Cervezas del Sur begins brewing February 2010

New $20 million plant under construction; locally brewed beer to hit shelves in April; aimed at becoming the beer of the new generation, with focus on quality

This year’s sensation at the MIDA (the Spanish acronym for the Chamber of Food Marketing, Industry & Distribution) food-trade convention was the “coming soon” teaser campaign launched by Cervezas del Sur, Puerto Rico’s new brewing company, scheduled to begin brewing a new premium-quality beer by next February, CARIBBEAN BUSINESS learned. The new corporation, backed by a group of local investors, among them Méndez & Co., as well as outside partners who hold 20% of the project, is brewing up some tough competition.

With an initial $20 million investment, the new brewery will be in a Ponce industrial park formerly occupied by Textron and Hanes manufacturing operations. The movie-like Cervezas del Sur trailer focused on the quality of the new beer product and some of its attributes like freshness, quality ingredients and an elaboration process of excellence. Although the new beer hasn’t been named yet, campaign images of a golden sun may provide valuable insight as to the future beer brand.

The new brewery will have the capacity to produce 2.6 million gallons of beer and malta annually.

“Cervezas del Sur should be receiving the equipment in August and September, and we will commence the insulation process in October. If all goes according to plan, we should be brewing by January and going to the market by next April,” said Luis Álvarez, principal of Cervezas del Sur, who credited two young North Carolina entrepreneurs, Geoff Hanson and Gregg Clucas, for the original project vision.

Regarding skeptics who questioned Méndez & Co.’s decision to establish its own local brewery, and perhaps in direct competition with its own Heineken distribution, he simply said: “We fought a tough and fair fight to eliminate the preferential tax that has given Cervecería India a tremendous competitive advantage in the local market over the years. We took our fight all the way to the highest court in the land, the federal Supreme Court, and we lost. I am a firm believer in adapting and evolving; our initial route didn’t yield the results we—as an industry—would have wanted, so I am adapting to the market. Only those who find the way to adapt in a changing market will survive to tell their story.”

In addition to leveraging the local tax situation to jump-start the new brewing company, Álvarez is tapping into his vast branding and marketing experience handling the Heineken-brand legacy. “The Heineken experience has prepared me for this new challenge, developing a quality product that is respectful of what consumers want,” he said.

We won’t be the cervecería llorona (the whining beer company), Álvarez noted, perhaps referring to Cervecería India, which often complains about local tax increases even when the existing preferential tax structure benefits their local production. “Ours will be a great beer, with fantastic ingredients, and consumers will drink it, not because it is the cheapest, but because we will offer the best value for the money and make them proud to give Puerto Rico a quality beer formulated with the utmost respect for the consumer,” he added.