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Having Long Dominated the Dominican Republic, Presidente Targets US, Europe
Impact International / Sept. 15, 2002

By Larry Luxner

SANTO DOMINGO -- With a virtual monopoly in its home market of the Dominican Republic, the Presidente beer brand is now sharpening its focus on U.S. and European export markets. A 25% tax hike on beer caused domestic sales to drop 12% last year, and Cervecería Nacional Dominicana S.A. (CND), the company that brews Presidente, hopes that local congressional elections will spark the economy and strong advertising will reverse the domestic sales decline.

At the same time, the company is increasing its export efforts in Europe and expanding from the East Coast in the U.S. to Illinois, Texas and California.

In the Dominican Republic, it's difficult to find a beer that doesn't carry the Presidente label. CND controls 98% of the Dominican beer market through Presidente (95%) and three other brands with together comprise 3%; Heineken and Bohemia, brewed locally by CND, and Miller, which the company imports.

Most of the remaining 2% is controlled by CND's only local competitor, Cervecería Vegana, which brews Quisqueya and Soberana. A very small quantity of imported beer, mainly Beck's and Corona, finds its way into the Dominican Republic, and is consumed mainly by tourists.

According to Franklin León, vice-president of business at CND's parent group León Jimenes S.A., CND was established by U.S. businessman Charles H. Wanzer in 1929. The company's first beer brands were Colón and Reina; in 1935, it introduced the Presidente label. In 1985, the León Jimenes group -- which until then was known mainly for cigars -- acquired a majority stake in CND. Since 1993, CND has been headed by Rafael Menicucci, who is also a vice-president of the parent firm.

According to company officials, group sales last year came to $600 million, and beer comprised 82% of that amount. That translates into $492 million in 2001 revenues for CND. CND employs more than 2,000 people and produces 2.8 million hectoliters of beer per year at its Santo Domingo brewery. Except for the water, labels and bottle caps, CND must import everything, including hops and bottles.

León, 46, is a great-grandson of León Jimenes, who founded the parent company in 1903. He notes that per-capita beer consumption in the Dominican Republic stands at 38 liters, down from 42 liters in 2000. That's somewhat less than the average for the Caribbean (48 liters) and half that of neighboring Puerto Rico (78 liters).

"Last year, we had a big price increase, because the tax went up by 25%," said León, estimating that the tax hike pushed up the average retail price of a bottle of Presidente from 15 pesos (88 U.S. cents) to 20 pesos ($1.17).

"It was only a few pesos, but it caused sales to drop by 12%," he said. "Beer is very sensitive to price increases, and sales tend to recuperate very slowly after a price increase."

CND is among the Dominican Republic's top 10 advertisers, spending over $5 million annually on radio and TV commercials, billboards and sponsorship of a variety of cultural and sporting events. Alcohol is freely consumed in the Dominican Republic -- often by teenagers -- and laws prohibiting beer sales to minors are rarely enforced. Few official restrictions are placed on CND, though León says company policy is to advertise Presidente on TV only after 6 p.m.

Santo Domingo and its environs account for about 60% of Presidente's domestic market. The remaining sales are made in secondary cities like Santiago de los Caballeros and San Pedro de Macoris, and in tourist resorts like Punta Cana, Puerto Plata and Sosua.

A growing percentage of Presidente's total production is exported. CND began shipping Presidente beer to Miami in 1991, selling 75,000 cases in the first year alone. In 1995, the company expanded to the New York-New Jersey area, home to an estimated 1 million Dominican immigrants. Last year, CND sold over half a million cases in New York, and an equal amount in Florida. The company's original Florida distributor was Miami-based J.J. Taylor, which has since been acquired by Gold Coast Distributors. Interestingly, 40% of the Presidente beer sold in South Florida goes to non-Hispanics, compared to 20% of the company's sales in the New York area.

"We already did the crossover a few years ago, and now our beer can be found in Anglo accounts as well as Hispanic accounts," says León. "This year, we'll export over 1.5 million cases. We're opening up new markets, and we're trying to cover the entire U.S. East Coast. We're working on a new structure and getting well-prepared people. We started this year with Atlanta and Chicago, and will soon expand to Texas and California."

León added: "Europe is going to be our second major beer market for exports. That's because 80% of the tourists who visit this country are Europeans. They already know the beer, they've tasted it and they like it."

In addition to the U.S. mainland and Europe, key export markets for Presidente beer are St. Maarten, Haiti, Guadeloupe and other Caribbean islands. Presidente can also be found in limited quantities throughout Puerto Rico.

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