German born, Federico Bindels never imagined that the creation of his beer Pilsen Callao, would be the starting point of one of the most important industries of Peru. On October 15, 1863 the craft brewer founded the Pilsen Brewery what is now Avenue Sáenz Peña.
Pilsen owes its name to the Czech Pilsner; a light beer with a soft aroma and golden color. In 1904 the Italian businessman Faustino Piaggio acquired the company. As executive in charge, Pilsen Callao reinforced their success in the market and the company changed its name to the National Beer Company (CNC),but in 1922 Cristal came and became their biggest competitor.
46 years ago, in 1879 Americans James Backus and Howard Johnston had founded an ice factory in Rimac, where three years after became Backus & Johnston Brewery Ltd.
_(Photo: El Comercio)_
Pilsen and Cristal where not the only brands in that time. Before the end of the nineteenth century in Cusco there were breweries owned by Ernesto Gunther, German Gustavo Mangelsdorff and the French of Leoncio Vignes and Julio Ariansen.
The latter two came together in 1898 and formed Cervesur in Arequipa. In 1918 the brewery Trujillo was founded in Trujillo itself. This company produces the brands Pilsen Trujillo and Pilsen Callao.
_(Photo: El Comercio)_
In 1954, a new milestone was marked in the history of the Peruvian beer market. A group of Peruvian entrepreneurs, led by Ricardo Bentín Mujica, acquired Backus & Johnston. This was the first time that a beer company was run by nationals.
With the arrival of the military leadership in the seventies, tax incentives for the installation of factories in provinces were released. Backus & Johnston took the opportunity to organize the San Juan Brewery in Pucallpa and the brewery in the north of Motupe (Lambayeque), which started operating respectively in 1971 and 1972. With the launch of these firms, arrived the creation of the regional beers San Juan and Real.
*The War for the Market*
In the late eighties began the war between the three market leaders. Backus & Johnston, CNC, and Cervesur. The first battle took place through advertising (which began to show voluptuous women with tiny clothes and beer.)
In the nineties the war intensified. Large investments were made in advertising, promotions were released and executives were being pulled from the competition. Amid all this, new economic measures were made that principally impacted the CNC. According to rumors at that time, much of the drop in Pilsen (which occurred in 1994) was due to an incorrect move by Backus who had distributed products from this brand in disrepair.
Although this was never proven to be true, the company’s Bentín family, who took 62% of the CNC in a transaction that ranged between $125 million and $135 million, exploited the situation. In the race remained the Argentinean brewery Quilmes, and the Colombian Santo Domingo Group.
That same day, Backus acquired control of the brewing company of Trujillo (Sociedad Cervecera de Trujillo). With the acquisition of these companies the Bentín family controlled 90% of the market. In 1996 the Union of Breweries Backus & Johnston ( UCBJ) was formed.
Until 1994 the competition between Cervesur and Bentín family’s company was relatively in peace, but everything changed when a provincial firm launched their beer Cusqueña in Lima. With this movement, their product went from 14% to 21%. Backus then responded with their “Cristal light” and focused all their efforts on the south of the country, the base of Cervesur.
Despite the struggle that hit them in the following years, the southern company ended up being acquired by Backus in 2000 after accepting a tempting offer of $164 million. Two years later the UCBJ was acquired by the Colombian Bavaria, property of the Santo Domingo Group. In 2005, the South African Sab Miller, one of the biggest beer companies of the world acquired the Colombian company along with the UCBJ.
That same year another brewing company entered Peru and the world, AmBev. The company of the Brazilian and Belgium capitals bet on the local market with their brand Brahma.
But, they weren’t the only ones to have luck in this market. In 2007, Aje Group made their leap from sodas and waters to beers from Franca. The Torvisco family did the same with Anpay in 2009.
Currently, Backus remains the country’s largest beer company, with a share of over 90%. However, they cannot rest on their laurels, as other competitors are sharpening their artillery to steal the market from them one of these nights.
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