Image campaign by Peru's No. 1 coincides with its takeover of No. 2

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LIMA--Peru's dominant brewer, Backus & Johnston Union of Peruvian Breweries, has launched a new ad campaign promoting itself as a Peruvian company in touch with the country, its history and people. The 30-second spot, created by Lima-based agency Causa, touts Backus & Johnston's importance in Peru.

The campaign comes at an important juncture in the company's history. Although not mentioned in the spot, Backus & Johnston is effectively Peru's only beer producer.

The company announced March 16 that it would pay $164 million for at least an 89% in Peru's second brewer, the Southern Brewing Co. (Cervesur), the maker of Cusquena and Arequipena beers. The deal also includes Cervesur's Frontera Bottling Company, which bottles Pepsi in the southern half of Peru.

The sale is expected to be concluded by late April, giving Backus & Johnston control over 98% of the Peruvian beer market. The remaining 2% is held by Mexico's Modelo, which makes Corona, and the Dutch brewer Heineken.

"This is a very important step in the strengthening of Peruvian companies in a world of growing globalized competition," says Backus & Johnston General Manager Carlos Benton Remy.

The Cervesur deal is Backus & Johnston's second major coup in the past six years. In 1994, it bought out arch-rival National Brewing Company, which produced Pilsen brands. Pilsen is now Backus & Johnston's top seller, followed by the company's own flagship brand, Cristal.

In 1999, Backus & Johnston had sales of $260 million and earnings of $52 million. Cervesur had sales of $65 million and earned $400,000 during the same year. Backus & Johnston expects to save $156 million in the coming five years, particularly on transportation, distribution and advertising costs.

Peruvian law does not prohibit monopolies, so Backus & Johnston will not have to deal with the troubles Brazil's Brahma and Antarctica companies are having to formalize their merger.

Backus & Johnston and Cervesur spent more than $40 million on advertising in 1999.

Copyright March 2000, Crain Communications Inc.

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