World Cup: volume increase, but also costs

Watch the matches of the World Cup with beer in hand is an indispensable ritual for millions of fans. It would therefore expect an excellent result during this period for Ambev, owner of almost 70% of the market of drink in Brazil. In fact, sales of beer by volume tend to increase a lot during the competition, to the point that the company consider the Cup as a kind of summer in the middle of winter. In the last line, however, the results may not be so expressive. BTG Pactual Bank report indicates that: "while the volume of sales may have marginal increase, the impact on profit, Ebitda and Ebitda margin is more controversial. Analysts, Thiago Duarte and Vito Ferreira studied the numbers of the company in the last three editions of the World Cup and found that the main event of the world football hasn't been all that profitable for Ambev. That's because, despite the increase in volume, grew also expenditure on marketing and promotions, which caused pressure on the banks. The Brahma brand, for example, pays a large sum on marketing, including to be official sponsor of the brazilian national team, which raises the cost of sales in the period. Another important point is that the promotions, so common in the period, led the average price in quarters where the World Cup was shorter compared to quarters without canopy. Another impact is caused for the choice of packaging by consumers. In the 2010 and 2014 World Cups, for example, grew the demand for canned beer, less profitable than the glass packaging and returnable bottles. With higher costs and lower prices, the company's Ebitda margin is impaired. "We believe that the World Cup should follow the trends the previous editions, without relevant expansion on the banks," wrote analysts from BTG Pactual.