Beervana and the Chilean Beer Industry Peter Haldis

★ Beervana and the Chilean Beer Industry Peter Haldis Eric Markley Yoichiro Hayakawa

★ History • Beer came with the Europeans • Beer arrived shortly after Independence. • First Chilean brewery "La Chimba" began in 1822 in Santiago. • Germans arrived mid-19 th century → Mass production of beer

★ History Cervecerías born in beer 1889. was consumed all over • • By. Compania the end of the Unidas 19 th was century, • In 2002 th. Compania Cervecerías Unidas was born in 1889. the country. • In 2002 the Association of Beer Producers of Chile AG (ACECHI) was • • founded. Compania Cervecerías Unidas was born in 1889. • Compania In 2002 the Association of Beer Producers of Chile AG (ACECHI) Cervecerías Unidas (CCU) born in 1889. was founded. Compania Cervecerías Unidas was born in 1889. • In 2002 the Association of Beer Producers of Chile AG (ACECHI) was Association of Beer Producers of Chile AG founded 2002, founded. e Association of Beer Producers of Chile AG (ACECHI) was founded. .

★ Unique “beers” of Chile Pisco Colorless or yellowish grape brandy produced in winemaking regions of Peru and Chile. Made from only certain varieties of grapes. Chicha • Several varieties, some non-alcoholic • Maize, manioc root, grape, apple or other fruits. • Classified as corn beer by foreigners

★ Beer in Chile Market Size • Chilean beer consumption low compared to the rest of the South America • Beer is the most consumed alcoholic beverage and takes 60% of the total market share for alcoholic drinks. There has been slow but steady growth in the sales of lager, pale from local microbreweries and imported pale lager.

★ Beer Consumption Per capita consumption: Canada: 99 L USA: 78 L Brazil: 65 L Argentina: 49 L Japan: 45 L

★ Place of Consumption

★ Market Shares Major players • CCU 80% market share in 2012. • Cervecería Chile, Chilean unit of In. Bev, 14% Craft beer • • Craft beer market born in late 90 s From 2008 -2012, craft beers sold rise from 125 to 400 Premium beers 18% share of total market, highest share in the region Growing demand for imports, especially full-flavor European-style

★ Beer Industry Analysis

★ Year Average Price Per Liter (peso) Growth Rate Average Price Per Liter 2010 2011 2012 550. 65 574. 29 581. 71 2. 4% 4. 2% 1. 3%

★ Beervana Ben Wood and Perry Hirsch Demand for imported beer among Chileans, plus 25, 000 American expats/tourists. Combined, importer, distributor and retailer • Only Chilean importer of American craft brews • Distribute to bars & restaurants • 750 sq. ft. store (eventual plan 100+ labels).

★ Beervana

★ Beervana -- Setting up • Setting up distributorship and retail much cheaper than in U. S. -- Personal savings and 2 U. S. silent investors. • Licensing and regulations similar to U. S. • Minimal government involvement

★ Beervana Pricing Current Market • Local Drafts $1000 CP • Imported bottles $1500 CP Beervana • Local Crafts $1000 CP • US Imports $2000 CP • International imports $3 -4000 CP • Extra large bottles $5 -7, 500 CP

★ Strengths Beervana SWOT • Experience in distribution • First mover • Location (Providencia/Santiago) Weaknesses • Pricing • Unproven Market Opportunities • Growing market segment • Two ways to succeed – retail and distribution Threats • Chilean craft beers • Craft beer just a fad? • Craft beer becomes very popular, and CCU or In. Bev get in.

★ Questions?