Telephone: (56) (2) 427-3000
Fax: (56) (2) 427-3215
Sales: CLP 384.06 billion ($646.76 million) (2003)
Stock Exchanges: Bolsa de Comercio de Santiago
Ticker Symbol: CERVEZAS
NAIC: 312111 Soft Drink Manufacturing; 312112 Bottled Water Manufacturing; 312120 Breweries; 312130 Wineries; 326160 Plastics Bottle Manufacturing
In the markets where we operate, we will work to lead the industry with brands that inspire our consumers, clients and employees to improve their quality of life, while providing sustainable and growing returns for our shareholders.
1902: Companias Cervecerias Unidas S.A. (CCU) is incorporated.
1907: CCU introduces its first soft drink.
1916: CCU owns the four largest breweries in Chile.
1960: The company adds mineral water to its line of beverages.
1980: CCU holds 98 percent of the Chilean beer market (and holds the same ten years later).
1986: A Chilean holding company and a German brewer acquire majority control of CCU.
1994: CCU takes a half-share in PepsiCo Inc.'s Chilean affiliate; the company purchases a 48 percent interest in one of Chile's largest wineries.
1995: CCU enters the Argentine beer market by acquiring two regional breweries.
1996: CCU becomes exclusive bottler and distributer of Budweiser in Argentina.
1999: CCU buys out the remaining shares in PepsiCo Inc.'s Chilean affiliate.
2001: CCU becomes exclusive bottler and distributer in Chile for Cadbury Schweppes soft drinks.
2003: Heineken becomes the foreign partner in the joint venture with majority control of CCU.
2004: Budweiser's owner, Anheuser-Busch, sells its 20 percent stake in CCU.
Compania Cervecerias Unidas S.A. (CCU) is the leading beverage company in Chile, where it dominates beer sales and is the leader in mineral water and bottled nectar. It is also the third largest producer of soft drinks and holds the nation's franchise for PepsiCo Inc. beverages. In addition, CCU is Chile's second largest wine producer. The company also produces, distributes, and sells beer in Argentina, where it is the second largest beermaker. CCU makes returnable plastic bottles for its soft drinks.
A Century of Brewing Beer: 1889-1989
Joaquin Plagemann opened one of the first breweries in Chile in Valparaiso in 1850, and Carlos Anwandter established another a year later in Valdivia. In 1889 the Valparaiso brewery merged with another in Umache to form the Fabrica Nacional de Cerveza, which soon after acquired the Gubler y Cousino Cerveceria y Fabrica de Hielo. In 1902 the Fabrica Nacional de Cerveza, acknowledging these predecessors, incorporated itself as Compania Cervecerias Unidas, or United Beer Company. Some years later, CCU acquired the old Anwandter factory, a number of other regional breweries, and two mineral water plants. It also began producing and marketing soft drinks in 1907. By 1916 CCU owned the four largest breweries in Chile. It owned five in 1950.
The bottling and selling of mineral water began in 1960. Until 1978 beer came in only one size of bottle (285 cubic centimeters, or about ten ounces) and was not labeled. Soon, however, the company acquired a brewery whose Pilsener and Malta Dorada brands entered into competition with traditional beers. The only other real competitor was Cervecera del Pacifico, whose Condor brand was introduced around 1980, but this brewery was purchased subsequently by CCU, raising its share of the Chilean beer market to 98 percent.
The Chilean government's one-third share of CCU, dating from 1971, was sold in 1976 for $9.72 million to the Cruzat-Larrain and Edwards groups. In the wake of the extensive privatizations of state-owned enterprises by the government during this period, the Cruzat-Larrain group became Chile's largest conglomerate, with its acquisitions financed by large loans from banks in which the group had become the dominant shareholder. When an economic crisis gripped Chile in the early 1980s, this group's long-term debt swelled to at least $350 million owed to 64 banks. Two sons of Andronico Luksic Abaroa then bought 10 percent of CCU for only $890,000. In 1986 the Luksic family holding company, Quinenco S.A., and Germany's Schorghuber group, producers of Munich-based Paulaner beer, jointly purchased 64 percent of bankrupt CCU for $14 million, or CLP 13 a share, and renegotiated its debt. At this time Chile was still in a recession, and CCU's sales in real terms did not pass the 1980 level until 1987, the year the company began trading its stock on Chilean exchanges. By 1989 CCU was solvent enough to resume paying dividends on its common stock.
Son of a Croatian immigrant to Chile, Andronico Luksic entered the mining business in partnership with French engineers. Their mine attracted the attention of a Japanese company, which accepted their selling price of "500,000," paying not in the pesos that the sellers expected but in dollars. Luksic's shares provided the basis for a far-flung business empire that included copper mining and metals processing, banking, agriculture and food production, railroads, telecommunications, forestry, fisheries, tourism, wineries, and auto distribution. Forbes rated him the richest man in Chile in 2004, estimating his fortune at $4.2 billion.
In 1988 CCU radically changed its distribution system, directly supplying its customers by means of a fleet of 859 trucks. In the same year it introduced plastic liter bottles and began promotional pricing. That year, the company ranked third among Chilean enterprises in profit. CCU, directly or indirectly, was, in 1989, producing the beer brands Bavaria, Cristal, Escudo, Morenita, Morenita Especial, Royal Guard, and Schop. By means of an affiliate, CCU was producing the soft drinks Agua Tonica, Bilz, Cachatun, Free, Ginger Ale, Kem Pina, Limon Soda, and Pap as proprietary brands. In 1990 (when it ranked tenth in Chile in sales) the company launched, under license, Paulaner as its high-end beer. This brew dated from 1635, when it was first made by Bavarian monks. By the end of 1990 CCU still held no less than 98 percent of the Chilean beer market, with Cristal composing 57 percent and the Paulaner and Royal Guard brands another 39 percent.
Expansion and Shifting Alliances: 1990-2004
Aided by a credit from Chile's central bank, CCU had greatly reduced its debt by 1991. It began selling the equivalent of shares in the United States in 1992, when it raised $56.5 million in the NASDAQ over-the-counter market and was described in LatinFinance as one of the outstanding equity values in Latin America. By late 1995 a share of the company's stock was trading at CLP 2,000 (about $5). Beer was especially profitable for CCU. Its operating profit margin in beer was estimated at more than 25 percent in 1991, when the contribution of beer to total profits was more than 90 percent. Its more than 15 brands of beer were being produced in six facilities along the length of Chile.
Cerveceria y Malteria Quilmes S.A.I.C.A. y G., the dominant beer company in Argentina, entered the Chilean beer market in late 1991 in a joint venture, Cerveceria Chile S.A., with giant Dutch brewer Heineken Brouwerijen N.V. Their Becker beer, positioned to compete with Cristal but priced notably lower, failed to make a large impact in Chile but forced CCU to double its marketing budget and to improve its management and delivery systems. During the next three years the company invested $179 million, the bulk of it on plant improvements.
In 1994 CCU and Buenos Aires Embotelladora S.A. (Baesa), PepsiCo Inc.'s bottler in Chile, established Embotelladoras Chilenas Unidas S.A. (Ecusa) for the production, bottling, distribution, and marketing of soft drinks and mineral water in Chile. Baesa held about 37 percent of the soft drink market at the time. CCU bought Baesa's share of Ecusa in 1999. Also in 1994, CCU entered the Chilean wine market, which was almost as large as the beer market in volume. It took a 48 percent interest in Vina San Pedro S.A., one of the nation's largest wineries. CCU also took an indirect controlling stake in Karlovacka Pivovara d.d., a Croatian brewery.
CCU carried the fight to Quilmes by entering the Argentine beer market (at least four times the Chilean one) in 1995. It paid about $100 million to acquire Cordoba-based Cerveceria Santa Fe S.A. and a majority interest in a smaller northern Argentina brewer, Compania Industrial Cervecera S.A. (CICSA) for its new Argentine subsidiary, Compania Cervecerias Unidas Argentina S.A. These two companies accounted for 8 percent of the Argentine beer market. After buying almost all of the remaining CICSA shares in 1997, CCU Argentina merged the Santa Fe brewery into CICSA. Near the end of 1995 CCU formed an alliance with Anheuser-Busch Companies, Inc. to be the exclusive producer and distributor of Budweiser in Argentina, which it introduced to the market in 1996. Anheuser-Busch took a small stake in CCU Argentina and gradually increased its share to 11 percent. In 1998 CCU added a third regional Argentine brewer, Cerveceria Cordoba, paying $8 million for the acquisition.
CCU sold 22 percent of its shares in a December 1996 public offering in Santiago and New York that raised $89 million as part of a capital expansion program that brought in $107 million more by May 1999. During 2000 the company acquired the Argentine winery Finca La Celia S.A., and made it a subsidiary of Vina San Pedro for the export of high-quality Argentine wines. CCU added to its Chilean beer holdings by purchasing a half-interest in Cerveceria Austral S.A. in 2000 and in Compania Cervecera Kunstmann S.A. in 2002. In 2003 the company began selling pisco, a grape-based spirit. CCU's share in the Croatian brewery was sold in 2003. Also that year, the company raised its share of Vina San Pedro to 60 percent. Anheuser-Busch, in addition to having taken a stake in CCU's Argentine subsidiary, paid $224 million in early 2001 for a 14 percent holding in parent CCU, which it raised to 20 percent by the end of the year.
CCU, in 2001, signed a ten-year pact with Schweppes Holding Ltd. to bottle and distribute, under license, Cadbury Schweppes soft drinks such as Orange Crush, Canada Dry Ginger Ale, Canada Dry Agua Tonica, and Canada Dry Limon Soda. Because Cadbury Schweppes had been acquired by The Coca-Cola Co., PepsiCo Inc. charged that the transaction was a violation of its pact with CCU, but a court ruled for the latter because the soft drinks involved were not colas. An even greater dispute had developed between Quinenco S.A., the Luksic holding company, and Schorghuber, its partner in Inversiones y Rentas S.A. (Irsa), which had held the majority stake in CCU since 1986. Schorghuber, in 2001, sold its interest in Irsa to Heineken, which in view of Heineken's participation in Quilmes' Cerveceria Chile venture, was a competitor of CCU. The transaction led to an extended judicial dispute that ended in 2003, when Schorghuber paid the Luksic group $50 million and CCU's shareholders an extraordinary dividend of $270 million to settle the matter. The major entry of Heineken into CCU's Chilean beer operations apparently upset Anheuser-Busch, for in 2004 it sold its stake in CCU for about $300 million. Before doing so, however, it agreed to allow CCU to continue produc- ing and distributing Budweiser in Argentina and continue distributing Budweiser in Chile for 15 years.
CCU in 2003
In 2003 CCU held about 89 percent of the beer market (by volume) in Chile. Cristal alone held 59 percent of this market. Other CCU proprietary brands included Royal Guard, Escudo, Morenita, and Dorado 6.0. The company was producing Austral, Heineken, and Paulaner under license, importing Budweiser, and distributing Kunstmann. It maintained breweries in Santiago and Tenuco and a bottling plant in Antofagasta. In Argentina, CCU held about 14 percent of the beer market. Among its proprietary brands, Schneider was the most popular, accounting for 42 percent of its sales volume. CCU Argentina also was producing Budweiser and Heineken under license and was importing Corona and Guinness under agreements in 1997 and 2001, respectively. The company's Argentine breweries were in Salta and Santa Fe.
CCU held about 23 percent of the market in Chile for soft drinks, about 52 percent of the market for nectars, 100 percent of fruit juices, and about 35 percent of the market for mineral water. Its proprietary soft drink brands were Bilz, Pap, Bilz Light, Pap Light, Kem Pina, Kem Xtreme, and Show. Others were being produced under license from PepsiCo and Schweppes. Glacier was the name of its proprietary mineral water brand; it also was producing Cachentun and Porvenir under license. Its bottled nectar, Watt's, was being produced under a licensing agreement with Watt's Alimentos S.A. dating from 1987. CCU, through Vina San Pedro, had about 18 percent of the Chilean wine market and about 13 percent of the export market. Vina San Pedro owned eight vineyards (the largest being in Molina) in Chile and one in Argentina.
Of CCU's net sales in 2003, Chilean beer operations accounted for 39 percent and Argentine beer operations for 8 percent. Soft drinks and mineral water accounted for 30 percent and wine for 21.5 percent. The picture was quite different in terms of operating income. Chilean beer operations accounted for 80 percent, soft drinks and mineral water for 19 percent, and wine for 8 percent, whereas Argentine beer operations recorded a deficit of 8 percent. In all, CCU had net income of CLP 54.09 billion ($91.09 million) on total sales of CLP 384.06 billion ($646.76 million) in 2003. Its long-term debt was CLP 104.19 billion ($175.46 million). The company had plants in Antofagasta, Casablanca, Coinco, Santiago, Talcahuano, and Temuco in Chile, and in Rosario de la Frontera, Salta, and Santa Fe in Argentina.
Principal Subsidiaries: Cerveceria CCU Chile Ltda.; Compania Cervecerias Unidas Argentina S.A. (Argentina; 97%); Embotelladoras Chilenas Unidas S.A.; Vina San Pedro S.A. (60%).
Principal Competitors: Cerveceria Chile S.A.; Cerveceria y Malteria Quilmes S.A.I.C.A. y G.; Embotelladora Andina S.A.; Vina Concha y Toro S.A.; Vina Santa Rita S.A.; Vital S.A.
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- Bickerton, Ian, "Heineken Works on Emerging Markets," Financial Times, January 15, 2003, p. 16.
- Dolan, Kerry A., "Like Father, Like Sons," Forbes, September 21, 1998, pp. 136, 140.
- Friedland, Jonathan, "Chile's Luksics: Battle-Tested and on the Prowl," Wall Street Journal, December 1, 1995, p. A10.
- "Golpe de timon," Capital, January 31-February 27, 2003, pp. 48, 50.
- "Grandes apuestas," Capital, December 19-29, 2003, pp. 52-53.
- "Less Filling," LatinFinance, November 1992, p. 30.
- Manriquez, Rodrigo, "La guerra del pisco," America economia, November 7-20, 2003, pp. 40-41.
- Mark, Imogen, "Chilean Brewery Prepares for War," Financial Times, November 29, 1995, p. 54.
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- Scovin, William, and John Greene, "Compania Cervecerias Unidas," LatinFinance, January 1993, pp. 72-73.
- Stamborski, Al, "A-B Purchases a 14 Percent Stake in Major Chilean Brewery," St. Louis Post-Dispatch, January 5, 2001, p. C1.
- "Temblor Grado Heineken Sacudira al Mercado," Gestion, May 1990, pp. 31-32.
- "El 22% de las Ventas Coirresponde a Productos Lanzados en los Ultimos Tres Anos," Gestion, July 2001, pp. 20-21.
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Source: International Directory of Company Histories, Vol. 70. St. James Press, 2005.