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 with report, the Director-General of the Ambev stated that it was necessary 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. 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 lower the cost of the product, "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.