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Argentinian brewery "Otro Mundo" starts producing in Mexico with USA and Canada as targets

Argentinian brewery "Otro Mundo" starts producing in Mexico with USA and Canada as targets

Posted by Clarisa Herrera on May 14, 2014

Otro Mundo (Another World) is the first brewery-boutique that aims at the development of high-end in Argentina. With only seven years in the market, the company - led by a group of entrepreneurs under the leadership of Pablo Fazio - has been able to transcend the borders of the country taking its varieties to places such as the United States, Sweden, the United Kingdom, Uruguay, Canada, Paraguay, Italy, Australia and Norway.

The interest in a high quality product was just the start for the commercial leap previously mentioned: not only this beer will be produced and distributed in Argentina, but it will also be produced in Mexico in order to develop the brand in one of the most competitive markets, the one with highest consumption and potential in the world. Simultaneously, this action will allow the brand to have a more direct access to other markets such as the Canadian.

Only in Mexico, 86 millions hectolitres of beer are produced annually, and the consumption per person is 62 litres per year for a total of 64 millions consumers, a figure that increases every year in one million consumers. But this positive context is strengthened with the process of atomization that the Mexican market is going through, due to a new legislation that regulates the market establishing new parameters that encourage the growth of independent breweries. Otro Mundo's CEO, Pablo Fazio, explains the company's internationalization startegy and its arrival in Mexico.

How was the strategy of giving world visibility to a niche product?

We started producing back in 2005 and in 2007 we made a commercial tour in the United Stated. Before that, we had had the request of particular regional countries such as Paraguay and Uruguay but no more than that. When we started this tour, we had some interviews with a Boston's beverage distribution company and the product was very well received. Being in such an important market like the American is a showcase. People who travel to these markets get the chance of knowing a product that comes from a very distant latitude: Argentina. Perhaps, the mere fact of being there is a trigger to open more doors. From that moment on, we started to export to ten different markets, we sent our product to Canada, Norway and Sweden, and later, Italy, the United Kingdom and Australia.

This is a niche market. I can only imagine that volume may not be the axis of the business model, am I right?

The truth is that beer market in general is still a niche market; it's a common ground for special beers and craft beers: punctual operations and not great volume. We do have international expansion as a target and being in those markets is of major importance to us all. Having a greater volume depends a lot on the evolution of this market category and on the brand's performance. We are a small company and we cannot invest millions in publicity and marketing.

What is the interest of the importer when it comes to a niche product like this one?

For those who offer alcoholic beverages and beers in particular, craft beers play a major role. Offering a beer from Taiwan or Argentina, from South Africa or from Brazil is a rarity. Many of these importers use this interest to increase their portfolio and grow commercially. Craft beers and micro-breweries are offering a very different product in the market and they stand out.

What happens in North America with this market?

This market segment in growing in the United States in a rate of 20% per year. Obviously beer consumption has a different level of maturity that Argentina hasn't reached yet. This means that consumers are leaving traditional products behind and want something with a much higher quality. When consumers meet a product with those features, so different in taste and smell from those made industrially, they value it. This market is developing enormously. The Mexican case is very interesting because it was the last in Latin America to get this trend. So it is, in general, a much younger market where fewer things have been done. Launching today another brand in the American market wouldn't make any sense. Canada also has a very interesting beer industry, maybe it's not that mature yet, but I see opportunities in it.

You mentioned Mexico and you are going to produce in Mexico. What was the reason for this decision?

In 2009 we started exporting to the Mexican market. There was this small importer that would take beer from other countries to the States, mainly. The market of craft beer was just being born. But the truth is it has grown substantially in the last two or three years. At that moment, I had the chance to travel to San Diego to a fair called ''the International Cup for Beers''. I met a Mexican family there, they had a brewery in low California and we told them about our experience. They were surprised that we were already exporting, in so little time, to Mexico and the United States. They were also surprised with the fact that we work with craft infrastructure in Argentina. With the best predisposition, we started talking about the possibility of producing in Mexico in order to supply not from Argentina, which increases costs, but from Mexico. Our country pays huge taxes everywhere and that was, of course, a limitation when we want to be in certain markets. We then spoke to our importer and we invited him to participate. He immediately said he was interested in the project and keep managing the brand from Mexico. It took us many years but we finally fulfilled our dreams and we are now on the right path to open even more channels of distribution in the country.

Can Mexico be a platform to reach surrounding markets with better competitiveness?

Yes. The idea is using Mexico not only to supply the local market but also to grow in the region. Mexico is a member of the NAFTA and we can export to the States or Canada without paying the taxes we would pay from Argentina, expenses in logistics are also much lower. This will be reflected on the prices, which will be more competitive. We plan to manage and contact importers, among them, the commissions of Canadian provinces, since alcoholic beverages are commercialised differently from state to state. I strongly believe that with Mexico as an origin and its consequences in prices, the possibility of developing a brand there is a much greater promise.

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