AmBev held prices to attract customers in crisis

São Paulo – due to the economic crisis, Ambev decided to postpone the increase in prices of its products in Brazil, which usually occurs in the third quarter to the fourth quarter.
With the continued rise in unemployment, the pressure on prices just got bigger. The weather didn''t help either. "We had a more severe winter. But we''re approaching the summer, "said Bernardo P, ceo of Ambev, in Conference call with analysts.
"Always evaluated together, sales volume, market share and price, to decide on what is the best strategy," he said, justifying the decision to postpone the high prices.
For Ambev, the macroeconomic scenario in Brazil undermined its performance. "We are disappointed with the numbers in Brazil," said Ricardo Rittes, financial Vice President and investor relations officer.
Inflation, high unemployment and low consumer confidence have affected the volume of sales in the country, which fell 4.1%. Net sales in Brazil shrank 6.6% and Ebitda, 31.1%, reaching R$ 2.02 billion. Revenue was 5.3% lower beers in the quarter.
Consumers also traded soda for water or powdered juices, cheaper. Sales in that category plunged 13.8% in the quarter compared to the same period last year.
Increase in costs
In addition to the drop in revenue, the company also saw increase in expenses. The cost of products sold in Brazil was 24% higher in the period.
The main reason was the hedge made by the company, i.e. an actual variation. As the real devalued 60 percent in second half of 2015, the recovery of the currency was reflected in the increased costs.
Thus, the costs tied to the dollar, which are about 40% of the total, increased compared to the previous quarter. "2016 was a very challenging year in terms of foreign exchange volatility in Brazil," said Paiva.
Focus on returnable bottles
To offer products at prices more attractive, Ambev has invested heavily in returnable glass bottles of 300 mL. They are responsible for 25% of sales of supermarkets, a number that should still increase, according to the Director.
In addition to being more accessible to consumers, the bottles are also cheaper for the company.
"The aluminum cans is a coffee with prices that are quite affected by variation of the dollar. This is not the case of the glass. Our exposure to currency fluctuation is less and costs are also reduced, "said Paiva.
With the improvement of the macroeconomic scenario in Brazil and increasing income and consumer confidence, Ambev hopes to regain sales, especially in the segment of premium beers.