Find out what’s new in our company and our brands around the world.
The multinational, owner of brands such as BIG Cola, Oro, Cielo or Free Tea, announces that it will enter Amazon ‘retailers’ in the US It analyzes the beverage market in the country, the situation and its partnership with Heineken to distribute in the traditional channel.
In his first interview as deputy CEO of the AJE group (owner of Cielo, Big Cola, Oro, Bio Amayu, among others), Augusto Bauer details to Día1 how the company experienced the first year of the pandemic, the changes at the level of consumption, Bio Amayu’s plans in the United States market and its innovation strategy to weather the crisis. Bauer also comments on the sale of Tres Cruces to Heineken and the agreement with the brewer to distribute its brands through the traditional channel.
– What is the balance of the operation in Peru one year after the health crisis?
Undoubtedly, many sectors have been impacted, but I think that overall we should feel lucky because, being in mass consumption, it has not been as strong as in other sectors. On balance, we had a good 2020, a year of profitability because we managed to guarantee the continuity of our operations, taking care of our people.
– From when did the operation for AJE begin to be regularized?
Already from the third quarter there was a significant recovery in volumes and demand. But, of course, you have a partial recovery of the traditional channel because people do not come out the same. So we had to develop omnichannel models with e-commerce, teleshopping, and thus balance the fall of the traditional one.
–Will there be more focus on e-commerce or how does the channel mix change?
Yes, AJE delivery had a good response, but we have to think that this new normal will remain throughout 2021 and we must also strengthen other channels, such as the modern channel, which has not stopped operating. And watch the horeca, as it recovers.
– Did this strategy help weather the fall of the traditional channel, the strongest for AJE?
In a way, yes, but it also has to be accompanied by changes in consumer behavior. For example, we had a way of arriving with Volt or waters in personal format, which were our main products, but now the consumer has migrated to familiar formats. What we have done is balance with the familiar formats in some categories. In Sporade, for example, we launched the liter and a half format this summer. It has been a success.
–Were the launches in this summer campaign aimed at family formats?
To a large extent yes.
– How is the summer campaign going? Has the February partial quarantine been felt?
We have done well in February. Let’s remember that in mid-March the quarantines began in 2020, so if we compare, this year is much better. March, April, which were the hardest months last year, will be good months this time. Especially in the case of Peru. It is going to be a good term.
–They have entered new categories such as jellies with Cifrut, what other brands have that flexibility?
We have a brand like Pulp where there could be innovations, it has a fruit base and with that it can expand a lot. And we are evaluating other very strong brands.
–What categories will they enter and with what brands?
We have some projects for this year and soon, in line with democratizing products. For that we have an innovation team that explores healthy products that make synergy with our portfolio.
–Will the offer of healthy products focus on the Bio Amayu brand?
It is the one most linked to healthy products and we have many projects with Bio Amayu.
–Will they explore more fruits besides camu camu and aguaje?
Yes, we have it in the pipeline. I name you some like copoazul, ungurahui, aguaymanto, the amount of Amazonian superfruits is enormous. What happens is that they are not very well known. So it’s about building that healthy portfolio and adding value to it. Now we work with almost 15 communities, but we want to expand it to Colombia, Ecuador and Mexico, which also have forests. This will open doors to other markets.
–Are there plans for Bio Amayu to cross to other continents?
Today we are already selling Bio Amayu (as Amarumayu) of aguaje and camu camu in the United States through Amazon. And we will be opening up to ‘retail’ as well. We started with two products, but there will be more. https://amarumayu.com/
–When will your entry into the North American ‘retail’ take shape?
We are in talks with Amazon ‘retailers’ such as Whole Foods Market, Amazon Fresh and also others specialized in healthy products. It is a matter of months before we are in the first ‘retail’ points there.
– Are you prioritizing some states in particular?
Usually they tell you that they start at four or five and then depending on how it goes, they place it in more cities. We opened our offices in California ago
– How much does the cost of the product vary?
It is more expensive. Manufacturing costs are higher there, in addition to the volumes being lower compared to those usually handled by the group.
–The relationship with Amazon has started with Bio Amayu, will they be able to sell other categories of the group?
For now we are with this one, but there is an option to see others.
–Going back to Peru, how are the beverage categories where your brands are present are recovering?
I would tell you that Big Cola, which is a new brand here, although it has been in the world for a long time, has had a great performance. The Pulp juice category is very solid and is entering new flavors. Like Sporade, which works well with the liter and a half format. People are buying isotonics instead of waters. Energizers and drinkable tea went down, mostly because they don’t have a family format.
–While in carbonated they have developed Big Cola a lot, they also have Gold, which has enhanced communication and formats, what segment is it targeting?
The only country where yellow drink is consumed is Peru and Oro is aimed at competing for the Peruvian palate. We are building the brand. In fact, it is part of the customization, each market has its particularity and the portfolio has to be developed based on that and that is the flexibility we have at AJE. In Colombia we are drawing panela water, for example.
-Last year they finally sold Tres Cruces. Has leaving beers allowed you to reinvest in other lines of business?
Indeed, there was a sale and as a result of it we have the possibility of making investments, but we are being conservative. What we are investing in is developing capacities in our factory, technology and innovation. On the other hand, beyond the sale, we have an agreement with Heineken for its distribution in the traditional channel, which also allows us to have better negotiation with the modern channel, where they have very good levers.
–How do you evaluate your partnership with Heineken in distribution?
It is a very good alliance. The idea is to continue strengthening it. They are putting a lot of focus on portfolio development. Here fighting the monopoly is not easy and they have the advantage of having us as partners for the traditional channel. They come to fight.
– You mentioned that they invest in productive capacity, how much have they increased it?
By 20%, but we have a large project to expand capacity thinking about the next few years and our future plans.
– How was the performance in the provinces during these months?
I’d tell you pretty well. There were problems at the time due to supply restrictions, but the north and east have done very well. Lima has been the one that was hit the most, because there was a greater lockdown and the provinces were even in some way.
–How did they rearrange their distribution in light of the different restrictions on infection alert levels?
The advantage we have is that we have our own distribution centers and those of third parties. And factories in Lima, Chiclayo and the east. That allows us to reorient shipments and manufacturing, but it has definitely been very dynamic, reviewing the planning every week based on how things are.
– Did they also adjust their production?
Yes, we review it weekly based on demand in each geographic point, format and trends. We have a team dedicated to that. Fortunately, we have a lot of flexibility in our production lines and sufficient inventories on the floor for any demand movement or restriction issues in our distribution centers. They are lungs before adjustments.
–Has the exchange rate had an impact on your production costs?
Yes, it has an impact but we know it is a hiccup. It is not structural, so you will see that the elections pass and it will go down. There are impacts that must be overcome, price adjustments will not be there.
–How does AJE plan to close this 2021 (electoral year and still in a pandemic) in Peru?
The elections have us all very nervous, but I think that in Peru we are used to living in uncertainty and we must know how to navigate in turbulent waters. Although it is still early, we expect to grow 10% more than 2020 as a group and Peru in line with this. We have worked a lot on efficiencies.
– What are the objectives that you have set for the company now as Deputy CEO?
The first thing we did this year, which has been an important milestone for the group, was the restructuring of our US $ 450 million bond, much of it with our own funds and the other part with the restructuring of the debt of our global operations. The financial strength of the group in the last three years is important, after we went through a very difficult time. Today, Latin America continues to be a continent that generates a lot of profitability for the group. We carried out important restructuring of operations and developed a more robust portfolio, we recovered the speed of launches in beverages and we are strengthening the presence and value of these brands. So now our challenge is to make it sustainable, to resume the growth in turnover, but to always maintain that dynamic and follow closely the efficiencies of factory operations, light structures, not create cost overruns. As well as strengthening corporate governance and venturing into digital transformation projects.
-------------------------------------------------- ---------------------------- SOURCE: THE TRADE - DAY 1 | INFORMATION ARTICLE Lima, April 7, 2021