Heineken could suffer in Mexican beer stand-off - analyst

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Related tags: Ab inbev, Grupo modelo

Heineken could suffer in Mexican beer stand-off - analyst
Heineken could face more intense price pressure in Mexico if rival AB InBev acquired the other half of native brewer Grupo Modelo, according to a New York-based analyst.

AB InBev's possible bid for the rest of Grupo Modelo could cost it up to $20bn (€16bn) analysts have suggested, and would set up a face off with European peer Heineken in Mexico: the Dutch brewer bought Modelo's main rival Fomento Economico Mexicano for $7.7bn in 2010.

Anheuser-Busch InBev said yesterday that media recent speculation regarding its possible buy-out of Grupo Modelo was accurate to the extent that discussions have been held that "may or may not lead to a transaction".

"There is a long history of partnership between Anheuser-Busch InBev and Grupo Modelo and AB InBev has great admiration for the Modelo business and its brands,"​ the firm added.

After this announcement, Rafael Shin, an anlayst at BTG Pactual in New York, told Bloomberg Business Week that Corono producer Modelo already led Heineken in Mexico (the world's sixth-largest beer market); AB InBev could cut production costs further and potentially beat Heineken on price, he added.

“Any way you see it, we believe it’s going to mean more aggressive competition for Heineken,"​ Shin said.

Belgian giant AB InBev acquired a 50% stake in Modelo after its 2008 acquisition of Anheuser-Busch.

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