American Beverage Company (AmBev), the world’s fifth largest brewer and Brazil’s leading beverage company, announced today its decision to enter the Dominican Republic’s market, competing in both the beer and soft drink arenas. The company announced today an agreement with Embotelladora Dominicana, C. por A. (PepsiCo’s exclusive bottler). As per the agreement, AmBev will purchase 51% stake at Embodom for US$60 million, due in three instalments (US$40 million in February 2004, US$10 million February 2005 and US$10 million in February 2006). The plan is for AmBev and Embodom to become partners in a company that will commercialize both soft drinks and beer in the Dominican market, and where AmBev will hold a 66% stake. The 66% stake will be achieved via asset contribution to Embodom, composed of US$10-million in cash and an operational beer production plant, built with existing assets from AmBev.
Embodom currently holds an enviable position in the Dominican soft drinks market, with a market share of 56% as of November 2003. The company sells PepsiCo’s core soft drink brands (Pepsi Cola, Seven Up and Mirinda), as well as its own brand, Red Rock. Embodom has one bottling plant with capacity to produce 2.3 million hectoliters per year.
In a press release, AmBev expressed that it is confident regarding a recovery of the Dominican economy and the transaction is described as another step towards AmBev’s expansion in Latin America, allowing the company to get a foothold in the Caribbean marketplace. AmBev is encouraged by the successful launch of its operations in Guatemala in association with the PepsiCo anchor bottler for the Central American region, Central America Bottling Corporation.
For more information, see http://www.ambev-ir.com/