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Brazil Food & Drink Report Q1 2012
Business Monitor International, Nov 2011, Pages: 127
Business Monitor International's Brazil 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 Brazil's food and drink industry.
With a population of nearly 200mn, dynamic consumer growth and a relatively favourable business environment, it is easy to see why Brazil is their favourite Latin American food and drink market. The country benefits from high levels of consumer spending from a regional perspective, as well as tremendous room for further growth. GDP per capita of just over US$13,000 means that a strong consumer sector has already developed, but there remains a long way to go before Western levels of affluence are achieved. The outlook is supported by a relatively favourable income distribution (from an emerging market perspective) with recent governments having pursued measures that ensure all parts of society benefit from the country's increasing wealth.
Headline Industry Data (local currency)
- 2011 per capita food consumption = +7.9%; forecast to 2016 = +46%.
- 2011 alcoholic drink sales = +10.0%; forecast to 2015 = +53%.
- 2011 soft drink sales = +12.0%; forecast to 2015= +64%.
- 2011 mass grocery retail (MGR) sales = +13.4%; forecast to 2015 = +58%.
Key Company Trends
Entry Of Heineken And Kirin Forcing AmBev to Think More About Premium Offering – Beer giant Anheuser-Busch InBev's chief marketing officer has said in an interview with Bloomberg that the firm plans to increasingly promote its flagship Budweiser brand in Brazil in an effort to encourage drinkers to buy more premium brands. The move can be seen as an opportunity to further enhance its already impressive margins, but can also be considered as a defensive move, with new entrants into the market also looking to attract drinkers interested in more premium offerings.
Carrefour Brazilian Exit Looks Increasingly Likely With Walmart Latest To Be Linked To Takeover – Reports in the Brazilian press have suggested that Walmart has been in talks to acquire Carrefour's operations in the country. These reports come after Carrefour failed to secure a deal to merge its operations with the country's largest retailer, CBD, after opposition from CBD's existing partner Casino. BMI has previously suggested that Carrefour's apparent unenthusiasm for the Brazilian market meant it looked like a likely takeover candidate and these reports support this view. For Walmart, an acquisition would light a rocket under the firm's revenues and put it in a very strong position to challenge CBD as the country's largest retailer.
Key Risks To Outlook
Overheating Risks Rise – Brazil's rapid recovery from the global financial crisis has reinforced its position at the forefront of the emerging market story and strengthened investor interest in the country. That said, such a swift rebound has pushed the economy to the brink of overheating as still-strong credit growth pushes inflation to uncomfortably high levels. Tackling these challenges, alongside persistent concerns regarding the impact of high interest rates on the exchange rate – and in turn manufacturing competitiveness – is likely to form the administration's toughest task in the years to 2014.
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