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Logo Central America Link

Region: MIller time?

Monday, January 27, 2014

SABMiller is thinking of building a Panamanian brewery, which could change the rules of the Central American beer market, by creating a regional market.

A new investment by SABMiller would in addition follow a trend of Colombian businesses expanding in the region.

A Colombian group controlled by Alejandro Santo Domingo owns 14% of London-based SABMiller, which sells hundreds of beverages in 60 countries, including MIller and Coors.

Miller and Atlas are the best-known beer brands of the company’s Panamanian subsidiary, Cervecería Nacional, which also produces and distributes various soft drinks.

Increased production in Panama could give SABMiller an opportunity to sell Panamanian-brewed beer throughout Central America.

The share of imported brands in each market of the region has been growing in recent years, as various free trade agreements lower the cost of selling beer across national borders.

During the last century, brewers in each Central American country maintained tariffs, which effectively made it impossible to import beer.

An efficient new Panamanian brewery could be a base for exporting beer to the rest of the region, where the Miller and Coors brands sre already known.

The United States is currently the main source of beer imported into Central America, followed by Mexico.

SABMiller in 2005 acquired Colombia’s Bavaria, Latin America’s second-biggest brewery, from Grupo Santo Domingo, which for most of the last half-century was controlled by Julio Mario Santo Domingo, Alejandro’s father.

Major recent investments in Central America by Colombian interests include the acquisition of regional airline TACA by Avianca, and the purchase of the Panamanian operations of HSBC by BanColombia (only in Spanish).

Aval (only in Spanish), Colombia’s biggest financial group, had previously acquired regional financier BAC Credomatic, while Davivienda bought HSBC's operations in Costa Rica, NIcaragua, El Salvador and Honduras.

SABMiller currently brews beer in a single location in Panama.