Foreign Direct Investment in Latin America and the Caribbean 2015

Foreign Direct Investment in Latin America and the Caribbean • 2015
There is no official data on FDI by sector in Peru, but the mining sector seems to account for much of the decline.
In 2014 investment in mining (both domestic and foreign) fell by 11%, the first drop since 2007 after years of very
rapid growth. The fall was particularly marked in the acquisition of equipment and infrastructure. Copper production
was flat in terms of quantities and dropped by 12% in dollar terms, while gold production declined. FDI had also
increased over the previous decade in services and other market-seeking activities, but the slowdown in GDP growth
in 2014 may make the domestic market less attractive for investors.
Lower metal prices, production problems at the mines and slacker economic growth combined to reduce FDI
profitability in Peru. FDI income earned by foreign companies in the country dropped to US$ 7.964 billion, the lowest
level since 2007. About half of these profits were reinvested, a similar proportion to previous years. Reinvested earnings
were the largest component of FDI (totalling US$ 3.978 billion), followed by intercompany loans (US$ 2.278 billion)
and capital contributions (US$ 1.342 billion), which were significantly lower than in previous years.
Box I.3
“Big Beer” market dominance in Latin America and the Caribbean
Beer is an interesting product: it is almost ubiquitous and relatively
easy to produce, but bulky and thus expensive to export. Even
the least developed economies produce it, since there is no lack
of demand. At the global level, however, the market is extremely
concentrated, with only five companies —led by Anheuser-Busch
InBev (Belgium), SABMiller (United Kingdom) and Heineken
(the Netherlands)— responsible for over half of the world’s beer
production (Barth-Haas Group, 2014). Each of these companies is
the result of multiple mergers and acquisitions as organic growth
into new markets is almost impossible. Anheuser-Busch InBev is
the product of the takeover of United States-based Anheuser-Busch
by Belgian-Brazilian InBev in 2008. InBev itself has its origins in a
2004 merger of Belgium’s Interbrew and Brazil’s AmBev.
In Latin America, many of the largest M&As in recent
years have been associated with beer. The 2013 takeover of
Grupo Modelo in Mexico by Anheuser-Busch InBev (valued at
US$ 13.249 billion) was one of the largest ever recorded in Latin
America and the Caribbean. The table below ranks the largest
mergers and acquisitions in the beer market in the last 20 years.
It shows that the global trend towards consolidation in this market
led to two waves of large takeovers in Latin America and the
Caribbean: around 2005-2006 and in 2010-2013.
Latin America and the Caribbean: largest mergers and acquisitions in the beer sector, 1995-2014
Year Company Country of origin Assets acquired Location
Nominal amount
(billions of dollars)
Real value
in 2014 a
(billions of dollars)
2004 Interbrew Belgium AmBev (52%) Brazil 11 732 14 196
2013 Anheuser-Busch InBev Belgium Grupo Modelo (50%) Mexico 13 249 13 381
2010 Heineken Netherlands FEMSA beer operations Mexico 7 325 7 838
2005 SABMiller United Kingdom Bavaria (97%) Colombia 4 717 5 566
2013 Constellation Brands United States Compañía Cervecera de Coahuila Mexico 2 900 2 929
2011 Kirin Holdings Japan Aleadri-Schinni Participações Brazil 2 523 2 649
e Representações
2005 Interbrew Belgium AmBev (5%) Brazil 1 274 1 503
2011 Kirin Holdings Japan Jadangil Participações e Representações Brazil 1 354 1 421
2006 Anheuser-Busch InBev Belgium Quinsa (34%) Argentina 1 200 1 368
2012 Anheuser-Busch InBev Belgium Cervecería Nacional Dominicana (42%) Dominican Republic 1 000 1 030
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures provided by Thomson Reuters.
a
Real values in 2014 were calculated using the United States GDP deflator as provided by the United States Bureau of Economic Analysis.
As a result of these two waves of takeovers, local brewers
play a significant role in very few countries in the region. Only in the
Bolivarian Republic of Venezuela, Costa Rica, Guatemala, Nicaragua
and some Caribbean countries do locally owned enterprises have
the largest market share. That is not to say that there are no locally
controlled brands in other markets, but they often play second or
even third fiddle to the large international enterprises. The map
below shows the top beer company in each economy in the region.
In addition to the global top five companies, local independent (often
family-owned) enterprises are the market leaders in a small number
of countries, the United Kingdom’s Diageo has the largest market
share in Jamaica, and Trinidad and Tobago’s ANSA McAL holds the
largest market share in three smaller economies in the Caribbean.
These last two companies are not traditionally considered brewing
companies, although Diageo does have significant experience in
this area through its Guinness brand.
Chapter I
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