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Peru's beer output increases, but price hikes play role
Impact International / July 15, 1996

By Larry Luxner

Peruvian beer production in 1995 increased by 14% over the year before, while during the first two months of 1996, production rose 13.1% over the same period in 1995, says Peru's Ministry of Industry, Tourism and Integration (MITINCI).

"That increase in production reflected the announcement of a price increase made by the Backus & Johnston Brewery in mid-January, which caused many wholesale distributors to accumulate stocks above the accustomed levels," a Lima beer distributor told the magazine Peru Economico. According to MITINCI, beer production in January alone recorded a 38.7% increase over the figure for the same month of 1995.

An executive of the Backus groupo, however, pointed out that "the growth record-ed in January cannot be regarded as indicative of what growth in the sector will be for the full year." He said first-quarter 1996 sales will likely equal sales in the first quarter of last year, which totaled 22.4 million cases. This is explained by the slowdown in the rate of growth of Peru's gross domestic product, and the decline in the purchasing power of the public as well as by other factors such as the short and relatively cool summer.

On the other hand, beer prices rose by 5.8% during the first two months of the year, whereas the overall increase in prices was 2.9%. This could, however, represent a restoration of the price of beer in real terms, given the fact that the 2.3% increse in beer prices during 1995 was less than the consumer-price index. No further increases in the price of beer are anticipated for the rest of the year, in which case the relative price of beer will probably drop and thereby stimulate consumption in the medium term.

Peru Economicopointed out that, because the beer industry operated at 75% of installed capacity during 1995, it could boost production without having to make additional investments in the event of an increase in demand. Moreover, Apoyo Consultants predicts that beer consumption will rise by 2.5% annually, therefore representing a potential capacity for growth.

On the other hand, an analyst in the sector points out that "the competition between the two brewery groups has induced growth in the market for beer, and especially in the provinces, where there is a greater demand for the informal beverages."

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