Potential of cachaça attracts múltis investment

Cachaça became bet of the multinationals of distillates, investing in buying on or in association with Brazilian producers. The strategy of companies is to make a sophisticated product leaks, consolidate position in the internal market and, in the future, investing in export.
The latest move was the Spanish group Osborne, who in June purchased, by value uninformed, 50.1% of Brazilian Natique, owner of Holy rum drink Xiboquinha and Degree. It was the company's largest investment in Latin America.
The Spanish follow the path trodden by major manufacturers of drinks. British Diageo bought the Ypióca group in 2012; the Italian Campari bought the Sagatiba in 2011; and the American Brown-Forman has exclusive distribution of Santa Dose since the beginning of the year and contract purchase in 2014. The French Pernod Ricard has the cachaça, and San Francisco.
According to Euromonitor, sales of cachaça totaled $ 7.54 billion (about US $ 15 billion) in 2012, down 10.4% on 2011. In volume, the fall was much smoother, 1.09%, to 902 million liters.
The cachaça is market consolidation trend that must follow in the coming years, say industry executives. "The imported labels are still far from the population because of import taxes in Brazil. Only 6% of the volume of hot drinks [alcoholic beverages, except beer] sold in the country is imported, "says Carlos Peralta de las Heras, Director of Osborne.
The cachaça is also opportunity to export. This year, the industry earned the recognition of Brazilian origin, a "certificate" that sorts of rum drink that follows production rules in national territory-the example of champagne, in France, and tequila in Mexico. The recognition was made by the United States and appreciates the cachaça, which until then entered the country as "rum". In Exchange, Brazil recognized the American Whiskey, like Jack Daniel 's, of Brown-Forman. Producers now work for the recognition of cachaça by China and Panama.
"We think in the internationalization of our brands," says the President of Natique, Luis Henry Munhoz. He is one of the founders of the company and will take command of the operation. The Spanish De las Heras is preparing his move to Brazil and will also lead the expansion of Natique.
The import tariffs in Brazil should remain high over the next decade and so the purchase of 50.1% of Natique is strategic for the Osborne, says De las Heras. He said taxes in Spain were reduced in 80 years, and, at the time, 80% of beverages consumed were 20% imported and domestic; Today 70% and 30% are imported. The transition takes, he says, and so the best way to sell in Brazil is via companies located here.
The entry of multinationals in the field accelerates a change in the profile of cachaça. They invest to differentiate craft and more expensive labels of popular and industrial, and try to make the drink get in "fashion" and "premium". For this work, price positioning and image.
Diageo operates in different ways with the Nêga Fulô, handmade, and the Ypióca group, industrial, bought last year for $ 900 million. It was the most expensive acquisition of Diageo in Brazil and the largest involving manufacturer of cachaça. American actor John Travolta is the poster boy of the Ypióca group. The Ypióca group has larger production scale and lower price than the Nêga Fulô.
Diageo has the goal of increasing the total sales in the region that includes Brazil, Paraguay, Uruguay for 1 billion pounds by 2017. In 2012, sold 600 million pounds in the area. The strategy is based on four points and one of them is just sell Ypióca group-the company's goal is to lead the movement of sophistication of rum in the country. Diageo reported in November that would increase the production capacity of the Ypióca group until the end of 2013.
The other three points are the "aggressive growth in key categories" (Diageo is a leader in branded whiskey, Johnnie Walker, and vodka, Smirnoff); "catching up with the emerging middle class" and speed up the sale of "super premium" products (like Ketel One vodka). The Brazil is the second largest market of Cîroc vodka, considered "ultra premium" by Diageo.
The opportunity for Osborne in Brazil is exactly in the sophistication of rum, says De las Heras. It does not open the business value; says only that the money came out of the box. In acquisition, working capital of Natique amounted to 1.7 time Ebitda, and the contracts were included in the negotiations. The acquisitions in the United States and studied Osborne in China.
The Sagatiba, bought in 2011 by Campari for $ 26 million, helped raise sales of Italian in Brazil since then. The goal is to "develop national premium cachaça international recognition," according to the company. The current advertising campaign teaches consumers to mix the drink with other ingredients, in addition to the lemon and sugar for caipirinhas.