Beer in Colombia
Euromonitor International's Beer in Colombia market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.
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Tables: 60 | Publication date: Jan 2009
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive environment
Product coverage
Dark beer; Lager by origin; Lager by price platform; Low/non- alcohol beer; Stout
Executive summary
The beer environment was characterised by strong advertising and promotional activities during 2008. Bavaria SA has taken advantage of television advertising as well as below-the-line advertising in order to improve sales. In Colombia, beer brands used to dominate in certain regions. For example, Pilsen is the leader in Antioquia, while Poker leads in Valle del Cauca. The change of the company’s strategy since its acquisition by SABMiller consists of segmenting the market not by region but by consumer lifestyle and consumption occasions. In this way, Pilsen is targeted at working class consumers who enjoy a beer at the end of the working day. Poker, meanwhile, is targeted at men and women of low- to middle-income segments aged 20-40, who inhabit the country’s major cities.
After the consumption boom seen in 2007, and the strong growth of beer over 2005-7, 2008 saw a lower, but still impressive volume increase of 7%. Rising interest rates, high inflation and the revaluation rate that affected thousands of families dependent on remittances from relatives, constrained consumption of most products and services, with beer no exception.
Domestic premium lager was the most dynamic niche with a total volume increase of 34% in 2008. This was in line with the growth rate of the leading company, Bavaria SA, which is focusing on increasing the share of its premium brands in overall beer sales. The reformulation and renewal of the image of Club Colombia was a factor contributing to boosting sales of domestic premium lager. The Club Colombia brand name is used to brand many bars throughout major cities and also to brand an upscale restaurant in Bogotá.
The unit price of beer increased 5% in 2008. However, domestic premium and standard beer saw increases slightly above inflation in order to compensate to some extent for increased raw materials costs. Increases were not overly significant in order to avoid erosion of consumption, which was already affected by other macroeconomic variables.
The increase in the price of barley had little effect on consumer prices. Regarding distribution, leader Bavaria SA has breweries near the main centres of consumption, and is working towards optimisation of distribution in order to increase penetration throughout the country, and reduce transportation costs.
In Colombia, niche products such dark and stout beer saw lower growth rates than in previous years, mostly due to deceleration in consumption.
Nowadays the Colombian beer environment is dominated by consumption of standard lager, which accounts for 95% of volume sales, while the premium segment represents approximately 4%. However, premiumisation is an important trend, since Bavaria SA is giving status to beer with its premium brands Club Colombia and Peroni, in order to compete with other alcoholic drinks such as whisk(e)y. Challenging other non-alcoholic drinks in the country is the next step for the company, as it has already conquered the beer environment.
Off-trade sales of beer represented 71% of volume sales at the end of the review period. In Colombia independent small grocery stores represent a very important channel for sales of beer, accounting for 59% of total off-trade sales. This high share is directly linked to Colombian culture, in which neighbourhood stores play an important role in everyday life, being places where most workers meet at the end of the day to enjoy a beer. Also it is important to note that an important number of these stores are sponsored by a beer brand, through advertisements with the name of the store and a refrigerator exclusively for the use of the promoted product. On the other hand, prices in on-trade channels are significantly higher (more than double), resulting in consumers in some cases preferring other alcoholic drinks that can be shared like spirits from off-trade channels. However, as premiumisation in beer strengthens, on-trade channels may increase their importance.
Since 2007 there has been a dispute in the premium segment between Heineken Colombia and Bavaria SA. Heineken Colombia alleges that Bavaria SA is abusing its dominant position to establish exclusivity contracts of sales, advertising and sponsoring of its premium brands in the on-trade channel. The case is still unresolved in the Superintendencia de Industria y Comercio – the entity responsible for the observance of regulations related with competition policy.
In Colombia, premium lager has an alcohol content of between 4.5% and 5.1%, while standard lager brands have a content of 4%. The most popular brand of dark beer in Colombia is Erdinger, which has an abv content of 5.3%. The abv for stout is 5%. In Colombia, the introduction of stronger beers does not seem promising, since the Brava brand from Bavaria SA launched in 2007 had an alcohol content of 6.5%, but was not accepted by consumers. This forced the company to reformulate the product and reduce the alcohol content to 5.5%.
In Colombia the niche for artisanal beer is very small, but 2008 saw some interesting developments. Bogotá Beer Company, a famous chain of pubs in the country’s capital, began to bottle its own beer in 4-packs of 330ml bottles with the purpose of entering the off-trade market. Customers can order their beer through a call centre, arranging a home delivery. Initially the company sold around 10,000 bottles per month at Col$3,000 per bottle and expected monthly sales to increase to 20,000 bottles. Many industry experts remain sceptical of the company’s ability to compete with the giant Bavaria SA, but others think that the Bogotá Beer Company has a strong unique selling point that differentiates its products from traditional beers, since it is not sold through normal off-trade channels like supermarkets and hypermarkets.
In May 2008 Club Colombia, the leading brand in the premium segment, won the Grand Gold Medal with Palm Leaves, recognising the product as the “best beer in the world”. This is the major distinction the Monde Selection grants. The institution is the most important entity at global level in quality certification of food and beverage products. This prize may open the door for exports of the product to European markets in future.
Data for UNDECO (Unión Nacional de Comerciantes) regarding beer consumption in Barranquilla, an important maritime port located on Colombia’s Caribbean coast, reveals that people spend more on beer than on milk. Average daily consumption of beer is two bottles per person. Average daily milk sales in the city do not reach Col$1 billion, while beer sales are worth Col$2.24 billion.
PRODUCTION, IMPORTS AND EXPORTS
Beer production in Colombia is largely determined by the behaviour of the leading manufacturer, Bavaria SA, and its sales. It is expected that beer production in Colombia will increase over the forecast period, as Bavaria tries to continue to increase per capita consumption rates. This company is also expanding the production capacity of its breweries in order to achieve its goals. During 2007 production capacity increased from 21 million hectolitres to 27 million hectolitres. In 2008 the brewery located in Valle del Cauca, with a production capacity of 3.5 million hectolitres per year, was inaugurated, and the facility at Barranquilla expanded its annual capacity from just fewer than three million hectolitres to over four million hectolitres.
Since 2007 Bavaria SA has exported its Aguila brand to the United States to conquer the growing Latin market. Each month seven containers of 1,200 boxes each are sent to the United States. The product is distributed by Miller Brewing Co. The major competitor in this market is the Mexican brand Corona.
Domestic lager dominates the market, accounting for 98% of the nation’s beer volume sales. However, imports of lager beer have demonstrated high growth rates since the introduction of Peroni by Bavaria SA in the premium segment in 2006.
Table of contents
ALCOHOLIC DRINKS IN COLOMBIA : MARKET INSIGHT
EXECUTIVE SUMMARY
Alcoholic drinks continue growing in 2008, but at slower rates
Consumers moving towards premium products
Bavaria continues to lead alcoholic drinks market
Off-trade channels still play important role in sales
Beer and wine to drive growth over forecast period
KEY TRENDS AND DEVELOPMENTS
Colombian consumers are moving towards cocktails
Promotional strategies aiming to fulfil consumers’ aspirations
Female alcoholic drinks consumers gain attention from producers
Responsible consumption of alcohol supported by alcoholic drinks industry
Specialist retailers provide largest selection of alcoholic drinks
Market Merger and Acquisition Activity
Summary 1 Speculated Merger and Acquisition Activity 2007-2008
MARKET BACKGROUND
Legislation
Taxation and Duty Levies
Table 1 Taxation and Duty Levies on Alcoholic Drinks 2008
Table 2 Typical Wholesaler and Retailer Off-trade Mark-ups by Selected Sectors 2008
Table 3 Selling Margin of a Typical Domestically Produced Beer Brand 2008
Table 4 Selling Margin of a Typical Wine Brand 2008
Table 5 Selling Margin of a Typical Spirits Brand 2008
Operating Environment
MARKET INDICATORS
Table 6 Retail Consumer Expenditure on Alcoholic Drinks 2003-2008
MARKET DATA
Table 7 Sales of Alcoholic Drinks by Sector: Total Volume 2003-2008
Table 8 Sales of Alcoholic Drinks by Sector: Total Value 2003-2008
Table 9 Sales of Alcoholic Drinks by Sector: % Total Volume Growth 2003-2008
Table 10 Sales of Alcoholic Drinks by Sector: % Total Value Growth 2003-2008
Table 11 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: Volume 2008
Table 12 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: Value 2008
Table 13 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: % Volume 2008
Table 14 Sales of Alcoholic Drinks by Sector by On-trade vs Off-trade Split: % Value 2008
Table 15 Company Shares of Alcoholic Drinks by Global Brand Owner 2004-2007
Table 16 Off-trade Sales of Alcoholic Drinks by Distribution Format: % Value Analysis 2008
Table 17 Off-trade Sales of Alcoholic Drinks by Sector and Distribution Format: % Volume Analysis 2008
Table 18 Forecast Sales of Alcoholic Drinks by Sector: Total Volume 2008-2013
Table 19 Forecast Sales of Alcoholic Drinks by Sector: Total Value 2008-2013
Table 20 Forecast Sales of Alcoholic Drinks by Sector: % Total Volume Growth 2008-2013
Table 21 Forecast Sales of Alcoholic Drinks by Sector: % Total Value Growth 2008-2013
DEFINITIONS
Summary 2 Research Sources
LOCAL COMPANY PROFILES - COLOMBIA
BAVARIA SA - ALCOHOLIC DRINKS - COLOMBIA
STRATEGIC DIRECTION
KEY FACTS
Summary 3 Bavaria SA: Key Facts
Summary 4 Bavaria SA: Operational Indicators
COMPANY BACKGROUND
PRODUCTION
Summary 5 Bavaria SA Production Statistics 2007
COMPETITIVE POSITIONING
Summary 6 Bavaria SA: Competitive Position 2007
EMPRESA DE LICORES DE CUNDINAMARCA SA - ALCOHOLIC DRINKS - COLOMBIA
STRATEGIC DIRECTION
KEY FACTS
Summary 7 Empresa de Licores de Cundinamarca SA: Key Facts
Summary 8 Empresa de Licores de Cundinamarca SA: Operational Indicators
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 9 Empresa de Licores de Cundinamarca SA: Competitive Position 2007
FáBRICA DE LICORES Y ALCOHOLES DE ANTIOQUIA - ALCOHOLIC DRINKS - COLOMBIA
STRATEGIC DIRECTION
KEY FACTS
Summary 10 Fábrica de Licores Y Alcoholes de Antioquia: Key Facts
Summary 11 Fábrica de Licores Y Alcoholes de Antioquia: Operational Indicators
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 12 Fábrica de Licores de Antioquia: Competitive Position 2007
INDUSTRIA LICORERA DE CALDAS - ALCOHOLIC DRINKS - COLOMBIA
STRATEGIC DIRECTION
KEY FACTS
Summary 13 Industria Licorera de Caldas: Key Facts
Summary 14 Industria Licorera de Caldas: Operational Indicators
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 15 Industria Licorera de Caldas: Competitive Position 2007
VINCORTE LTDA - ALCOHOLIC DRINKS - COLOMBIA
STRATEGIC DIRECTION
KEY FACTS
Summary 16 Vincorte SA Key Facts
Summary 17 Vincorte SA: Operational Indicators
COMPANY BACKGROUND
PRODUCTION
COMPETITIVE POSITIONING
Summary 18 Vincorte SA: Competitive Position 2007
BEER IN COLOMBIA
HEADLINES
TRENDS
PRODUCTION, IMPORTS AND EXPORTS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR BACKGROUND
Lager price band methodology
Summary 19 Lager by Price Band 2008
Published data comparisons
SECTOR DATA
Table 22 Sales of Beer by Subsector: Total Volume 2003-2008
Table 23 Sales of Beer by Subsector: Total Value 2003-2008
Table 24 Sales of Beer by Subsector: % Total Volume Growth 2003-2008
Table 25 Sales of Beer by Subsector: % Total Value Growth 2003-2008
Table 26 Sales of Beer by On-trade vs Off-trade Split: Volume 2003-2008
Table 27 Sales of Beer by On-trade vs Off-trade Split: Value 2003-2008
Table 28 Sales of Beer by On-trade vs Off-trade Split: % Volume Growth 2003-2008
Table 29 Sales of Beer by On-trade vs Off-trade Split: % Value Growth 2003-2008
Table 30 Beer: Production, Imports and Exports: Total Volume 2002-2007
Table 31 Beer Exports by Country of Destination: Total Volume 2002-2007
Table 32 Beer Exports by Country of Destination: Total Value 2002-2007
Table 33 Beer Imports by Country of Origin: Total Volume 2002-2007
Table 34 Beer Imports by Country of Origin: Total Value 2002-2007
Table 35 Company Shares of Beer by National Brand Owner 2003-2007
Table 36 Company Shares of Beer by Global Brand Owner 2003-2007
Table 37 Brand Shares of Beer 2004-2007
Table 38 Forecast Sales of Beer by Subsector: Total Volume 2008-2013
Table 39 Forecast Sales of Beer by Subsector: Total Value 2008-2013
Table 40 Forecast Sales of Beer by Subsector: % Total Volume Growth 2008-2013
Table 41 Forecast Sales of Beer by Subsector: % Total Value Growth 2008-2013