RAFAEL SALAZAR CRISTAL

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LIMA-For the better part of the last 50 years, Peru's two leading beer marketers, each holding between 40% and 45% of the market, have battled each other fiercely.

But it was a one-liter bottle introduced last year by Rafael Salazar, head of marketing planning at one of the two companies, Backus & Johnson, that put Cristal clearly in the lead. By yearend, Cristal had an 80% market share.

Mr. Salazar's company realized several years ago that the standard 620-milliliter bottle was not meeting consumer needs. Although B&J wanted for some time to introduce a larger bottle, already common in nearby Chile and Argentina, the cost of new equipment to produce the bottles during an economic downturn was prohibitive.

Last year when the market improved, Mr. Salazar took the plunge just as archrival Pilsen, marketed by Compania Nacional de Cerveza's, embarked on a $23 million campaign, the biggest Peru had ever seen.

Last August, Mr. Salazar introduced the big bottle, dubbed Margarito by the public in honor of a seven-foot Indian giant who appeared that month on a hot weekly TV comedy series, "Risas Y Salsas" ("Laughs and Dances").

Mr. Salazar oversaw Cristal's $12 million budget, handled by Publicidad Causa, to introduce the Margarito by radio, print and TV. His plan was based on research that told him Peru's beer market and drinking habits had undergone a radical change in the past five years, thanks to terrorism and economic hardship. With car bombings and curfews keeping Peruvians off the streets, more than 50% of beer consumption now takes place in homes, while consumption in restaurants and bars has dropped from 50% to less than 20%.

Peruvians also drink socially, in groups of three or more, sharing one glass and passing the bottle around. The Margarito was not only more practical but cost 15% less-a single Margarito costs $1.60, compared to the smaller bottle, which sells for $1.15.

"There was a space to fill: People wanted more product for a good price," Mr. Salazar says.

Cristal cut into its rival's share so deeply that CNC was put on the selling block this year. Backus & Johnston took the opportunity to assure its continued leadership, buying a majority of its one-time rival and giving it a hefty 85% to 90% of the total market.

"We broke the traditional beer marketing scheme in Peru," Mr. Salazar says. "We set our product apart, which contributed to a new product personality and market loyalty."

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