Brazil Food and Drink Industry Update Quarter 2 2012

  • February 2014
  • -
  • Business Monitor International
  • -
  • 123 pages

With dynamic consumer growth, a population of nearly 200mn and a relatively favourable business environment, it is clear to see why Brazil remains our favourite Latin American food and drink industry . The country benefits from high levels of consumer spending from a regional perspective, as well as tremendous room for further growth. In addition, recent governments have pursued measures that ensure all parts of society benefit from the country's increasing wealth. With plenty of monetary and fiscal ammunition to weather a global growth slowdown, the medium-term outlook is one of above-trend growth, with our projections for real Gross Domestic Product growth set to hit an above-consensus 3.9% in 2012.

Headline Market Data
(local currency)
- 2012 per capita food consumption = +8.1%; projection to 2016 = +35%.
- 2012 alcoholic drink revenues = +14.4%; projection to 2016 = +62%.
- 2012 soft drink revenues = +10.6%; projection to 2016= +42%.
- 2012 mass grocery retail (MGR) revenues = +8.8%; projection to 2016 = +40%.


Key Firms Trends

Brazilian Biscuit Growth Prompting Consolidation – Increased international interest in the Brazilian biscuit segment looks to be pushing local producers to consolidate their operations, with local industry leader M. Dias Branco recently announcing it has take over d local rival Pelágio Participações for BRL240mn.
M. Dias Branco is on the lookout for further take over s and is also believed to have made a bid for another local manufacturer, Marilan. Snack and soft drink giant PepsiCo has also recently sealed the take over of Brazilian biscuit maker Mabel in a deal worth about US Dollar 520mn. The move represented a sizeable investment in the industry and comes at a time when the Brazilian biscuit segment is advancing rapidly.
FEMSA Invests as Soft Drinks Consumption Increases – Mexico-based soft drinks producer Coca-Cola Femsa commenced work on a new bottling plant in Brazil at the end of 2011. The facility, built in the town of Itabirito in the state of Minas Gerais, will require an investment of US Dollar 146mn and is expected to begin operations in June 2013. It will reach annual capacity of 2.1bn litres by 2015 and produce all of the firm 's brands. This significant investment chimes with the current dynamism within the Brazilian soft drinks segment, which it is believed has huge potential for further growth.


Key Risks To Outlook
Credit Crunch Potential – A hard landing in China and a severe recession in the eurozone continue to pose major risks to our projections, potentially affecting the Brazilian economy through a loss of confidence as global financial industry s react to the above shocks, and subsequently through a reduction in financing. If the external environment takes another turn for the worse, which is entirely possible given the eurozone's ongoing sovereign woes, the authorities may struggle to prevent a credit crunch. Two possible antecedents off such a scenario would be a surge in non-performing loans or an uncontrolled sell-off in the Brazilian real, which would make bank financing more expensive and also hamper consumer spending by increasing the cost of imported goods.

Table Of Contents

BMI Market View .... 7
Industry SWOT Analysis .... 9
Brazil Food Industry Environment and Risk Analysis ... 9
Brazil Drink Industry Environment and Risk Analysis 10
Brazil Mass Grocery Retail Industry Environment and Risk Analysis . 11

Environment Overview .... 12
BMI’s Core World Market Views 12
Data : Agricultural Commodity Prices .... 14
Data : Core Views Q212 . 23
Latin America Risk/Reward Ratings ... 24
Latin America Food and Drink Risk/Reward Ratings Q212 27
Brazil Food and Drink Risk/Reward Ratings ... 28

Macroeconomic Data . 29
Data : Brazil - Economic Activity .. 31

Market Projection Scenario ... 32
Consumer Outlook 32
Food.. 34
Total Food Consumption 34
Data : Brazil Food Consumption Indicators - Historical Data and Projections ... 35
Prepared Food, Processed Meat and Fish .... 35
Data : Canned Food Value/Volume Sales - Historical Data and Projections .. 35
Data : Pasta 36
Data : Meat 36
Data : Fish .. 38
Data : Jams And Jellies .. 41
Frozen Fruit and Vegetables 42
Data : Frozen Fruit And Vegetables ... 42
Dairy . 43
Data : Dairy .... 44
Confectionery... 47
Data : Confectionery Value/Volume Sales - Historical Data and Projections . 48
Data : Snack Foods ... 49
Drink . 50
Hot Drinks .. 50
Data : Hot Drink Value Sales - Historical Data and Projections . 51
Alcoholic Drinks ... 51
Data : Alcoholic Drink Value Sales - Historical Data and Projections . 52
Soft Drinks And Bottled Water .. 52
Data : Soft Drink Value/Volume Sales - Historical Data and Projections .. 53
Mass Grocery Retail .. 54
Data : Brazil Mass Grocery Retail - Value Sales by Format - Historical Data and Projections .... 55
Data : Sales Breakdown By Retail Format, 2009 And 2020 (%) . 55
Trade 56
Data : Food and Drink Trade Balance - Historical Data and Projections .... 56
Food 57
Key Firms Trends And Developments 57
Brasil Foods Merger Finally Approved ... 57
Brasil Foods Investing to Take Advantage of Margarine Consumption . 58
Brazilian Biscuit Growth Prompting Consolidation .... 59
Nestle Opens New Dairy Plant as Consumption Ticks Up 61
Heinz Targets Brazil As Part Of Emerging Industries Push 62
Canned Food Opportunity in Brazil.... 63
Danone Targeting Ambitious Growth Levels 64

Industry Analysis .. 65
Overview Of Segment .... 65
Prepared Food/Canned Food ... 65
Confectionery... 65
Dairy . 67
Meat .. 68
Poultry ... 70
Seafood .. 71
Drink .... 72
Key Firms Trends And Developments 72
AmBev Forced to Think Premium .. 72
Kirin Focuses on Premium Beers But Top End of Industry Becoming Overcrowded .. 72
Coca-Cola Femsa Invests as Soft Drinks Consumption Increases .... 73
Orange Juice Business Merger Given Go-Ahead .... 75
Brazilian Wine Market Hoping for Sales Boost from World Cup in 2014 . 75
Are AmBev’s High Profits Sustainable? .. 76
Coffee Segment Could Become Largest, Continues To Attract Investment 78

Industry Analysis .. 79
Hot Drinks .. 79
Soft Drinks .. 80
Alcoholic Drinks ... 81
Mass Grocery Retail .... 84
Key Firms Trends And Developments 84
Carrefour Exit Looks Likely With Walmart Latest To Be Linked To Takeover 84
CBD/Carrefour Merger Falls Flat . 85
CBD Could See Operations Hindered by Tightening Credit Conditions 85
Walmart's Brazilian Investment Hints At Slower Pace Of Expansion .... 86
Cencosud Ramps up Presence in Brazil ... 87
Immature Retail Segment Offers Opportunities For Smaller Players To Expand 89
High Competition Means Other Retail Segments Likely To Attract New Entrants ... 90

Industry Analysis .. 91
Data : Structure of Brazil's Mass Grocery Retail Industry By Estimated Number of Outlets 93
Data : Structure of Brazil's Mass Grocery Retail Industry - Sales by Format (US$bn) .... 94
Data : Structure of Brazil's Mass Grocery Retail Industry - Sales by Format (BRLbn).... 94
Data : Average Annual Sales Value by Format - 2009 94
Data : Sales Breakdown by Retail Format Type (%) ... 95

Competition Overview ... 96
Consumer Share Price Analysis 96
Key Players . 99
Data : Key Players in Brazil's Food Segment .. 99
Data : Key Players in Brazil's Drink Segment 100
Data : Key Players in Brazil's Mass Grocery Retail Segment ..101
Company Profiles . 103
Food.103
JBS SA ..103
Brasil Foods ...105
Drink 108
Embotelladora Andina ...108
AmBev ...110
Schincariol (Kirin) ....113
Mass Grocery Retail .114
Companhia Brasileira de Distribuição (CBD) ..114
Walmart Brazil ....116
Carrefour Brazil ..118
Risk/Reward Ratings Methodology ... 120
BMI Food and Drink Market Glossary ....122
Food and Drink .122
Mass Grocery Retail .122
BMI Food and Drink Projection ing And Sources ...124
How We Generate Our Market Projections ..124
Sources .125

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