Seis Continentes / June 2002
By Larry Luxner
SANTO DOMINGO -- Visiting the Dominican Republic? If so, you'll have a difficult time finding beer that doesn't carry the Presidente label. Then again, this local brew is so popular that hardly anyone bothers with the competition.
Cervecería Nacional Dominicana S.A., the company that produces Presidente, has managed to turn its business into a virtual monopoly, accounting for 98 of every 100 bottles of beer sold in this nation of 8.5 million people. That's according to Franklin León, vice-president of business at Grupo León Jimenes S.A., which owns CND.
"Presidente is considered the mainstream beer in the Dominican Republic, the brand to compare all others to," said León. "We have a unique, different flavor."
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.
Fifty years later, the León Jimenes group -- which until that point was known more for cigars than anything else -- acquired a majority stake in CND for an undisclosed price. Since 1993, CND has been headed by Rafael Menicucci, who is also a vice-president of the parent firm.
At present, CND employs well over 2,000 people and produces 2.8 million hectoliters of beer annually at its sprawling brewery in Santo Domingo. From there, millions of bottles of Presidente are trucked to distributors and retailers all over the Dominican Republic, which occupies the eastern two-thirds of the island of Hispaniola.
"We have to import the bottles," said León. "In fact, everything including the hops [the basic ingredient of beer] is imported except the labels, the bottle caps and the water used to make the beer."
According to company officials, total 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, which rarely gives interviews and is somewhat secretive about its operations.
León, 46, is a great-grandson of León Jimenes, who founded the parent company in 1903. The executive spoke to Impact during a mid-April visit to CND's gleaming new headquarters building on the outskirts of Santo Domingo.
He says 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 per-capita).
"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 to 20 pesos.
"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."
Even so, says León, CND controls 98% of the Dominican beer market through Presidente (95%) and three other brands which together comprise 3%: Heineken and Bohemia, brewed locally by CND, and Miller, which the company imports.
Most of the remaining 2%, says León, 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.
In addition to beer, Grupo León Jimenes -- through its various subsidiaries -- distributes pharmaceuticals, operates farms and produces premium cigars for export as well as Marlboro cigarettes for local consumption. U.S. cigarette giant Philip Morris has had a stake in CND's parent company since 1969, though León declined to elaborate on the nature of that partnership.
León also refused to discuss earnings, saying only that Grupo León Jimenes is generally profitable, despite the ups and downs of the Dominican economy.
"Last year wasn't so good because of the drop in sales, but we hope that this year, the economy will get better," he said. "We have congressional elections May 16, and that will activate the economy a little."
CND is among the Dominican Republic's top 10 advertisers, spending over $5 million a year on radio and TV commercials, huge billboards along major highways 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.
Likewise, 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 such as Santiago de los Caballeros and San Pedro de Macoris, and in tourist resorts like Punta Cana, Puerto Plata and Sosua.
In addition, a small but growing percentage of Presidente's total production, no more than 10%, is exported.
According to León, 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 one 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've already done 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, but for some reason that island isn't an important market -- despite the fact that over 100,000 Dominican immigrants live there.
"Dominicans tend not to support our beer in Puerto Rico. We don't know why," said León, adding that "the Puerto Rican market is so complex. You have to have the right product at the right time at the right place. Right now, Coors dominates that market. Next year it could be Heineken, two years from now it could be Budweiser. Four years from now it could be Presidente."
One place you won't find a drop of Presidente is Cuba, despite the recent establishment of diplomatic relations between the two Caribbean nations.
"Cuba would be a great market to enter, but conditions there have to change," says León, choosing his words cautiously. "There are a lot of restrictions right now, and since Presidente is in the U.S. market, we really don't want any problems, especially with the Cuban community in Miami."