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Business
Summary
NYSE
: LQU
Quilmes
Industrial S.A. is a beer producer in Argentina and in the combined southern
cone markets of Argentina, Bolivia, Chile, Paraguay and Uruguay. Quinsa is also
into the soft drinks business in Paraguay, selling the products of Coca-Cola. In
1999, the Company sold 1.5 million hectoliters of soft drinks and water,
accounting for 86.5% of the total soft drinks sold in Paraguay. The balance of
the Company's sales is accounted for primarily by sales of soft drinks and
bottled water, particularly in Argentina. The water business in Argentina was
divested in July 1999. This business is now conducted through a new company, Eco
de los Andes S.A. of which the Company owns 49% and Perrier Vittel, S.A. of the
Nestle Group, owns the remaining 51%.
Financial Summary
Quilmes Industrial S.A. is the largest beer producer in Argentina and in the
combined Southern Cone markets of Argentina, Bolivia, Chile, Paraguay and
Uruguay. LQU also bottles and distributes soft drink products. For the fiscal
year ended 12/31/00, net sales rose 21% to $955.1 million. Net income before
extraordinary item fell 8% to $71 million. Results reflect increased total
beverage volumes due to the acquisition of BAESA, offset by increased selling
and interest expenses.
Expanded
Business Summary
Quilmes Industrial S.A. (Quinsa) is a beer producer
in Argentina and in the combined southern cone markets of Argentina, Bolivia,
Chile, Paraguay and Uruguay. Quinsa is also into the soft drinks business in
Paraguay, selling the products of Coca-Cola. In 1999, the Company sold 1.5
million hectoliters of soft drinks and water, accounting for 86.5% of the total
soft drinks sold in Paraguay. The balance of the Company's sales is accounted
for primarily by sales of soft drinks and bottled water, particularly in
Argentina. The water business in Argentina was divested in July 1999. This
business is now conducted through a new company, Eco de los Andes S.A., of which
the Company owns 49% and Perrier Vittel, S.A. of the Nestle Group, owns the
remaining 51%.
In 1996, the Company acquired a majority interest in Industrias Cerveceras S.A.
(Incesa), which owns two breweries in Bolivia (Cerveceria Taquina and Cerveceria
Santa Cruz), with a combined capacity of 1.2 million hectoliters. The Company
sells 25 different brands of beer in more than 15 different presentations
through all major channels of distribution. Since 1984, Heineken, one of the
largest beer producers in the world, has held a 15% equity interest in the
Company's principal subsidiary, Quilmes International (Bermuda) Ltd. (QIB),
through which the Company's operating subsidiaries are controlled.
The Company initiated a significant expansion of its mineral water business in
Argentina with Eco de los Andes, launched in late 1994. In 1996, the Company
sold 742,000 hectoliters of bottled water, of which 589,000 hectoliters were
sold in the Argentine market.
The Company is a holding company that operates through its subsidiaries,
principally QIB, in which it holds an 85% interest. QIB has direct and indirect
holdings in the Company's various operating subsidiaries in Argentina, Bolivia,
Chile, Paraguay and Uruguay. These holdings range from 99.55% to 100% in
Cerveceria y Malteria Quilmes S.A. (CMQ) and in the Company's Chilean
subsidiary, respectively, to as low as 58.2% and 56.3% in the Company's two
Uruguayan subsidiaries. QIB owns a minority interest in Compania Salus S.A, a
company with a strong presence in the beer and water markets of Uruguay.
Argentina
The Company's beer, malt and hops operations in Argentina were conducted through
CMQ, CRP, CYNA, Patagonia Hops SA (PH), Malteria Safae S.A. (MALSAF) and, as of
February 1997, Cerveceria Bieckert. During the first quarter of 1998, most of
these companies were merged into CMQ, in which QIB holds a 99.37% interest. The
Company also conducts crown bottle top production operations through Coroplis
S.A., in which QIB holds an indirect 99.99% interest.
Quinsa's beer is sold in all provinces of Argentina, with almost half of the
Company's beer being sold in the metropolitan area of Buenos Aires.
Commercially, the Company's operations are divided into eight geographic
divisions in Argentina: the city of Buenos Aires and the surrounding
metropolitan area; Atlantic Region (comprising the main cities on the coast in
the province of Buenos Aires); Northeast Region (comprising the provinces of
Chaco, Formosa, Corrientes and Misienes); Litoral Region (comprising the
provinces of Santa Fe and Entre Rios); Northwest Region (comprising the
provinces of Tucuman, Salta, Jujuy, Santiago del Estero and Catarnarca); Central
Region (comprising the province of Cordoba); West Region (comprising the
provinces of Mendoza, San Luis, San Juan and La Rioja), and Southern Region
(comprising the rest of Buenos Aires province and the provinces of La Pampa,
Neuquen Rio Negro, Chubut, Santa Cruz and Tierra del Fuego). Quinsa serves all
of the provinces of Argentina with several distinct brands.
Bolivia
In 1996, the Company acquired two breweries, Cerveceria Santa Cruz and
Cerveceria Taquina. QIB indirectly holds 100% of Cerveceria Santa Cruz and
91.46% of Cerveceria Taquina, located in Cochabamba. The Company's Bolivian
brewing facilities have an aggregate capacity of 1.02 million hectoliters.
Quinsa has re-evaluated and rationalized its portfolio of brands. The Company
concentrated advertising and promotional efforts on Ducal, a brand designed for
the Santa Cruz market, Taquifia Expart, a brand designed for the La Paz and
Cochabamba markets and Maltin, a non-alcoholic product that the Company launched
nationally in October 1997. In the low-price segment, Imperial and Pilsener
serve the La Paz market. A liquid malt alcoholic beverage, Malta, Crueena
Ricomalt and Heineken, imported from Holland and introduced in 1998, complete
the Company's portfolio of brands.
Chile
The Company's beer operations in Chile are conducted through Cerveceria Chile
S.A. The Company currently serves Chile with three locally brewed brands
(including Heineken, under license). In addition, the Company sells Quilmes
Cristal in the import segment of the market. The Company positioned its Becker
brand as an affordable international product. In 1999, Becker accounted for
43.6% of the Company's sales in Chile. The Company's other local brand, Baltica,
was introduced as a higher-alcohol-content, dry beer aimed at the lower-income
segment of the market. The Company operates one brewery in Chile that is located
north of Santiago. The plant currently has a capacity of approximately 0.8
million hectoliters.
Paraguay
The Company's beer operations in Paraguay are conducted through Cerveceria
Paraguaya S.A., in which QIB holds an 81.85% ownership interest. The Company
also conducts glass bottle manufacturing operations through Fabrica Paraguaya de
Vidrios S.A., in which QIB controls indirectly a 75.75% ownership interest. The
Company has sold beer in Paraguay since 1932 and in a growing and highly
competitive market.
Quinsa commands the predominant position in the soft drinks market in Paraguay
through its 57.97% ownership interest in Paraguay Refrescos. Through its 1996
acquisition of certain fixed assets of Refrescos del Parana, the Company holds
rights to produce, bottle and distribute the Coca-Cola brands to the entire
country. Soft drink and water sales volumes in 1999 decreased by 14.8% to
1,545,000 hectoliters from 1,813,000 hectoliters in 1998 due to a weak economic
environment.
In September 1999, QIB entered into a non-binding agreement with the Coca-Cola
Export Company to sell its equity stake in Paraguay Refrescos. The sale is
currently being negotiated and arrangement expects to complete the transaction
during 2000.
Uruguay
The Company sold 381,000 hectoliters of beer in Uruguay in 1999, down from
415,000 hectoliters in 1998. Quinsa has also sold liquid malt in Uruguay, but
never more than 14,000 hectoliters in any of the years between 1995 to 1999, and
has also sold 42, 000 hectoliters of bottled water in Uruguay in 1999. The
Company has traditionally sold approximately half of all beer consumed in
Uruguay, with its two main local competitors sharing the balance of the market
in roughly equal proportions.
Disclaimer:
The data included within the Financial section is solely for information
and does not construe a recommendation and/or endorsement by IGHRM or its
members to invest funds with any of the companies listed. You are strongly
advised
to obtain professional advice with qualified individuals or corporations for any
investments of funds.
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