Investor Strategy

Heineken to pour $183 million into expansion in Brazil

imageStock Markets6 hours ago (Mar 09, 2020 09:13PM ET)

By Alberto Alerigi

SAO PAULO (Reuters) – Heineken NV (AS:HEIN) will invest 865 million reais ($183.14 million) to expand its Ponta Grossa brewing plant in Brazil, the company said on Monday, as competition between the world’s two largest beer makers bubbles up.

The Dutch brewer will make the investment this year and next and focus on it Heineken and Amstel brands at the third-largest brewing facility in Parana state in Brazil, its most important market worldwide.

The company did not give details of the expansion plan, stating only that production would rise by 75%.

“We are bringing forward by one year all the investments

of our strategic plan. Brazil is a key market for us,” Heineken Brazil Chief Executive Officer Mauricio Giamellaro told Reuters.

“Basically, we are building a new brewery,” he said in an interview.

Despite the slow recovery of the Brazilian economy, the world’s second-largest brewer after Anheuser-Busch InBev (BR:ABI) is not waiting to expand its beer production in a market that is more important for sales than the United States or Europe.

Heineken has reduced the lead in Brazil of top beer seller Ambev (SA:ABEV3), the Brazilian unit of Anheuser-Busch InBev, after buying the operation of Japan’s Kirin (T:2503) for $1.2 billion in 2017, which doubled its Brazilian output. Heineken says it now has 22% of the market.

The expansion announcement came just on day after Ambev announced it will invest 2 billion reais to open a new brewery in northern Brazil, a malting factory in the southeast region, along with a can producing unit and additional premium beer production lines.

Heineken to pour $183 million into expansion in Brazil

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