Heineken boosts presence in Brazil

Heineken, the world’s second-largest brewer, has agreed to buy the loss-making Brazilian breweries of Japan’s Kirin Holdings to boost its presence in the world’s third-biggest beer market.

Heineken, the world’s secondlargest brewer, agreed on Monday to buy the loss-making Brazilian breweries of Japan’s Kirin Holdings to boost its presence in the world’s thirdbiggest beer market.

The Dutch brewer will have a share of about 19% in Brazil, behind clear market leader Anheuser-Busch InBev (AB InBev). Including debt, Heineken said it would pay €1.025bn.

For Kirin, it marks a departure from the Brazilian market. The firm paid about $3.9bn in 2011 for 12 breweries. The business has subsequently lost market share and seen raw material costs rise. Kirin said the unit made an operating loss of 284million reais ($91m) in 2016.

Brazil’s economy appears set to enter a third year of recession in 2017, but Heineken said its beer market was attractive in the longer term, with a premium segment growing faster than the market as a whole.

The acquisition will increase Heineken’s presence in the north and northeast of Brazil. Heineken already has five breweries in the country.

“None of the normal ratios work because it’s loss-making, but it’s a very attractive price,” said Trevor Stirling, beverage analyst at Bernstein Research.

Some analysts said the deal was important because it made Heineken a stronger rival in AB InBev’s heartland just as the latter has pushed into Heineken’s markets elsewhere through its takeover of SABMiller.