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Firms Unite in SAmerican Beer Deal

November 3, 1997

CARACAS, Venezuela (AP) _ The Cisneros Group and Belgium-based Interbrew SA announced Monday they would team up in a venture aimed at capturing a greater share of South America’s beer market.

They said they expected to invest $2 billion in the market over the next five years.

As part of the deal, Interbrew paid $250 million for a 50 percent stake in Cerveceria Regional, the Cisneros’ brewery business.

Together, the companies hope to lift Cerveceria Regional’s share of the Venezuelan beer market to 20 percent from 7 percent in five years.

They also hope to capture 10 percent to 15 percent of the overall South America beer market in the same period by producing local brands in separate national markets.

Company officials said they believe they can be more successful producing local brands rather than importing U.S. brands.

They declined to specify which brands or countries besides Venezuela would be targeted.

``Respecting local cultures and the needs of consumers is a formula guaranteed to succeed,″ said Gustavo Cisneros, president of the Cisneros Group, one of the largest corporations in Latin America.

Cerveceria Regional’s two major competitors are Venezuela-based Empresas Polar, which dominates the market, and Brazil-based Companhia Cervejaria Brahma.

Interbrew is one of the world’s largest beer companies, producing 120 brands and with operations in Europe, Asia and Latin America.

The Cisneros Group, which had $3.3 billion in revenue in 1996, owns businesses in communications, entertainment and soft drinks. They include Venevision, Venezuela’s No. 1 TV station, and Galaxy Latin America, which offers the satellite-delivered TV service in Latin America.

Last year, Cisneros ended a decades-long partnership with PepsiCo Inc. and switched overnight to Coca-Cola Co. in a deal that Pepsi soft drink officials called ``betrayal.″ The Cisneros group said they made the move because Pepsi rejected proposals to expand the business in Venezuela.

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