Karl Lippert, president, SAB Miller Latin America, addressed the Consumer Analyst Group of New York (CAGNY) conference last week and said LATAM still held significant growth potential.
“We believe the beer category is strong," he said. "We have seen very interesting per capita consumption growth in the last seven years or so, and we still think there is substantial potential for these per capita levels to grow.
“We’re extending the way we think about the beer category: to us within the beer category participating in beer, to participating in alcohol, to expanding our horizons, to participating in the total beverage space.”
Lippert compares the company's total beverage value share in its six core countries, which was 43.5% in FY10 and has grown to 47.1% in FY15.
During this time, its beer share of the market has remained around 94%. Soft drink share has grown from 14.9% to 17.6%.
“We have already made progress," said Lippert. "Our value share of total beverages in our six core markets has gone from 43-47% in this time period.
“You can see that our beer share is already quite high and we’ve maintained that quite strongly. But we’ve also grown in this period our share of the alcohol market. So as we are maximizing are position within beer and within alcohol the new horizon is quite important to us.
“Our share of soft drinks has grown, it’s an important part of our business, in fact in Latin America it represents 30% of our sales volumes right now.”
Commodity prices
Since LATAM consists primarily of emerging markets, the region's economies depend on commodity prices, Lippert says – and he believes market conditions are improving.
“GDP in our part of the world follows the commodity cycle," he said. "I’m happy to say though, we are more optimistic about the year ahead."
“We are already seeing that some commodity prices have started to move, the oil price is coming off a low and is heading in the right direction again. We have seen corn prices go up by 25% since last November, and we are seeing early shoots of a recovery which will be good for our part of the world.
"Not just in terms of those economies but in fact the strength of the currency in which we trade.”
Premium portfolio in Brazil
In a significant emerging market in Africa, Uganda, beer consumption rose 98% - from roughly 5 liters per capita in 2000, to 10 liters per capita in 2012.
But in Peru consumption is up from 22 liters to 45 liters – a 104% increase, which shows the potential LATAM holds.
Lippert identifies Brazil an "exciting frontier". In November, SAB Miller signed a license agreement with Grupo Petropolis, the country’s second biggest brewer, to sell beer premium beer brands this year.
“Brazil is a very attractive market, it has 42% of beer consumption in all Latin America," Lippert said.
"There is substantial potential to develop the premium end of the market, which is a business opportunity not just for us but in this particular case for Grupo Petropolis as well, which does not have a premium portfolio.
“We will be entering into Brazil alongside Grupo Petropolis to develop a premium portfolio there.”
SAB's 'social command center' in Bogota
“We have also been quite successful in improving our engagement with consumers. It’s been a major challenge for companies that are used to broadcasting marketing messages to engage digitally with consumers and turn that into something meaningful and contribute to our business.”
“We have done a fair amount of work in this area.”
For example, SAB Miller has a ‘social command center’ in Bogota, Columbia, which it uses to generate consumer insights, track brand followers and stakeholders, and develop brand communities.
“We have the fortunate situation in Latin America, unlike the developed world, that social media is actually still quite concentrated. Adult media consumption in the digital space is still 94% Facebook in our part of the world.”
Having started work on their Facebook presence a few years ago, Lippert said he is "now quite happy [with] where we’ve gone" – particularly since two of the top SAB Miller digital brands hailing from Latin America.