Brazil Food and Drink Report Q4 2011

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Brazil Food and Drink Report Q4 2011 Published on August 2011

Report Summary Brazil continues to top BMI's Latin America Risk/Reward rating thanks to its very high Reward rating. This reflects the fact that the country represents a particularly dynamic market for the food and drink sector, supported by rising affluence and the increasingly positive picture for Brazil's large low-income population. That said, we have become more cautious about possible overheating, which could have negative implications for demand. This partly explains why Brazil's risk rating remains only average for the region, with inflationary and financial risks in the market higher than in some other parts of Latin America. Headline Industry Data (local currency) - 2011 per capita food consumption = +7.9%; forecast to 2015 = +47%. - 2010 alcoholic drink sales = +9.5%; forecast to 2015 = +54%. - 2011 soft drink sales = +10.7%; forecast to 2015= +65%. - 2011 mass grocery retail (MGR) sales = +12.7%; forecast to 2015 = +63%. Key Company Trends Brasil Foods Shares Up As Merger Finally Approved ' Shares in Brasil Foods surged by over 14% between July 12 and July 14 after the country's antitrust regulator, Cade, ruled that it would allow the merger that created the firm to go ahead. The ruling requires the firm to sell off a significant chunk of its manufacturing capacity and relinquish the use of several key brands. However, the deal is being greeted very positively by investors due to earlier signs that Cade was looking unfavourably on the merger. Brasil Foods now looks in a strong position to increase its revenue and earnings in one of the world's fastest growing consumer markets. CBD/Carrefour Merger Falls Flat ' In July 2011, the Brazilian government backed out from a proposed merger of local retailer CBD with French retailer Carrefour following strong opposition from the Brazilian company's existing partner Casino. Previously, the Brazilian National Development Bank had agreed to spend approximately US$3bn of public funds to finance the proposed deal on condition all players agreed to it amicably. However, Casino opposes the deal, considering it hostile and illegal. 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 reinforced 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.

Table of Content BMI Industry View ... 7 SWOT Analysis 9 Brazil Food Industry SWOT .. 9 Brazil Drink Industry SWOT ... 10 Brazil Mass Grocery Retail Industry SWOT ... 11

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>> Get this Report Now by email! Business Environment . 12 BMI's Core Global Industry Views .. 12 BMI Core Views .. 19 Latin America Risk/Reward Ratings 20 Table: Latin America Food & Drink Business Environment Ratings Q4 2011 23 Brazil Food & Drink Risk/Reward Ratings .. 24 Macroeconomic Outlook .. 25 Table: Brazil ' Economic Activity .. 29 Industry Forecast Scenario ... 30 Consumer Outlook ... 30 Food. 31 Total Food Consumption 31 Table: Brazil Food Consumption Indicators - Historical Data & Forecasts ... 32 Prepared Food, Processed Meat and Fish .. 32 Table: Canned Food Value/Volume Sales - Historical Data & Forecasts ... 32 Table: Pasta 33 Table: Processed meat 33 Table: Processed fish .. 35 Table: Jams and Jellies ... 38 Frozen Fruit and Vegetables ... 39 Frozen fruit & vegetables ... 39 Dairy ... 41 Table: Dairy ... 41 Confectionery.. 44 Table: Confectionery Value/Volume Sales - Historical Data & Forecasts .. 45 Table: Snack foods .. 46 Drink 47 Hot Drinks .. 47 Table: Hot Drink Value Sales - Historical Data & Forecasts .. 48 Alcoholic Drinks . 48 Table: Alcoholic Drink Value Sales - Historical Data & Forecasts 50 Table: Alcoholic drinks ... 50 Soft Drinks And Bottled Water 52 Soft Drink Value/Volume Sales - Historical Data & Forecasts 52 Mass Grocery Retail 53 Table: Brazil Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts ... 54 Table: Sales Breakdown By Retail Format, 2009 And 2019 (%) . 54 Trade ... 55 Table: Food & Drink Trade Balance - Historical Data & Forecasts .. 55 Food 56 Key Company Trends And Developments 56 Brasil Foods Shares Up As Merger Finally Approved 56 Kraft Investing In Brazil To Tap Growing Demand For Chocolate And Biscuits 57 Heinz Targets Brazil As Part Of Emerging Markets Push .. 59 Canned Food Opportunity in Brazil 60 Danone Targeting Ambitious Growth Levels .. 60 Market Overview . 61

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>> Get this Report Now by email! Overview Of Sector . 61 Prepared Food/Canned Food . 62 Confectionery.. 62 Dairy ... 64 Meat 65 Poultry 66 Seafood ... 67 Drink ... 69 Key Company Trends And Developments 69 Kirin Pounces On Schincariol But Faces Challenge Of Dominant AmBev .. 69 Femsa Investment Plan Focused On Soft Drinks 71 Are AmBev's High Profits Sustainable' . 72 Coffee Sector Could Become Largest, Continues To Attract Investment .. 73 Market Overview . 75 Hot Drinks .. 75 Soft Drinks .. 75 Alcoholic Drinks . 76 Mass Grocery Retail .. 79 Key Company Trends And Developments 79 CBD/Carrefour Merger Falls Flat .. 79 CBD's Lower Margins And Sales Growth Raise Questions About Merger .. 80 Walmart's Brazilian Investment Hints At Slower Pace Of Expansion .. 81 CBD Undervalued In Comparison To Walmex' . 82 Cencosud Builds Momentum in Brazil 83 Question Marks Over Carrefour in Brazil .. 84 Immature Retail Sector Offers Opportunities For Smaller Players To Expand 85 High Competition Means Other Retail Sectors Likely To Attract New Entrants .. 86 Market Overview . 87 Table: Structure Of Brazil's MGR Market ' Estimated Number Of Outlets, 2003-2009 . 89 Table: Structure Of Brazil's MGR Market ' Value Sales By Format, 2003-2009 (US$bn) . 90 Table: Structure Of Brazil's MGR Market ' Value Sales By Format, 2003-2009 (BRLbn) . 90 Table: Average Annual Sales Value By Format, 2009 90 Competitive Landscape 91 Consumer Share Price Analysis ... 91 Key Players .. 94 Table: Key Players in Brazil's Food Sector 94 Table: Key Players in Brazil's Drink Sector ... 95 Table: Key Players in Brazil's Mass Grocery Retail Sector 96 Company Profiles .. 98 Food. 98 JBS SA 98 Brazil Food & Drink Report Q4 2011

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>> Get this Report Now by email! © Business Monitor International Ltd Page 5 Brasil Foods ..100 Drink ...102 Embotelladora Andina ...102 AmBev 103 Schincariol (Kirin) .106 Mass Grocery Retail ...107 Companhia Brasileira de Distribuição (CBD) ...107 Walmart Brazil ..109 Carrefour Brazil 111 BMI Methodology 113 Food & Drink Business Environment Ratings 113 Table: Returns ...114 Table: Risks ...115 Weighting 116 Table: Weightings ..116 BMI Food & Drink Industry Glossary 117 Mass Grocery Retail ..117 BMI Food & Drink Forecasting And Sourcing ...119 How We Generate Our Industry Forecasts 119 Sourcing .120

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