Falls production of beer and soda

As expected by the market, the drinks industry recorded worsening performance in the second quarter of the year, finished last. The main causes are the retraction of consumption, the trend of replacement of soft drinks for other drinks with less sugar and sodium and a high comparison base, as in 2014 sales rose due to the Fifa World Cup, held in Brazil.
For some, the market sector entities will still bad results in July, especially by comparative imbalance, and an eventual recovery is expected for the fourth quarter.
Control system of production of beverages (Sicobe) of the internal revenue service show that beer production totaled 6.5 billion pounds in the first half-a fall of 6.8% as compared to the same range of 2014. In comparison with the same period in 2013, progress was made of 3.8%.
In the second quarter of 2015, beer production totaled 2.89 billion liters, a retreat of 10% on the same period last year. The volume was very close to that produced in the second quarter of 2013 (year with no World Cup).
In the case of soft drinks, the scenario is not better. Production from January to June amounted to 7.1 billion liters, which is a retraction of 5.7% compared to the same interval last year. This was the worst result for the first half in production of soft drinks from 2011.
Considering only the second trimester, the production of soft drinks in the country totaled 3.29 billion liters, equivalent to a fall of 6% compared to the same period in 2014.
Paolo Petroni, Executive Director of the Brazilian Association of the industry of Beer (CervBrasil), had already alerted to the possibility of more expressive in the segment falls in June and July. And noted that there was a risk of delay in resumption of the economy as a whole, due to the prolonged discussions in Congress about the proposed fiscal adjustment.
The slowdown, however, turned out to be positive for the soft drink industry. Last week, the House of representatives dropped the proposed change in the tax on manufacturers of soft drinks and concentrates, installed in the Manaus free trade zone. The amendment provided for reduce of 20% to 4% the tax on industrialized products (IPI) levied on extracts and concentrates for soft drinks. As companies producing soft drinks in the free zone are exempt of IPI, they receive tax credits equivalent to 20% of the value of the sale to other regions. The change would reduce to 80% the credits obtained by companies and would generate for the Government a raise $ 2 billion to $ 2.5 billion.
AmBev, Coca-Cola, Pepsico and Kirin Brazil maintain factories in the Manaus free trade zone for the production of extracts and concentrates. Almost 90% of the production of soft drinks in the country is made with concentrated processed in the region.
Alexander Jobim, President of the Brazilian Association of manufacturers of soft drinks and non-alcoholic drinks (Abir), said that all companies buy soft drinks concentrates of Manaus and that the change would make it even worse the scenario for business. "The sector showed significant falls in the first half of the year. For the second half of the year, there may be a reduction in the fall, but it is still worrying, "he said. The Executive also considers that there may be improvement in industry performance when the market start to react positively to the Government's fiscal adjustment.
Even with this scenario, Ambev-only beverage company with shares in BM & FBovespa-kept performance up the Ibovespa index in the first half of the year. The company's shares have accumulated high of 19.3% in the period, compared with 6.14% appreciation of the BM & FBovespa's main index, which closed at 53,081 points.
Only in the second quarter, the roles of Ambev climbed 4.03% (the Ibovespa rose 3.77%). The company has already demonstrated in the first three months of the year was able to expand sales of higher added value, making its revenue per hectolitre. In addition, the company had to reduce the expenditure perspective on marketing in the second quarter as compared to the same range of 2014, since they wouldn't have the additional expenses related to the World Cup.
The expectation of analysts is that the Ambev present gain in profit margins from April to June and, possibly, increased participation in the local market about the Kirin, which Brazil lost space.