By The Sizemore Letter<\/u><\/p>\n
From the news, you would think that Brazilians had stopped drinking beer.\u00a0 Ambev<\/b> (<\/span>ABV<\/a>)<\/span>, the Brazilian brewing giant, is expected to see mildly negative volume growth<\/a> this year, as slower economic growth and rising inflation appear to have dampened the party spirits.<\/p>\n Ambev\u2014which trades as a separate ADR despite being controlled by global brewer Anheuser-Busch InBev <\/b>(<\/span>BUD<\/a>)<\/span>\u2014has followed the Brazilian market lower this year.\u00a0 In dollar terms, Ambev is down about 17% from its February high vs. a loss of 15% on the popular iShares MSCI Brazil ETF<\/b> (<\/span>EWZ<\/a>)<\/span>.<\/p>\n So, after its recent spill, is Ambev a buy?<\/p>\n At current prices, Ambev is not a compelling buy.\u00a0 True enough, the brewer is one of the purest plays on the rise of Latin American living standards.\u00a0 This is a durable macro trend and, in my view, one of the most\u00a0 attractive investment themes of the next decade.\u00a0 But trading at 23 times expected 2013 earnings and yielding only 2.3% in dividends, it can\u2019t be considered a screaming bargain.<\/p>\n What about its behemoth international partner, Anheuser-Busch InBev?<\/p>\n BUD is the largest brewer in the world and one of the most diversified.\u00a0 It counts over 200 beers in its product portfolio, claims 6 of the 10 most valuable beer brands in the world, and it sells over half of its beer by volume in emerging markets.<\/p>\n BUD isn\u2019t “cheap” trading at 20 times earnings, but for a high-quality, defensive dividend grower with unparalleled international reach, I wouldn\u2019t consider it expensive.<\/p>\n Earlier this week, I wrote about my favorite way to invest in emerging markets<\/a>:\u00a0Western-domiciled multinationals with an oversized presence in the developing world, or what I like to call “Emerging Markets Lite.” \u00a0Anheuser-Busch InBev would certainly make the cut here.<\/p>\n But as attractive as BUD is, it\u2019s not my favorite.\u00a0 That distinction belongs to Dutch-based megabrewer Heineken <\/b>(<\/span>HEINY<\/a>)<\/span>.<\/p>\n Heineken depends on Western Europe for a larger chunk of its revenues than Anheuser-Busch InBev, which has muted investor enthusiasm.\u00a0 But Heineken gets about half of its revenues and more than 60% of its sales by volume from emerging-market countries, and it has excellent positioning in Africa, the last real investing frontier of any size.<\/p>\n Africa already accounts for 22% of Heineken\u2019s sales by volume, and this percentage will only increase with time as African consumer trade-up from home brews to branded beer.<\/p>\n Heineken trades for a reasonable 17 times earnings and pays a modest 1.8% dividend.<\/p>\n Charles Lewis Sizemore, CFA, is the editor of the\u00a0Sizemore Investment Letter<\/a>\u00a0and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he was long HEINY.\u00a0Click here<\/a>\u00a0to learn about his top 5 global investing trends and get your copy of \u201cThe Top 5 Million Dollar Trends of 2013.\u201d \u00a0This article first appeared on\u00a0InvestorPlace<\/a>.<\/em><\/p>\n This article first appeared on Sizemore Insights as Want Emerging Markets Exposure? Go for Global Beer<\/a><\/p>\n