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Colombia Food and Drink Report Q4 2009
Business Monitor International, Aug 2009, Pages: 74
Business Monitor International's Colombia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's food and drink industry
Colombian food and drink companies are increasingly pursuing international expansion, attracted by the close proximity of markets which are larger and/or less mature than the domestic market. Opportunities abound across the Latin American region and Colombian firms, with their local market knowledge and regional expertise are well placed to take advantage. Colombian firms are also expanding into the US attracted by the size of the market and the country’s growing Hispanic population. The move is also driven by necessity with the local market becoming increasingly mature and now home to a large number of multinational operators.
In mid-March 2009, the CEO of Colombia’s largest processed food producer Grupo Nacional de Chocolates, Enrique Piedrahita, said that the company will pursue acquisitions in Peru and the Caribbean this year. He revealed that the company is in a position to make one or two acquisitions of up to US$100mn and would consider selling bonds to make larger purchases if the right opportunities arose.
These intentions were laid out shortly after the firm completed the acquisition of Mexican chocolate manufacturer Nutresa for US$95mn. This takeover expanded the firm’s operations in the substantial Mexican market and can also be seen as a move to increase its Mexican product portfolio as part of a wider strategy of targeting the growing Hispanic population in the US. Chocolates has revealed that it eventually hopes to generate half of its revenues outside of Colombia.
Meanwhile, in mid-February 2009, Colombian dairy firm Alpina Productos Alimenticios announced plans to buy a US yoghurt maker for which it has set aside a budget of US$50mn. Alpina CEO Julian Jaramillo said the company has been looking at acquiring a US firm in one of the East-Coast areas of New Jersey, New York or Connecticut. However, he admitted Alpina’s acquisition fund had been halved from US$100mn to US$50mn in light of the financial crisis.
The soft drinks sector is an example of a segment where local players are likely to be increasingly squeezed by competition from multinationals. In February 2009, Coca-Cola Femsa and The Coca-Cola Company (TCCC) sealed the joint acquisition of the Agua Brisa bottled water business from Bavaria, the Colombian subsidiary of international brewing giant SABMiller. Meanwhile, in June 2009, the vice president of corporate affairs at Mexico-based Coca-Cola Femsa, Felipe Marquez, revealed that the firm plans to invest US$119mn in Colombia this year claiming that the market is one with 'enormous growth potential'. While this attention can be expected to drive growth in the overall category, the presence of such strong competition represents a formidable challenge to local players, such as Postobon and Quala.
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