President, Cervecería Nacional
General Manager, Tzanetatos
CHRIS RITCHIE Our growth strategy has focused on our core businesses. There are many parts of the beverage industry that Cervecería Nacional was involved in, and at SABMiller we have closely focused on our core strength, which is beer and malt-based beverages. Secondly, in regard to carbonated soft drinks (CSDs), which is a second support for us contributing scale, we are the strong number two player in the market. Essentially, our task is to leverage the beer category and build up the malt category. Typically, when we acquire operations we look at them historically in a simple manner. As an African operating company, we have strengths in root-to-market and production, and very high quality standards for our products. What you have seen generally across the global beer industry applies also to us and our major competitors. The acquisition model was highly successful until around five to eight years ago. What you are starting to see is the industry shifting far more toward its more traditional FMCG roots. It is no longer about operating efficiencies, but about the consumer and customer. Therefore, efforts toward improving the quality of our communications and marketing, the degree of insight, and the investment behind related activities are far greater today than five years ago. What typically happens, and it is happening in Panama, is that while GDP continues to grow slowly, the per capita consumption of beer starts to tail off. For example, in many Latin American markets the per capita consumption is below 30 liters per capita. In Panama, it is 72 liters per capita. Rather than simply riding the GDP wave, as volume growth starts to decelerate we change to a revenue-based model.
ALBERTO PAZ-RODRIGUEZ JR. We worked hard to develop our own brands by expanding both our market coverage, and the assortment of products that we offer under each brand. Because of changes to the economic environment, we have had to create new strategies. We have entered into export operations, and we are opening our own retail operations that sell our alcoholic beverages. We have brought in international consultants to assist us in this transition. Our basic strategy in Panama has remained unchanged; namely to increase market penetration, and strengthen our product portfolio. National distribution remains our primary focus.
CR Balboa and Atlas have become national icons that we absolutely protect. SABMiller is unique among the global brewers in terms of its belief in local brands. Beer is a local business, differing greatly from most FMCG businesses as people develop deep associations with their local brand. Miller Light has been a home run for us. In fact, it is the greatest success story worldwide on a premium introduction brand in any country in which we are present. Our three key dynamos, therefore, are Atlas, Balboa, and Miller Light. Panama is about 10 years behind the US, but moving at twice the pace. That is a phenomenon that we are seeing often today with local craft producers and also with what I call crafts, but which are actually just imports. Significant fragmentation is happening in the premium segment that we have to address in order to stay ahead.
APRJ The recently instituted price law is a threat to the retail sector, because although it exists to control rising costs and assist the underprivileged, it will have negative financial consequences for retailers and manufacturers. Our country worked fine under a free market system, and it was not necessary to make these legal changes. Another challenge for retailers is acquisition by, and competition from, multi-national retailers, like Wal-Mart and Carrefour. While the companies have yet to make significant entries into the Panamanian market, their business model remains a threat. Unless Panama faces an economic downturn, however, the threat of internal competition should be manageable. The economy has been growing steadily with consistent demand, while consumer demand has promoted the introduction of new products.
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