International Business Insight Aggressive expansion has been a hallmark of Ajegroup’s business since the soda maker concocted its first batch of Kola Real 20 years ago in the Peruvian highland town of Ayacucho. Today the company sells 3.5bn litres of beverages a year across 16 countries, and is entering four new markets in the next six months – Indonesia, India, Vietnam and Brazil.
News of the move into Brazil created an extra fizz of excitement in Peru, which is experiencing strong inward flows of investment from its vast neighbour to the south.
“The international market is the most important for us,” says Jorge Lopez Doriga, a corporate director at Ajegroup. “Our strategy is not to go to more mature markets, but to the emerging markets. We started in an emerging nation and we go to emerging countries ... the distribution channels and philosophies often are similar, and [there is an] entrepreneurial spirit.”
While Brazilian companies such as Odebrecht, Vale and Votorantim have invested heavily in Peruvian infrastructure and mining projects, Ajegroup is one of only a handful of sizeable Peruvian companies to cross the 1,860-mile border into the world’s eighth-biggest economy.
The company, one of Peru’s biggest family-owned enterprises with 12,000 employees, has a history of taking on seemingly outsized challenges. The Añaños brothers founded the company at the height of Peru’s Shining Path terrorist insurgency amid kidnappings, massacres and regular sabotage of roads and infrastructure. “We started 20 years ago in the mountains of Peru with just $20,000, and now we have sales of $1.5bn and persistent growth over the past five years of 30 per cent,” Mr Lopez Doriga says.
Its $3m Brazilian plant in Queimados, Rio de Janeiro, will be able to produce 72,000 units an hour to quench Brazilian thirsts.
While Ajegroup produces 17 trademarks across a portfolio of juices, nectars, light beverages, bottled natural water and beer, it has chosen Big Cola to spearhead the Brazilian expansion.
“Our Big Cola slogan is ‘Think Big’, and in all of these emerging economies we are inviting our consumers to do what we do and think big – because now it’s possible for a Brazilian or an Indian or an Indonesian to say, ‘I don’t have to stick to my territory, I can be a multinational,’” says Mr Lopez Doriga.
The company took advantage of the downturn to reinvest profits in developing new markets, and says it has no plans to raise outside capital. Its Peruvian roots have given it expertise in dealing with complicated distribution systems. Between 20 per cent and 80 per cent of stock has to reach these small vendors, depending on the market.
Brazil’s notorious city traffic presents a selling opportunity that is common across the emerging world, he adds. “You can see traffic jams right now in Mexico City, in Bangkok, in Jakarta – with more and more cars and not necessarily more roads. People are in their cars, it’s hot and they’re thirsty. Street vendors become more important.”
San Miguel, a Peruvian beverage company controlled by one of the Añaños brothers, is also building a plant in the northern Brazilian region of Bahia that will open by next March.
In the finance sector, Grupo ACP, the parent company of MiBanco, Peru’s biggest microlender, announced this year it would partner Ceape Maranhao to create Brazil’s first specialised microfinance bank. The $38m joint venture, which has branches in 99 municipalities in Brazil’s
Maranhão state, has since enrolled 20,000 clients with loans worth more than $200m.
Miguel Vega, president of the Brazil-Peru Chamber of Commerce and Integration, says Brazilian companies are expected to invest about $33bn in Peru’s gas, petrochemical and energy sectors in the next decade. Among these are Vale’s $566m investment in the Bayobar phosphate mine, Votorantim’s $420m purchase of a controlling stake in Milpo, Peru’s biggest zinc mining company, and Eletrobras’s contract for construction of the $4bn-$5bn Inambari dam. Odebrecht will this month inaugurate the $3bn Inter-Oceanic Highway, which will link Brazil for the first time with Peru’s Pacific ports and, by extension, China and other Asian markets.
“We estimate that after 2011 we will see a 42 per cent increase in bilateral trade between Brazil and Peru,” Mr Vega says. He predicts the flow of investment will speed up next year as infrastructure improves and companies seek to take advantage of Peru’s trade agreements with China, the US, Japan, South Korea and others.
Mr Lopez Doriga sees only opportunity in Peru and Brazil’s deepening relationship. “The world is changing; it’s a new world order,” he says. “If you look at the projections of the top 10 countries in the world, you will see all the emerging companies are there – and how the old world is dropping out of that list very quickly.”
