Food & Drinks

Heineken, The Coca-Cola Co end Brazil spat with distribution revamp

Heineken is to take the distribution of its two biggest beer brands away from The Coca-Cola Co in Brazil as the two sides settle a long-standing dispute in the country.

Heineken will take on the Brazilian distribution of the Amstel and Heineken brands

Both brand Heineken and Amstel will move to the brewer’s in-house distribution team in the country from mid-2021. The switch is part of a partnership “redesign” between the two companies, Heineken said yesterday.

It also brings to an end a disagreement stemming from Heineken’s takeover of the Kaiser brand distribution through its purchase of Kirin Holdings’ Brazilian beer and soft drinks assets in 2017. Up until that point, Kaiser was being distributed by Coca-Cola Brazil and other Coca-Cola bottlers in the country.

Under the terms of the new deal, Coca-Cola will distribute Kaiser, Bavaria and Sol while also adding premium brand Eisenbahn and other international brands. 

“The parties have agreed to end the existing litigation between them relating to the previous distribution agreements,” Heineken said.

According to the brewer, the new agreement gives both companies more flexibility in the types of beverages they can work with in Brazil. The Coca-Cola system will be able to produce and distribute alcoholic beverages and an agreed proportion of other beer brands in the country, while Heineken will be able to “explore further opportunities in the non-alcoholic segment”. 

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The increased flexibility comes as both Coca-Cola and Heineken look to expand outside of their traditional product portfolios. Coca-Cola adopted a “total beverage company” outlook in 2017 and has since launched new products including a hard seltzer. Meanwhile, earlier this month, Heineken combined an announcement to cut about 10% of its workforce with a pledge to delve deeper into fast-growing categories including hard seltzer. The brewer also aims to ramp up the global footprint of the non-alcoholic Heineken 0.0.

The Coca-Cola bottler in Brazil is Coca-Cola FEMSA, which is owned by Mexico-based group FEMSA. The group’s sale to Heineken of FEMSA Cerveza 11 years ago in return for a 20% stake in the Netherlands-headquartered brewer was valued at the time at US$5.5bn. Seven years later, FEMSA offloaded just over 5% of its holding for almost $3bn.

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