In February Heineken will start an arbitration case with Associação Brasileira dos Fabricantes da Coca-Cola (ABFCC), a consortium of 13 Coca Cola distribution companies in Brazil, regarding the distribution of Heineken brands in the South American country. The contract, which includes brands like Heineken, Kaiser, Amstel, Bavaria, Xingu und Sol, was originally scheduled to run until 2022.
When Heineken acquired last year Brasil Kirin from Japan’s Kirin Holdings for € 1.03 billion ($1.21 bn) (inside.beer, 13.2.2017, inside.beer, 1.6.2017), the Dutch brewer broke off the contract to start distributing the brands through its own newly acquired sales network. In the long run to work with two separate distribution networks in Brazil is for Heineken no viable option.
As reported by local newspapers, Heineken offered to continue the contract with ABFCC with only the two brands Bavaria and Kaiser for another five years but the distributors rejected the proposal as not adequate.
As people familiar with the Brazilian market pointed out a possible solution could be the sale of one or more brands and production sites by Heineken to the distributors.