Can SABMiller Save Guatemala's Home-Brewed Beer Industry?

Two of the world’s largest beer companies are getting ready for a bar fight in Guatemala as they vie for the attention of beer-loving Chapines.

Anheuser-Bush InBev – makers of such hoppy staples as Budweiser, Corona and Stella Artois – has made inroads into the Guatemalan market that for years has been controlled by the locally-owned Cerveceria Centro Americana.

The Guatemalan business, however, is not letting the world’s largest beer company bully it around and has teamed up with SABMiller Plc – the world’s second largest beer company – to form a strategic alliance that hopes to push Anheuser-Bush InBev out of the Central American nation. At first Cerveceria will distribute bottles of Miller Genuine Draft, with the two companies planning to expand to other Miller products if sales go well.

The deal is expected to gain an ambitious 20 to 25 percent of the country’s premium beer market, Cerveceria Centro Americana said.

The family-owned Cerveceria has been struggling to stay afloat since 2003, when the Brazilian division AB-InBev – before merging with Anheuser-Bush – broke up the Guatemalan business’s monopoly. Industry insiders say that Cerveceria is bleeding money and the SABMiller deal is a lifeline for the company, something that experts at the global company seem to hesitantly agree about.

“They don’t think of themselves as poor. They just think they are temporarily out of money,” SABMiller Latin America President Karl Lippert told Quartz magazine back in March.

The alliance of the two companies also underscores SABMiller’s plan to expand their reach throughout Latin America, a region where it is the third largest distributor behind AB-InBev and Heineken. Latin America already accounts for about 40 percent of SABMiller’s earnings growth since 2007.

Unlike AB-InBev, which prefers to acquire brands in the markets it enters, SABMiller relies on a strategy of utilizing niches for its already existing brands. In the case of Guatemala, the company hopes that it can use Miller Genuine Draft to appeal to low-income buyers who still want to feel like they are purchasing a premium beer.