★ Beervana and the Chilean Beer Industry Peter Haldis Eric Markley Yoichiro Hayakawa ★ History • Beer came with the Europeans • Beer arrived shortly after Independence. • First Chilean brewery "La Chimba" began in 1822 in Santiago. • Germans arrived mid-19th century → Mass production of beer ★ History Cervecerías born in beer 1889. was consumed all over • •ByCompania the end of the Unidas 19th was century, • In 2002 thCompania Cervecerías Unidas was born in 1889. the country. • • • In 2002 the Association of Beer Producers of Chile AG (ACECHI) was founded.Compania Cervecerías Unidas was born in 1889. •Compania In 2002 the Association Cervecerías of Beer Unidas Producers (CCU) of Chile born AG (ACECHI) in 1889.was founded.Compania Cervecerías Unidas was born in 1889. • In 2002 the Association of Beer Producers of Chile AG (ACECHI) was Association of Beer Producers of Chile AG founded 2002, founded.e Association of Beer Producers of Chile AG (ACECHI) was founded. . ★ Unique “beers” of Chile Pisco Colorless or yellowish grape brandy produced in winemaking regions of Peru and Chile. Made from only certain varieties of grapes. Chicha • Several varieties, some non-alcoholic • Maize, manioc root, grape, apple or other fruits. • Classified as corn beer by foreigners ★ Beer in Chile Market Size • Chilean beer consumption low compared to the rest of the South America • Beer is the most consumed alcoholic beverage and takes 60% of the total market share for alcoholic drinks. There has been slow but steady growth in the sales of lager, pale ale from local microbreweries and imported pale lager. ★ Beer Consumption Per capita consumption: Canada: 99 L USA: 78 L Brazil: 65 L Argentina: 49 L Japan: 45 L ★ Place of Consumption ★ Market Shares Major players • CCU 80% market share in 2012. • Cervecería Chile, Chilean unit of InBev, 14% Craft beer • • • • Craft beer market born in late 90s From 2008-2012, craft beers sold rise from 125 to 400 Premium beers 18% share of total market, highest share in the region Growing demand for imports, especially full-flavor European-style ★ Beer Industry Analysis ★ Year Average Price Per Liter (peso) Growth Rate Average Price Per Liter 2010 2011 2012 550.65 574.29 581.71 2.4% 4.2% 1.3% ★ Beervana Ben Wood and Perry Hirsch Demand for imported beer among Chileans, plus 25,000 American expats/tourists. Combined, importer, distributor and retailer • Only Chilean importer of American craft brews • Distribute to bars & restaurants • 750 sq. ft. store (eventual plan 100+ labels). ★ Beervana ★ Beervana -- Setting up • Setting up distributorship and retail much cheaper than in U.S. -- Personal savings and 2 U.S. silent investors. • Licensing and regulations similar to U.S. • Minimal government involvement ★ Beervana Pricing Current Market • Local Drafts $1000 CP • Imported bottles $1500 CP Beervana • Local Crafts $1000 CP • US Imports $2000 CP • International imports $3-4000 CP • Extra large bottles $5-7,500 CP ★ Beervana SWOT Strengths • Experience in distribution • First mover • Location (Providencia/Santiago) Weaknesses • Pricing • Unproven Market Opportunities • Growing market segment • Two ways to succeed – retail and distribution Threats • Chilean craft beers • Craft beer just a fad? • Craft beer becomes very popular, and CCU or InBev get in. ★ Questions?