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Allied builds new distillery in Brazil to meet demand
Impact International / July 1, 1996

By Larry Luxner

Booming demand for its wine brandy has led Allied Domecq's Brazilian subsidiary to construct a new 10,000-square-meter distillery in the southern Brazilian state of Rio Grande do Sul. Luis Bustos, president of Allied Domecq Brasil, said the new plant -- located at Garibaldi, in the heart of Brazil's wine-growing region -- will begin operating by August 1997, and represents a $5 million investment in the first phase. It follows a surge in demand for Domecq brandy that has averaged 20% annually over the last three years.

"The current plant we have is totally saturated, and we need to expand production," Bustos told Impact International in a phone interview from Caxias do Sul, adding that the plant is situated on a 60,000-square-meter tract of land. Currently, he said, Domecq enjoys 77% of the Brazilian brandy market (Seagram's Macieira has most of the remainder).

At the moment, according to Bustos, Brazil's cognac market is around 8.0 million nine-liter cases, though wine brandy -- which costs three times as much as cognac de caña -- is about 320,000 cases.

Besides the factory, Allied Domecq plans to spend $16.5 million to market its leading brands, including Domecq brandy, Ballantine's, Teacher's and Long John. The company, with 225 employees in Brazil, expects sales this year of $85 million and total volume of around 700,000 cases.

In a separate move, the Kaiser beer conglomerate has launched its seventh brewery in Araraquara, São Paulo state, reports Jornal do Brasil. The plant has a capacity of 2.4 million hectoliters, to be expanded to 5.0 million hectoliters by 1999. With the new unit -- valued at $81.5 million -- Kaiser boosts its overall capacity to 17 million hectoliters. This should add around $200 million to its annual sales, projected this year at around $1.5 billion.

Kaiser will spend $200 million on two more breweries between now and the end of 1997: one at at Ponta Grossa, in the state of Paraná, and the other at Pacatuba, in Ceara state. At the moment, Kaiser is Brazil's No. 3 beer, with a 16.1% share of the market (behind Brahma, with 30.1%, and Antarctica, with 28.3%).

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