk. Income disparity and potential inflation and tax increases could hamper growth within the alcoholic drink s industry. W e believe Heineken looks well positioned to benefit from Brazilian opportunit ies following its acquisition of Femsa in April 2010, particularly given its portfolio of iconic, premium brands.
Despite potential risk, impressive investment prospects and the sheer size of Brazil make it an extremely attractive market for b rewers , with both the success and dominance of AmBev potentially no longer enough to deter increasing regional and global competition.