This document is the result of the third module of Coursera’s Business Strategy Specialization: “Growth Strategy”. The selected business is Cervecería Centroamericana, from Guatemala. The purpose of this work was to apply the key concepts such as Scenario Planning, Game Theory, Pay-off Matrices and M&A Analysis.

1. Growth Strategy
Client: Cervecería Centroamericana SA
Presented by: Delmy Alvarenga
Date: Jan. 16th, 2017
Introduction
Cervecería Centroamericana SA is a well established company in Guatemala with 125 years in the
market , owned by the Castillo Family. Cervecería Centroamericana SA is the national beer production1 2
company in Guatemala. From late XIX century to 1960’s, the company took advantage of fiscal and
political arragements, monopolizing the market, building one of the largest corporations in the country:
the Corporatión Castillo Hermanos. For the purpose of this analysis, the growing alcoholic drinks industry
and the company’s main portfolio, we will focus on the beer industry.
For over a century, Cervecería Centroamericana SA held the monopoly on the production and sale of
beer in Guatemala. They gained market competitiveness by keeping the prices high compared to other
products in the market and imposing the law on their side. This monopoly ended in 2004 when Brazilian
Company AmBev entered the Guatemalan market with their signature beer, Brahva.
Ambev, now Anheuser-Busch InBev, the world’s largest brewer with a 25% share of the global market
and annual revenues of over $1 billion entered the market in 2004 with a clear objective to win over the
Central American beer drinker. They are responsible for the production of more than 200 brands,
including Budweiser, Corona, Stella Artois, Beck’s, Quilmes and Presidente. It’s their size what allows
them the luxury to drop prices to acquire market segments, and this has been their chosen strategy for
gobbling up national beer companies who cannot keep the battle with such fierce competition.3
For over a century, Cervecería Centroamericana dominated the market, imposed their monopoly, and
lowered entrant possibilities keeping the market dynamics flat. Ambev’s entry changed the dynamics.
Since 2004, Ambev has introduced more than 15 reowned international beer brands disrrupting the
market with options, innovation, quality, and affordability. This strategy has been accompanied by a war
on prices, dropping the category from standard to economy beer.
Despite the price war, Cervecería Centroamericana SA keeps their leadership on a mature market thanks
to their strong brand positioning, their wide product portfolio that ranges from economy to premium beer
and their strong distribution channels that allow them to reach small independent stores across the
country, both in urban and rural areas. To satisfy new market needs and create new market opportunities,
Cervecería Centroamericana plays along emerging trends developing in-and-out seasonal innovations
and new flavours beers to reach niche markets.
Cervecería Centroamericana. “Nuestra historia” http://www.cerveceriacentroamericana.com/conoce-la-cerveceria/nuestra-historia/1
Cervecería Centroamericana. “Cervezas” http://www.cerveceriacentroamericana.com/cervezas/2
Beer in Guatemala Report. http://www.euromonitor.com/beer-in-guatemala/report3
of1 5

2. Scenario Analysis
Trends:
- Flavoured seasonal innovations to reach new markets.
- Niche markets: independent breweries have a perception of higher quality.
- National pride: local breweries wake up consumer’s national pride and raises their willingness to pay
more.
Uncertainties:
- Perception of higher quality: consumers perceive international beer as premium.
- Market Share: Ambev strategy to saturate the market with imported beer to decrease Cerveceria’s beer
brands visibility.
- Brand’s market saturation: international imported beer market will reach a plateau, lowering prices and
demanding premiumisation.
- Local breweries grow brand value consolidating as a third player.
Figure 1: Market Share vs. Beer Quality
Scenario A: Commodity Trap. This is the worst case scenario, whereas international beer saturates the
market flooding consumers with brand options and no differentiation. War price. Since Ambev has a wide
portfolio, they could flood the market to drop prices, leading Cervecería to lose margins and drop prices
to remain competitive and defend market share.
Scenario B: Emergent Player. Local breweries could consolidate their market position by uniting and
leveraging distribution channels. Depending on local breweries value, price strategy and production line,
either Cervecería Centroamericana or Ambev could use them as an strategic growth opportunity, by
acquiring breweries or creating alliances for premiumisatiom.
Scenario C: Market Consolidation. Imported beer will find a niche market in the higher consumer
segments and will set a price standard for premium beers.
Scenario D: Quality Standarization. Local breweries could capitalize on national pride to build premium
brands, defend market share and establish price standards.
Imported Beer Local Breweries
Market Share
Increase
Scenario A:
Commodity Trap
Scenario B:
Emergent Players
Premium
Niche Markets
Scenario C:
Market Consolidation
Scenario D:
Quality Standarization
of2 5

3. Game Theory Analysis
From the previous analysis, Scenario C: Market Consolidation more than a growth strategy, it’s a market blocking
strategy either key player can use as a wild card. Both Cervecería’s or Ambev’s have the financial capabilities to
purchase local breweries. For Cervecería, the key component would be to acquire local breweries to block Ambev’s
growth opportunities.
The arrow indicates in which direction Cervecería Centroamericana should grow.
Figure 2: Local Breweries
Alliance Formation vs. M&A
of3 5

4. Acquisition Analysis
Potential Strategic Moves
Figure 3: Cervecería Centroamericana vs. Ambev’s
Potential Strategic Moves towards local breweries
Notes: During the creation of this report, no information was found regading the state of local breweries production. All scenarios
and analysis are made solely on market and consumer’s observation, without financial data to support this hypothesis.
Cervecería Centroamericana Ambev
Develop
Capabilities
Cervecería Centroamericana controls
the whole value and production chain.
Developing the capabilities to include
artisan beer among their portfolio is a
strategy that allows them to reach higher
paying consumers. Taking advantage
of their on-premise distribution channels,
they could position the new artisan
brands as a higher quality product,
leveraging market share, corporate
reputation and national pride.
Ambev controls the value and production
chain of the second beers in Guatemala,
however, developing local production
capabilities is not a foreseeable strategy
since Ambev’s strenght relies on
international imports.
Alliance
Formation
Cervecería Centroamericana’s mission
and corporate values are “to develop
Guatemalan by creating job opportunities
and supporting national production.”
By controlling the main distribution
channels off-premise and on-premise,
Cervecería’s partnership with local
breweries helps them to capitalize on
distribution channels, reach new
markets, product portfolio expansion,
and raise positive corporate reputation
(commited to the country’s development).
Alliance Formation with local breweries
would be an unexpected strategy from
Ambev’s known trajectory, however it is
viable strategy to block Cervecería’s
potential niche markets consolidation.
Mergers
Both Cervecería Centroamericana and Ambev’s structures are big and well
developed that a merger threats the integrity of the “artisan concept”,
losing the growth potencial value
Acquisitions
Cervecería Centroamericana acquisition
of local breweries could facilitate
economies of scale, integrate production
lines, expand portfolio (diversification),
consolidate innovation market and raise
corporate governance and reputation.
To deliver its corporate strategy to create
enduring bonds with consumers and
clients, providing them with the best
brands, products and services, Ambev’s
international and financial muscle could
outbid Cervercería Centroamericana and
buy artisan breweries allowing them to
keep their independence; blocking
Cervecería’s growth opportunity.
of4 5

5. Synthesis of Findings
The beer market in Guatemala presents growing opportunities for every player: national beer producer
Cervecería Centroamericana, international beer importer Ambev, and local breweries emerging players.
Cervecería Centroamericana strategy includes value and production chain ownership, channels
distribution control, on-premise exclusivity, brand heritage and national pride. The foreseeable growth
strategy for Cervecería Centroamericana is either the formation of alliances to raise market share,
Cervecería Centroamericana’s best growth scenario is the acquisition of local breweries since it would
enable the reduction of redundancies, economies of scale, production lines integration, portfolio
diversification, consolidation of the innovation/premiumisation market, governance and corporate
reputation. However, for acquisitions to be succesful, Cervecería should leverage their first-mover
advantage and utilize its distribution channels to expand artisan beer distribution and grow market share.
It should also allow local breweries to keep their brands “independent”, separated from the main portfolio
to capitalize on consumer’s national pride and minimize “industrialization” perception.
Figure 4: Options Analysis for Local Breweries Acquisition
of5 5