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Chile Food and Drink Report Q4 2011
Business Monitor International, Sep 2011, Pages: 107
Chile 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 Chile's food and drink industry.
Chile’s food and drink sector is highly regarded by BMI thanks to high consumption levels and an operating environment that is seen as less risky than all of its Latin American peers. There are some signs that Chile's consumer story is cooling, as a result of the central bank's rate-hiking cycle and we believe consumer spending could moderate for the next few months. However, this effect looks trivial in the context of our five-year forecast period and we continue to believe that Chile's market-friendly politics and strong institutions that have underpinned the nation's political scene in recent years will continue to contribute towards steady economic growth and a continued ramp up in consumer demand.
Headline Industry Data (local currency)
- 2011 per capita food consumption = +9.4%; forecast to 2015 = +39%
- 2011 alcoholic drink sales = +7.2%; forecast to 2015 = +30.2%
- 2011 soft drink sales = +8.4% ; forecast to 2015 = +46.9%
- 2011 mass grocery retail sales = +8.7%; forecast to 2015 = +38%
Key Company Trends
Chilean Retailers Investing In Peru – Chilean retailers Cencosud and Falabella have detailed their investment plans for neighbouring Peru as they look to take advantage of the country's growing consumer affluence. Cencosud, which is already the country's leading supermarket operator, plans to enter the department store sector by investing US$70mn to establish 10 of its Paris branded department stores in Peru by 2014. These investments are in line with a long-term trend of Chilean firms aggressively expanding their Peruvian operations and are a sign of confidence in the Peruvian consumer story.
Retailers Cleared In Government Credit Fraud Investigation – In the Chilean government's preliminary investigation into credit fraud by retailers, only Empresas La Polar has been found to have committed the offence, Minister of Finance Felipe Larrain said. The announcement is expected to increase investor confidence in other retail chains in the country, following a sector-wide investigation that included Wal- Mart Stores, Cencosud and Falabella. La Polar was previously found to have increased interest rates and imposed charges on approximately 400,000 clients without telling them and misled regulators.
Key Risks To Outlook
Market maturity – A limiting factor on our growth forecasts is the growing maturity of the food, drink and retail sectors; for example, Chileans are already among the highest consumers of soft drinks in the world. In addition, the organised retail sector already accounts for around 62% of all grocery sales (compared to 27% in neighbouring Peru) and, with expansion opportunities limited, supermarket sales in real terms have advanced by only around 30% since 2005. This figure compares unfavourably to other countries in the region.
Growth remains tied to Chinese prospects – With the Chilean economy still highly dependent on the export of minerals to China, any slowdown in this market would have significant negative implications for Chilean economic growth and consumption.
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