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Quilmes expands into Bolivia in major new investment
Impact International / July 1, 1996

By Larry Luxner

BUENOS AIRES -- Quilmes Industrial S.A. (Quinsa), a Luxembourg-based hold-ing company with extensive brewing and soft-drink operations throughout the Southern Cone, is investing $48 million to enter the Bolivian beer market.

William Engels, Quinsa's manager of corporate finance, said the company's two brands, Ducal and Taquiña, are likely to enjoy a 35% share of the 1.6 million hectoliter local market once they're introduced to Bolivian beer drinkers. Engels, interviewed at Quilmes headquarters in Buenos Aires, said Bolivia's per-capita beer consumption of 23 liters -- considerably lower than that of its neighbors -- "represents a very good opportu-nity" for Quinsa. "We can really bring something to the table," he said. "Paraguay has been a very profitable business for us, and Bolivia has twice the population of Paraguay."

As part of its investment, a Quinsa subsidiary, Quilmes Internacional Bermudez (QIB) is to acquire 54.6% of Incesa, a Bolivian holding company which will control 100% of Cervecería Santa Cruz (in the city of Santa Cruz de la Sierra) and 85% of Taquiña (in the city of Cochabamba). Outgoing shareholders, whom Engels declined to identify, will remain minority partners in Incesa. A final agreement should be in place by mid-June.

According to Engels, the two companies employ about 1,000 people. Santa Cruz has a technical capacity of 520,000 hectoliters a year, while Taquiña's annual capacity is 770,000 hectoliters.

Furthermore, Taquiña owns 50% of a brewery in Santa Cruz, with an additional capacity of 300,000 hectoliters; the other half is owned by third parties. "Currently, this brewery is not producing any beer, but it is in good condition and could start producing as soon as the market warrants it," said Engels. At the moment, Quinsa has no sales in Bolivia, nor does it export to the landlocked nation of 7.4 million.

Quinsa's 1995 net sales came to $797.6 million, of which $632.2 million (79%) derived from beer sales and $512.1 million (64%) specifically from Argentina. Several months ago, Citibank N.A. established an American Depositary Receipt program for Quilmes, allowing U.S. investors to trade in Quilmes shares under the symbol "LQU" on the New York Stock Exchange.

With an 85% market share in its franchise territories, Quinsa is also the leader in the Paraguayan soft-drink market; bottling and distribution of Coca-Cola products there generated $111.9 million last year. The rest of Quinsa's sales consists mainly of bottled water, set to increase with the launch of a mineral-water brand labeled "Eco de los Andes."

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