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22 August, 2022

FDI in beverages in 2021: The state of play

Beverages FDI grew by 14.3% in 2021, with regions such as Western Europe showing signs of recovery from pre-pandemic levels.

By Marina Leiva

The Covid-19 pandemic caused overall greenfield foreign direct investment (FDI) project numbers to decline by 17.5% in 2020. However, as the world reopened in 2021, investors reacted quickly and FDI levels rose by 18.1%, according to our Global FDI Annual Report 2022. Most sectors witnessed a rise in their number of projects, with companies keen to make up for lost time, yet the rise is not expected to be sustained. Investment levels will likely fall again in 2022. Russia’s invasion of Ukraine has led to heightened geopolitical tensions, a global cost of living crisis, slow economic growth and continued supply chain disruptions. All of which will claw back the resurgence FDI seen in 2021.

Beverages FDI rebounds in 2021

There were 112 greenfield FDI projects in the beverages sector in 2021, up from 98 the year before, according to the FDI Projects Database. Yet this total remained below the 131 recorded in 2019, signalling the industry’s prolonged Covid-19 hangover.

Out of all the projects in beverages FDI in 2021, 64% of them were new, while the remaining 36% were expansion projects.

Where are the leading destinations for beverages FDI?

Western Europe was the leading region when it came to attracting FDI projects in beverages in 2021, with 31.25% of all projects announced or opened globally. The region recorded the same number of projects in 2021 as it did in 2019. 

North America was the only region that saw an increase in projects in 2021 from the 2019, with 70.6% more projects. 

Beverages FDI increased 162.5% in Asia-Pacific from its 2020 level, seeing almost the same amount of projects as before the Covid-19 pandemic in 2019. 

Canada became the leading destination country for beverages FDI in 2021, seeing growth of 275% from pre-pandemic levels. It received a total of 15 beverages FDI projects, up from four in 2019 and five in 2020. The US ranked second with 14 projects, one more than the country recorded in 2019 though down on the 18 projects seen in 2020.

Several countries, including Germany, France and Spain, began to recapture inward beverages investment in 2021, having seen levels plummet in 2020. 

Belgium was the key source market for beverages investments into Canada, with the country being responsible for 13 out of the 15 recorded projects in 2021. Labatt Breweries of Canada, a subsidiary of Belgium-based Anheuser-Busch InBev, accounted for all 13 of these projects.

The largest Labatt Breweries project was a production capacity expansion in Ontario, part of the company's $145m investment plan. It plans to invest $52.6m into the London brewery for major initiatives such as KeelClip, a minimal material fastener solution made of recyclable fiber paperboard to replace the use of plastic rings, tops and shrink film, and a new can line that increases packaging flexibility and supports product innovation.

What are the top beverages FDI operations?

Manufacturing continued to be the leading business operation for foreign investors in beverages in 2021. A total of 60 projects were created with a sales-related function, up 1.7% from 2020 but down 29.4% on 2019 levels.

Sales, administration and marketing, and logistics and warehousing ranked second and third in 2021, with 33 and nine projects, respectively. 

Canada was the leading destination for manufacturing projects in beverages FDI in 2021, with a total of 13 projects, while the US was second with eight and the UK and France were joint third with a total of four projects each. 

What are the top subsectors for beverages FDI?

Beer was the top subsector when it came to FDI projects in beverages in 2021. The number of beer projects increased by 12.9% in comparison to 2019, placing it ahead of soft drinks, mineral waters and other beverages, which had topped the subsector ranking in 2019.

One of the most striking investments was from Compania Cervecerias Unidas, a Chile-based beverage company and a subsidiary of Inversiones Y Rentas, a Chile-based company. The beer company announced plans to invest $4 billion in its Lujan, Buenos Aires, Argentina plant to double beer production capacity.

Another large investment in the beer subsector was announced by Corporacion Hijos de Rivera, a Spain-based brewery, to build an Estrella Galicia brand factory in Araraquara, Sao Paulo, Brazil. The company announced an investment of around $335m in two phases of its construction, with the aim of installing a medium-term production capacity of 300 million litres of beer per year, to be executed in two parts of 150 million litres each. Estrella Galicia is scheduled to open the factory on a 250,000m2 plot in 2023, creating 400 new jobs.

Where are the leading beverage investors located?

Investment Monitor's analysis shows that the US remained the leading source market for outbound beverages FDI in 2021. In fact, the investment level in 2021 was almost as high as in 2019. There were a total of 27 outbound projects in 2021, close to the 30 recorded in 2019.

On the other hand, investments from Belgium-based companies rose by 83%, from 12 projects in 2019 to 41 in 2021.

PepsiCo was the leading beverages investor from the US in 2021 with a total of six projects, followed by The Coca-Cola Company with four projects. 

Three out of the six PepsiCo projects were in manufacturing operations, as were two out of the four projects by The Coca-Cola Company. 

The six PepsiCo projects were spread across the world, including plans to open a new regional headquarters in Riyadh, Saudi Arabia, and a $84.23m investment to open a new logistics centre in Huejotzingo, Puebla, Mexico.

Meanwhile, The Coca-Cola Company announced R&D and manufacturing projects in 2021, including a new digital hub in Dublin, Ireland, and an expansion to its plant in Laguna, Santa Rosa, Philippines. The company announced an investment of a total of $63m for the expansion of its PHL plant.

What does the future hold for FDI in beverages?

The recovery in the beverages sector has been strong in regions such as Western Europe, North America and Asia-Pacific. However, all other regions are still feeling the effects of the pandemic in the levels of beverages FDI. 

Although the pandemic brought about some changes to beverages consumption around the world, such as the emergence of alternative alcoholic drinks such as hard seltzers, the beer market segment has shown continued strength between 2019 and 2021.

The industry faces new economic and geopolitical challenges, not least the impacts of the Ukraine-Russia conflict, which might potentially impact consumption of beverages across the world. Being a broad sector covering all beverages from mineral water to beers and soft drinks, it does have a degree of flexibility to adapt to changes in consumer trends however and limit the impact of these market headwinds.

Click to download the full Global FDI Annual Report 2022.

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