Beer in Dominican Republic - New Report Available

From: Fast Market Research, Inc.
Published: Tue Jul 15 2014

The fiscal reform implemented on 1 January 2013 is the most comprehensive and deep reform in recent history. It will be implemented in stages and will last until 31 December 2017. Taxes for all types of income were raised, from savings tax to gasoline and personal income. In terms of beer, a triple tax increase pushed the retail sale prices too high for the market to absorb it without decreasing the value size in constant terms. Ad valorem tax increased by 33% to 10% of the manufacturer sale price, specific tax increased by 4% for beer (9% for distilled alcoholic drinks), and value added tax increased by 13%. As a result, retail sale prices increased by 11% in current terms, inducing a volume drop in beer of 9%. The volume drop by mid-2013 was in the -20s%, so the -9% drop was only possible after price decreases (promotional or permanent) that the industry was forced to implement by midyear to avoid punishing the volumes that much.

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Competitive Landscape

Cerveceria Nacional Dominicana continues to lead sales in 2013. After the strategic alliance between the company and AmBev, the company now commands a de facto monopolistic volume share of 99% (from 88% in 2011). Presidente is by far the largest brand house, commanding a 63% volume share, two percentage points above its share in 2012. The company pricing strategy (i.e. to reduce the price gap between Bohemia/Brahma -low priced- and Presidente -mid priced-) is aimed towards increasing the company's profitability, and it should make Presidente's value share even higher in the next few years. As the share evolution demonstrates, the strategy is working, even in an economic slowdown year.

Industry Prospects

Over the forecast period, beer will continue to suffer contractions because of the five consecutive years of tax increases from 2013 until 2017. There are going to be years of increase in the three tax types (value added, specific, ad valorem), like the difficult 2013. In other years two tax types will increase (specific and ad valorem) in 2014 and 2015. Finally, in 2016 and 2017 only one tax type will increase -specific tax- which will finally converge between the two drink types (fermented and distilled alcoholic drinks) in 2017. For the first time the specific tax will not discriminate among types of alcoholic drinks. All these tax increases will further decline the volume each year, but not at the levels of 2013. Only 2018, with its combination of no tax increases and growing disposable income, will see volumes not decline.

Report Overview

Discover the latest market trends and uncover sources of future market growth for the Beer industry in Dominican Republic with research from Euromonitor's team of in-country analysts.

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