SAO PAULO/BRUSSELS--Sao Paulo bar owner Arthur Santi has long served up boatloads of ice-cold Skol, one of Brazil's most popular beer brands and a mainstay of brewing giant Ambev SA. Then last year, rival Heineken NV made him an offer he could not turn down. Santi was launching another saloon in the same working-class neighbourhood. The Dutch brewer wanted top billing for its products at the new location.
Heineken paid him 90,000 reais ($23,000) for a three-year commitment to sell Heineken as its only big-name premium beer. The company also threw in new refrigerators, tables and chairs, all emblazoned with its familiar green logo with the red star.
Bar by bar, Heineken is fighting for a bigger share of the world's third-largest beer market and an end to Ambev's dominance in Brazil. While beer consumption has stagnated in much of the world, growth is still forecast for Latin America's largest economy, which is why Brazil has become a key battleground for global brewers.
Heineken made a big move last year with its $1.2 billion purchase of the money-losing Brazil operations of Kirin Holdings Co Ltd. That transaction doubled Heineken's market share to nearly 20 percent.
But to catch Ambev, which still controls nearly two-thirds of the action here, Heineken has opened a multi-pronged front. The company is aggressively marketing its products in bars and street corner watering holes, spots where convivial Brazilians guzzle nearly half of the nation's beer annually.
And it is trying to plug holes in its strategy, both geographically and in terms of product offerings, according to interviews with several executives, analysts, consultants, distributors and bar owners. The company is pushing hard into Brazil's vast northeast, home to one-third of the nation's 210 million people. While one of Brazil's poorest areas, it is home to a number of sizeable cities, including Salvador, Fortaleza and Recife.
Heineken is also focusing on the mainstream market throughout the country, according to Marc Busain, the company's Americas chief. Prior to the Kirin deal, the company had beers at the high and low ends of the market, but little in between. It now plans to promote its mid-tier offerings, including Devassa, a mark acquired from Kirin, and Amstel, a Heineken brand that has been in Brazil only since 2015.
"Today we have a portfolio that allows us to play in all segments that matter in Brazil," Busain said. "We have plans to transform Brazil into one of Heineken's top markets."
The Brazil duel is a microcosm of a wider global jousting match between Ambev's parent company Anheuser-Busch InBev NV, the world's largest beer maker with $56 billion in annual revenue, and Heineken, the No. 2 player, with $25 billion, based on current exchange rates.
If InBev is worried about its Brazil lead evaporating, CEO Carlos Brito is not showing it. A native of Rio de Janeiro, he sounded unfazed at a March news conference where he discounted Heineken as an immediate threat on his home turf.
"Most of their business today, volume-wise, is on the value side," Brito said. "It's too early in the process."
