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Known for his high profit margins and 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.
The company performed well until 2015 with a model based on direct distribution, strong sales in bars and the presentation of its main beers in 600 ml bottles. The transformations of the sector in recent years, however, are starting to test this model of success so far.
For Bradesco, one of the biggest challenges is the growth of beverage sales at Atacarejos, which gives Ambev the edge. direct distribution and greater reach, mainly 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 beer 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 reduction in incomes, also increased to 12%, nearly 5% ten years ago. Result: the tradition of Ambev has lost ground.
Although the company has introduced new products to respond to these changes, the results have not been 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, said
Competition
In addition to the evolution of the sector, badysts point out that competition is also more intense. According to Euromonitor, Ambev has lost nearly 5 percentage points of the market over the last 10 years. 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 cumulative amount of 2019, the Brazilian stock market is growing at an accelerated pace, shares of Ambev have already recovered by 16%. Yesterday, the company closed for a value of R $ 294.7 billion.
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. "It is unlikely that 2019 will be as bad as in 2016 (for the company), but we see little room for very good surprises."
The market is realizing that margins (Ambev) may not return to pre-2016 levels. Competition and 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 product offering is the main market recovery strategy of Ambev. and return to results 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
. It has always been against "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 cbadava in her recipes and cheaper than traditional brands.
The executive says that entry into the segment was not a strategy for dealing with the crisis, but an "opportunity" to get closer to the public in areas where brands " discount "should always prevail. For Tennenbaum, in other states of the country, this market will decline again as the Brazilian economy recovers.
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Although Ambev says he does not anticipate a significant expansion of the most popular segment, the launch of the new brands has been well seen 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. 19659004] Optimism
Tennenbaum is still optimistic about the recovery of the country's economy – and therefore with Ambev. "As Brazil grows, it can 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 more important and the result of the company was also compromised. (19659004) "Now, the big question is whether we are going to review the volume." It's a bit in the minds of investors, "replies Tennenbaum about the company's performance on the stock market in 2018.
The estimates of CervBrasil (an industry badociation of which Ambev does not) is more member) indicate that the production of beer reached 13 billion liters recorded in 2014. The projection of the entity for this year is up 3% in volume if the government managed to accelerate the reforms On the contrary, there must be stagnation The information comes from the newspaper O Estado de S. Paulo
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