After losing sales and cancel bonuses, Ambev focuses on price and grow back

The year 2016 was one of the worst in the history of drinks giant Ambev. The 5.5% fall in sales has reduced the company''s volume to the lowest level since 2009. The result was so weak that left employees without bonuses. Since the beginning of last year, the bad numbers are already prenunciavam. So, the Chief Executive Officer of Ambev, Bernard P, put on the road to make a closer management of supermarkets and bars, in order to seek solutions to the business. Since then, he spends at least two days a week outside the central office, in São Paulo.
This pilgrimage was motivated by the sharp drop in sales in the first quarter of 2016, when the volume of the company fell 7.5% compared with the same period in 2015. Over the past year, several challenges imposed to the company, which suffered high liquor taxes, the costs of an operation (protection) to hedge the fluctuation of the dollar and the aggressive competitive pricing strategy.
In a way, explains the Analyst Gabriel Vaz de Lima, Bradesco BBI, the brazilian beverage giant faced a "perfect storm". In an interview to the State, the Chief Executive Officer of Ambev said it was I need to find a creative way to overcome the setbacks. "The market of beer depends on the disposable income of consumers. In a crisis scenario, it was necessary to develop strategies to make our portfolio stronger, "P.
In wanderings around the country, talking with owners of pubs and supermarkets, the Executive considered that it was necessary to prevent the client to ditch Ambev for cheaper brands – especially in a scenario where the Kirin, which owns Schin, was aggressive promotions. According to analysts, the "Holy Grail" of Ambev was find a way to offer its main brands such as Brahma and Skol, at prices lower than those of rivals.
For that, took aim not at the product, but the packaging. To reduce costs, Ambev decided to persuade the Brazilian to re-use the old "hooves". The bet was in a 300 ml containers, sold exclusively in establishments such as atacarejos and supermarkets. "It was a form of Ambev download the product cost," says Lima, Bradesco. "With the advantage that the returnable bottle ensures the company a much larger profit margin than the cans."
The minigarrafas are being introduced gradually, because they require investment in machines of recollection and reverse logistics. In 2015, just 4% of Ambev''s sales in supermarkets – the end of 2016, already amounted to 25%. An industry source says that the bottles are an additional protection because they are patented and can''t be used by other breweries.
Results. The result of the strategy appeared in numbers. Although Ambev''s profits have fallen in the first quarter, the company grew 3.4% in volume, while the market shrank by 2%. Analysts said the company gained 2 percentage points of the market, to 69% in March.
The Bradesco analyst says, to re-grow, Ambev has proved to be a "defensive action" seen as safer in times of crisis. Valenzuela recalls that Ambev must rectify problems of cost in 2017. In addition, rivals like Heineken – who bought the Kirin-will have to spend part of the year "chores".
Despite the more positive scenario, Paiva says he has no intention of leaving to spend the sole of his shoe. Will continue with the trips to search results – and, who knows, ensure back of bonuses in 2017.
Expectations of stable sale stirs up contention between breweries
Although Ambev has made it back to broaden its sales in 2017, that doesn''t mean the drinks market as a whole is on a recovery path, after two years of decline in production, according to the Brazilian Association of the industry of Beer (CervBrasil).

Expectations of stable sale stirs up contention between breweries
Although Ambev has made it back to broaden its sales in 2017, that doesn''t mean the drinks market as a whole is on a recovery path, after two years of decline in production, according to the Brazilian Association of the industry of Beer (CervBrasil).

Faced with an economy that still rehearses a recovery after strong recoil in 2015 and 2016, the expectations of industry sources is that the dispute of the breweries continue to give in the price factor, without expansion of the volume. According to an industry source, the year 2017 will be marked by the breweries trying, more than ever, "steal" the market for rivals.
A company may face challenges to protect your market share is Heineken, which will have to "Digest" the acquisition of Kirin. Although the company paid only a third of what the Japanese trip six years ago by assets that include 12 factories and several brands – including Schin, Glacial, Riotous, BadenBaden and Eisenbahn –, the deal comes packed with problems to be solved, analysts heard by the State.
One of the main challenges of Heineken, according to Gabriel Vaz de Lima, an analyst at Bradesco BBI, is the distribution. After work with a distribution partnership with Coca-Cola, Heineken announced that should use the framework contract that inherited from Kirin. This question, explains Vaz, gives advantage to Ambev and Petrópolis (owner of Itaipava) that have their own distribution. "Brazil has a complex logistics. Therefore, the distribution itself is one of the main competitive advantage that a consumer goods company of Brazil can have, "he says. "This is not just in the drinks. It is an advantage that also benefits companies such as BRF, m. Dias e Souza Cruz. "
Brands. To "hold" in the period of crisis, the President of Ambev, Bernard P, says that the company continued to invest in larger volume marks, even in a crisis scenario, as of 2016.
Ambev gave a "bath of shop" on labels and packs of Skol and Brahma. "We could save that for later, but certain investments cannot wait", explains the Executive. "In the crisis, we need to put our best clothes. That''s the kind of mentality that reflects the culture of Ambev to think long-term. "
Marketing side, Ambev also attempts to expand the occasions of consumption of the product, adding new brands to the portfolio. In addition to working their labels in big events, the company opened four bars in São Paulo to craft brands.
Another concern is the management of the main ingredient of beer: water. The company has been setting economic targets. For 2017, the goal was to produce 1 liter of drink using a maximum of 3.2 litres of water. The end of 2016, the consumption was already in 3.04.
"Brazil has a complex logistics. The distribution itself is one of the main competitive advantage of a company of consumer goods. "