Peru: Grupo Empresarial Bavaria is ready to meet beer giant InBev in Peru

Colombia’s leading beer maker, Grupo Empresarial Bavaria (GEB) announced it is ready to stand up against beer giant InBev, which announced its entry into the Peruvian market by May 2005. Bavaria will realize its intentions with the help of a recently introduced pricing plan, Reuters commented on May 3.

Bavaria, which now has 99 % of the beer market in Colombia and neighbouring Peru, said its Peruvian sales rose 6.3 %, excluding PepsiCo Inc. products, during the first three months of this year compared with the same 2004 period.

"This result demonstrates that our marketing strategy is working and that we are ready to go up against InBev, which announced its entry into the Peruvian market by May 2005," Chief Financial Officer Mauricio Restrepo told analysts on a conference call to explain first-quarter results.

He said the company is preparing to maximize revenues in Peru with a pricing plan to push different brands toward consumers with different amounts of money to spend.

"Our beers in Peru were all priced the same until very recently," Restrepo said. "At the end of last year we introduced a price segmentation policy to set prices between 6 percent and 17 percent below their reference price in order to give consumers more alternatives and differentiate our brands from the rest of the market."

Bavaria, which is seeking a foreign partner and has been the subject of persistent takeover rumors, said on Friday that first-quarter consolidated net profits fell to 5.8 billion pesos ($2 million) from 22.2 billion pesos in the first three months of 2004 due to higher interest rates, commissions and amortization costs.

Bavaria shares have jumped 66 percent this year on reports from analysts and industry sources that the world's top four brewers -- InBev , Anheuser-Busch Cos. Inc. , SABMiller Plc and Heineken NV) -- were looking at buying the company.

But Bavaria says it has received no offers and its controlling shareholders from Colombia's Santo Domingo family do not want a straight sale and are instead looking at a share swap that would give them a stake in a world-class partner.

Taking a share in Bavaria would be the only way for a rival to challenge InBev, the world's largest brewer, in the promising South American market, analysts say.

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