Heineken to Gain Share in Mexico After Acquisition, CEO Says

January 13, 2010  |  

By Thomas Black

Heineken NV, the brewer that agreed to buy Mexico’s second-largest beer producer, will increase its share in that market in part by pushing the flagship Heineken brand, Chief Executive Officer Jean-Francois van Boxmeer said.

“It has been submitted to a slight erosion and that pattern should be reversed,” Van Boxmeer, 48, said in an interview today in Monterrey, Mexico, referring to the acquired business’s market share. “The brands are very strong.”

Amsterdam-based Heineken, which sells 25,000 hectoliters of its namesake brand annually in Mexico, agreed yesterday to buy the beer unit of Fomento Economico Mexicano SAB in an all-stock transaction worth about $7.7 billion.

Femsa Cerveza, the acquired unit, is second to Grupo Modelo SAB in the country. Its third-quarter market share fell to 42 percent from 44 percent a year earlier, while Modelo rose to 58 percent from 56 percent. Femsa Cerveza sold 27.4 million hectoliters of beer in Mexico in 2008, the latest data available. It is also Brazil’s third-largest beer maker.

Heineken will use Femsa Cerveza’s distribution to 350,000 outlets to push the Heineken brand, Boxmeer said. He declined to estimate sales growth for the Heineken brand in Mexico.

The company expects to achieve cost savings of 150 million euros ($217 million) over five years, mostly from purchasing efficiencies, Van Boxmeer said.

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