Big Mexican beer makers urged to open local market

MEXICO CITY - Reuters

The Mexican government forces brewers to cut exclusivity deals. AP photo

Mexico’s biggest brewers, Corona maker Grupo Modelo and Sol producer Cuauhtemoc Moctezuma, have agreed to face more competition to end a dispute over their long domination of the domestic beer market, the world’s sixth-biggest.

Mexico’s Federal Competition Commission (Cofeco) said on July 11 that Modelo, a unit of Anheuser-Busch InBev SA , and Cuauhtemoc, which belongs to Heineken NV , would in the next five years have to reduce exclusivity deals they have with clients in Mexico or face heavy fines.

The directive follows a longstanding complaint from rival SABMiller, whose brands include Miller, Grolsch and Peroni, and which has struggled to make headway in Mexico.

In terms of the amount of beer consumed, Modelo accounted for some 56 percent of the Mexican market in 2012, with Heineken Mexico at 43 percent, data from market research firm Euromonitor shows. SABMiller was a distant third with 0.3 percent.

The two brewing giants agreed to conditions that include limiting exclusivity deals in convenience stores and restaurants to a maximum of 25 percent of points of sale, reducing this to 20 percent over the next five years.