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Known for its high profit margins and the provision of good results for investors, Ambev experienced a different moment. In 2018, while the stock market was the country's most profitable investment, with a 15% increase in Ibovespa, the company's shares fell by nearly 30%. The company lost most of its market value, in absolute terms, last year: from 340.7 billion rand to 241.8 billion. Since January, however, with the growth of the São Paulo Stock Exchange in anticipation of economic growth, Ambev has already recovered some of the losses of 2018.
For Bradesco, one of the biggest challenges is the growth of sale of which gives Ambev the advantage of direct distribution and a wider reach, especially in bars. The company now has 1 million points of sale, while Heineken (owner of Kaiser and Schin) has 600 000 and Petrópolis (Itaipava) 700 000. The problem is that the sale of beer in supermarkets, which does not require a distribution system as complex as that put in place by Ambev, has progressed in recent years.
In addition, in countries that have experienced deep crises like Brazil, returned to the bars after the economic recovery. In a report, Bradesco predicts that beers' market share will increase from 38% to 41% by 2022.
Ambev also faces the expansion of the "premium" and "discount" segments. the loss of space of the intermediate segment, in which predominate its main brands (Skol, Antarctica and Brahma). In times of crisis, the "discount" market, where the cheapest beers are found and whose brands make no difference to the consumer, has gone from 19% to 25%. The "premium", which was not affected by the decline in revenues, also increased to 12%, nearly 5% ten years ago. As a result, the Ambev segment lost ground.
Although the company launched new products to respond to these changes, the results were not maintained. "Ambev continues to underperform in the traditional category while premium growth has not yet translated into increased profitability," writes Thiago Duarte in a BTG Pactual report.
The company's chief financial officer, Fernando Tennenbaum, states (19659008) lu )
Concurrence
In addition to the evolution of the sector, badysts point out that competition is also fiercer. In the last ten years, Ambev lost nearly 5 percentage points of the market according to Euromonitor. The UBS bank claims that Heineken has consolidated its brands, hindering the recovery of Ambev's market share. The bank interviewed 1,600 consumers who concluded that Heineken's perception as a premium brand had risen from 20% to 24% over the last year, while Amberv's Stella Artois had dropped 35%. % to 31%.
Despite the difficulties, the brewing industry tends to start slowly improving. Projections point to a recovery in the market as a whole after three years of decline. On the accumulated amount of 2019, with the sharp acceleration of the Brazilian stock market, shares of Ambev have recovered by 16%. Friday 7, the company closed for a value of 286.4 billion R $.
However, costs can again reduce margins. Ambev conducts financial operations to hedge short-term exchange rate fluctuations. This impact usually occurs 12 months later. The 2018 dollar summit is going to hit society now. "2019 is unlikely to be as bad as 2016 but we still have little room for very good surprises."
The market is materializing [19659007] from Ambev ) can not return to the level prior to 2016. The competition and the industry have changed, says an badyst. In a recent report, UBS pointed out that the company's margins would not reach the pre-crisis level until 2025.
Strategy
The expansion of the company 39 product offering is the main strategy of the drinks giant Ambev to win back the market and return to produce results more similar to those before the crisis. Since 2015, the company has expanded its three main brands (Skol, Antarctica and Brahma) into 10 launches.
"Our portfolio is much more robust than it was three years ago, today, for example, we have Skol, Skol Hops and Skol Puro Malta, you can play the products on different occasions," says the director. financial institution, Fernando Tennenbaum.
Although it has always been against the "discount" – considering that the consumer does not differentiate brands – the company has also invested in this market. Last year, she launched Nossa in Pernambuco and Magnífica in Maranhão, both with cheaper and cheaper cbadava recipes than traditional brands. an "opportunity" to get closer to the public in regions where "discount" brands should always prevail. For Tennenbaum, in other states of the country, this market will decline again with the recovery of the Brazilian economy.
Although qu'Ambev claims not to anticipate a significant expansion of the most popular segment, the launch of new brands has been well received by investors. According to BTG Pactual, the tax benefits granted to the company by the states where the drink is produced allow it to be sold up to 10% cheaper than Schin – now in the hands of Heineken – and without loss of profit margin. 19659009] Optimism
Tennenbaum is still optimistic about the recovery of the country's economy – and therefore with Ambev. "With the growth of Brazil, it is possible to recover a margin.How much ( margin ), it is difficult to say." He admits that the exchange rate will have an impact this year due to the devaluation of the Brazilian currency in 2018, but nothing compared to 2016.
That year, he adds, the devaluation was d & # 39; 39, a larger scale and the result of society was also compromised.
"Now the big question is whether we are going to see the volume of beverage sales . It's a little in the minds of investors," Tennenbaum replies. , interviewed on the company's performance on the stock market in 2018.
The estimates of CervBrasil (an industry badociation of which Ambev is no longer part) show that the production of beer was 13 billion liters l & # 39; last year, 8% less than in 2014, a record year. The projection of the entity for this year is up 3% in volume if the government managed to accelerate the structural reforms of the economy. If not, there must be stagnation.
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