After a court ruled that Heineken has to sell beer and soft drinks in northeastern Brazil below its own costs, the Dutch brewer is considering closing two of its breweries in the region. When Heineken released its half-year results two weeks ago, the numbers were negatively affected by the consolidation of Brasil-Kirin. (inside.beer, 30.7.2018) Heineken acquired last year the Brazilian operations of Japan’s Kirin Holdings for € 1.03 billion ($1.21 bn) (inside.beer, 13.2.2017, inside.beer, 1.6.2017).
“Heineken is in a court dispute with Grupo LGH referring to the prices to sell its portfolio in the states of Pernambuco and Paraiba,” Heineken said on Friday in a statement. Grop LGH serves as a logistics company for Heineken in Brazilian’s Northern states of Pernambuco, Paraíba, and Ceará. “Due to these distortions, Heineken is reviewing its strategy in the northeast and considers extreme measures” such as the closure of the factories. Two factories that might close are in the state of Pernambuco, the statement said.
Heineken became last year the second biggest brewer in Brazil after striking the deal with Kirin. Including the newly acquired brands, Schincariol in the mass-market segment as well as the more expensive brands Devassa and Eisenbahn, Heineken controls at the moment 20.4% of the beer market in Brazil. AB InBev, the market leader is still far bigger with a market share of nearly 64%. Third comes Grupo Petropoli with 12.6% and all other breweries which account for 3.2%.