Getting the World Tipsy

Getting the
      World Tipsy

For decades, Brazilians willing to drink a beer had to answer the
question: "Antarctica or Brahma?" Now the rivalry has ended and they have one
sole owner.
By Francesco Neves

They don’t make deals like that, not in Brazil anyway. The largest beer maker in the
country gobbled up the second place creating in the process the third largest beer company
in the world in a $4.5 billion deal, the biggest ever in the country. Together they will
have 71.6% of the Brazilian beer market, which has provoked shouts of "monopoly"
from the public, but mainly from the smaller competitors that have names like Schincariol
and Kaiser.

Welcome to globalization Brazilian style. Due to the passion these beers arouse in
consumers, the recent announcement that Brahma and Antarctica would share the same board
of directors under the name Ambev (American Beverages) led some to compare the acquisition
to their favorite soccer team being bought by its main adversary. Both companies are
centenary institutions. While Companhia Antarctica Paulista was founded in 1885, by a
group of friends from São Paulo, Companhia Cervejaria Brahma was created three years
later in Rio by Swiss Joseph Villiger.

Brahma employs 9,700 people, produces 4.3 billion liters of beer yearly, has 28
factories and had $42.2 million of profit in the first quarter of 1999. On the other hand,
Antarctica has 6,800 workers, makes 2.1 billion liters of beer a year, has 22 factories
and had a profit of $9.95 million in the first quarter. Brahma is already the world’s 8th
largest beer maker and Antarctica the 15th. Combined they will lose in size only to
American Anheuser-Bush and Holland’s Heineken.

For decades, Brazilians willing to drink a beer had to answer the question:
"Antarctica or Brahma?" More recently the choices increased, but both continued
to be overwhelmingly the favorites. Brahma and Antarctica have been engaged in an ad war
since the beginning of the century. That fight got louder in the ’50s and nastier in
recent years. Many celebrities were used to sing the virtues of both sides.

When Brahma launched it Malzbier in 1914 the beverage was presented as "especially
recommended to nursing moms." Antarctica started to sell its Guaraná soft drink in
1921, something that was copied by Brahma six years later.

This decade the dispute between Washington Olivetto’s W/Brasil ad agency, which had the
Antarctica account, and Eduardo Fischer’s Fischer, Justus, on the Brahma side made school.
The war was never so heated as during the 1994 soccer World Cup in the U.S. when the
stadiums were invaded by fans of both beers. Brahma was presented as "Number 1"
while Antarctica was "The National Preference." Another rivalry had to do with
Carnaval. Brahma has been sponsoring the Carnaval in Rio while Antarctica chose the
Salvador (state of Bahia) one.


Curiously, the idea to merge the companies came from a man who drinks only mineral
water, abstaining completely from beer or soft drink. He is 59-year-old Jorge Paulo
Lemann, the chairman of Brahma. Lemann was naturally looking overseas. The international
vocation of the new company can be seen in the fact that it was born with three names to
fit diverse markets. It will be called Companhia de Bebidas das Américas, in Brazil;
Compañía de Bebidas de las Américas in Latin America and American Beverage Company in
the United States and the rest of the world.

Brahma had everything going for it. After introducing streamlined and modern concepts
of management it had a 30% increase in profits in 1998 while Antarctica suffered a 20%
decline. Convincing Antarctica to accept the merger was not easy though. Many had tried
unsuccessfully in the past, including American Anheuser-Busch whose best deal was to
secure a partnership with the beer company_this arrangement will end now_mainly due to
what was seen as arrogance by the Yankees.

Brazilians are not big beer guzzlers. While Germans drink 140 liters of beer per capita
a year, and Americans consume 80 liters, Brazilians survive with 50 liters. On another
front Brahma and Antarctica are also soft drink producers, each one producing 1.2 millions
liters of soda a year. Combined they represent 14.6% of the soft drink market, which is
still no serious competition for Coca Cola (46.5%). Pepsi has miserly 4.8% share.

The merger will not happen before the Cade (Conselho Administrativo de Defesa
Econômica_Administrative Counsel of Economic Defense) studies the case_it has 120 days to
do this_but nobody believes there will be a veto, since President Cardoso has already
hailed the merger and encouraged other similar deals. He also will be the one to sign the
final authorization.

World’s Top Ten Beer
Producers in 1998

Production in millions of hectoliters

Anheuser-Busch (US) 121.3
Heineken (Holland) 79.1
AmBev (Brazil) 64.0
Miller (US) 52.9
SAB (South Africa) 43.0
Interbrew (Belgium) 36.8
Carlsberg (Denmark) 33.7
Grupo Modelo (Mexico) 30.0
Kirin (Japan) 29.2
Foster’s (Australia) 28.7



Earnings: $5.73 billion

Actives: $4.5 billion

Employees: 17 mil

Factories: 50

Production in liters: 8.9 billion

Beer and chopp (as draft beer is called in Brazil) has inspired
some of Brazil’s greatest composers, who not only imbibed the potion as well as sang about
it. While Paulista (from São Paulo) composer Adoniran Barbosa only drank Antarctica, some
icons of bossa nova like Tom Jobim, Vinicius de Moraes, and João Gilberto were
Brahma guys. Caetano Veloso and Chico Buarque de Hollanda even wrote a famous ditty in
which they celebrate the Brazilian way of life and Brahma:

Vai Levando

Caetano Veloso and
Chico Buarque

Mesmo com toda fama
Com toda Brahma
Com toda cama
Com toda lama
A gente vai levando
A gente vai levando
A gente vai levando essa chama

Mesmo com todo emblema
Todo problema
Todo sistema
Todo Ipanema
A gente vai levando
A gente vai levando
A gente vai levando essa gema

Mesmo com nada feito
Com a sala escura
Com um nó no peito
Com a cara dura
Não tem mais jeito
A gente não tem cura

Mesmo com toda via
Com todo dia
Com todo ia
Quando não ia
A gente vai levando
A gente vai levando
Vai levando
Vai levando essa guia

Keep on going

Even with all the fame
With all the Brahma
With all the bed
With all the mud
We keep on going
We keep on going
We keep on taking this flame

Even with all the emblem
All the problem
All the system
All Ipanema
We keep on going
We keep on going
We keep on taking the gem

Even with nothing done
With the room dark
With a knot in the chest
With a straight face
There is no way
We have no cure

Even with all the road
With the whole day
With all the going
When not going
We keep on going
We keep on going
Keep on taking
Keep on taking this way

The merger has made some people recall with nostalgia a phrase attributed to Vicente
Matheus, the late president of the Corinthians soccer club: "We would like to thank
Antarctica for having sent us these little Brahmas." The same phrase wouldn’t be
funny at all today, just a portrait of a new reality.

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