Brazilian beer giants wage war on Coke

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RIO DE JANEIRO--Top Brazilian beverage companies Brahma and Antarctica are mounting a TV and print campaign in Brazil accusing Coca-Cola Co. of attempting to thwart their proposed merger. The merged Brahma and Antarctica would operate as Companhia de Bebidas das Americas (AmBev).

Coke owns 14.5% of Brazilian brewery Kaiser, one of Brahma and Antarctica's leading competitors. AmBev executives claim the soft drink marketer is attempting to persuade the Brazilian government to block the merger. If the new company gets the go ahead, it would control 80% of beer sales and 39% of the soft drink market in Brazil.

One print ad signed by AmBev asks: "Why is Coca-Cola against AmBev?" The ad then argues that AmBev has always been in favor of foreign companies entering Brazil because competition benefits consumers.

AmBev is not limiting its attacks to the local market. The company is now planning a U.S. print campaign asking U.S. consumers their opinions of Coke's affiliations with an alcohol brand in Brazil. Salles D'Arcy, Sao Paulo, is understood to be preparing a campaign.

The war escalated further following the recent disclosure by Antarctica President Victorio De Marchi that, in 1997, Coca-Cola attempted to acquire Antarctica to distribute its guarana brand around the world. AmBev subsequently signed a global distribution pact with PepsiCo.

The merger is under review by Brazil's anti-monopoly agency, CADE. In some Brazilian regions, AmBev is likely to hold a nearly 100% share of the market. CADE's decision is likely to be made on a stateby-state basis, according to the shares of the company in each Brazilian state.

Meanwhile, Brazil's Secretary of Economic Rights has recommended that one of AmBev's main brands -- either Skol, Brahma or Antarctica --be sold so that the company won't have the majority of the market.

Copyright February 2000, Crain Communications Inc.

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