Latin America continued

Financial summary

Group revenue1 (US$m)

5,495 2009

5,251 2008



1,173 2009

1,071 2008


EBITA margin (%)

21.4 2009

20.4 2008

Sales volumes3 (hl 000)


37,138 2009

36,846 2008


Soft drinks

18,509 2009

18,484 2008


Soft drinks organic

18,509 2009

18,140 2008


  1. Including share of associates.
  2. In 2009 before net exceptional credits of US$45 million (2008: net exceptional charges of US$61 million) being profits on disposal of the Colombian water business and the Bolivian soft drinks operations of US$89 million net of integration and restructuring costs of US$31 million and a US$13 million charge in respect of litigation.
  3. Volume figures have been restated for the prior period following the revision of the group’s volume Definitions. Further details are provided in the Chief Financial Officer’s review.

Latin America’s initiatives to develop increasingly differentiated brand portfolios and to enhance sales activities resulted in a rising share of beer within the alcohol market. Our brands demonstrated resilience in tough consumer and economic environments in Colombia and Central America while favourable trading conditions and improved market execution in Peru and Ecuador boosted lager volume performance. Continued robust pricing and productivity enhancements offset increased commodity costs, resulting in an improvement in EBITA margin of 100 bps and EBITA growth of 10%. The Brisa water brand in Colombia and the soft drinks bottling operations in Bolivia were sold realising a profit of US$89 million. Reduced capital expenditure across the region improved cash generation. In response to economic conditions, the region embarked on a number of restructuring programmes during the year.

Following several years of strong growth, lager volumes in Colombia declined 6% reflecting the economic recession in the country, high interest rates and depressed consumer spending. GDP growth for the quarter to December 2008 slowed sharply to -0.7% from 7.6% in 2007. National retail sales fell by 4% and industrial output fell by 13% in February versus the prior year. Despite the volume decline, we gained share of the alcohol market throughout the year with March reaching a record high of 68%, up 400 bps on the prior year. Poker, Pilsen and Aguila Light all recorded healthy growth. The Aguila brand benefited from the introduction of the 225ml bottle in the northern part of the country. Premium volumes grew by 12%, driven by 10% growth of Club Colombia and a strong performance by Redd’s following its launch in late 2007. Marketing expenditure declined following several years of significant brand renovations and launches while strong pricing, beneficial mix and cost productivity improved EBITA margin.

In Peru lager volumes grew 9%, despite a slowdown in the fourth quarter. Market share ended the fourth quarter 400 bps ahead of the prior year due to the successful positioning of Pilsen Trujillo as a national economy brand. Our premium brand Cusqueña also performed well with volume growth of 59% and market share growth of 280 bps. A price increase introduced across most of our brands in March 2009 reflects the strength of our lager portfolio in a very competitive market, while an earlier 9% increase on Pilsen Trujillo followed our competitive success in the economy segment. We launched a new brand, Quara, in March 2009 aimed at female consumers but with potential appeal to all consumer segments. The second half of the year benefited from improved route to market and direct store delivery.

Our Ecuador business continued to perform well benefiting from brand renovation, improved route to market and sales execution, investment in refrigeration and the introduction of national pricing. These improvements, together with greater disposable income following two increases in the national minimum wage, grew lager volumes by 14%. In the premium segment, the Club brand was repositioned as more distinctly premium and the pack was extended to include a new 550ml bottle resulting in premium sector growth of over 100% for the year. Premium brands now account for 8% of our portfolio. The launch of Conquer, a new mainstream brand, in the second half of the year had a promising start. The flagship mainstream brand Pilsener continued to perform well, following its renovation last year, with growth of 13%.

Panama’s lager volumes were level with last year. Strong performance from Balboa, following its relaunch in 2008, and our super premium brands offset the softer performance of Atlas. Price increases were taken selectively on lager to offset increased commodity costs. Soft drinks volumes grew 9% with sparkling soft drinks up 5%, led by the Schweppes brands and PET growth while non-alcoholic malt beverages grew 37%, supported by upgraded brand imagery and the introduction of a new PET pack.

Operations in Honduras had a challenging year with the US economic slowdown affecting remittances and local unemployment rising to 28%. Disposable income has been impacted, particularly in the fourth quarter. Lager volumes were level with prior year despite good growth in the super premium segment which offset some volume loss from our Imperial brand. Lager prices were increased on average by 8% to help absorb commodity price increases. Investment in refrigeration continued in the second half, embedding the cold beer culture in the trade. Soft drinks volumes grew 3% driven by 7% growth in Tropical, the launch of Coca-Cola Zero and new Coca-Cola multi-serve PET packages. Price increases on soft drinks offset marginally negative mix driven by higher sales of non-returnable family packs.

In El Salvador we relaunched the mainstream Pilsener brand with more attractive packaging and a new 330ml returnable bottle. Despite the success of the relaunch, tight economic conditions led to a decline in lager volumes of 6%. Soft drinks volumes were level with the prior year.

Key focus areas

  • Further enhance the beer category’s appeal across consumer segments and occasions
  • Increase share of alcohol, capitalising on well differentiated brand portfolios
  • Optimise and extend distribution network and sales reach
  • Pursue operational excellence and efficiency in our businesses, optimising resources and costs