July 28, 2009 -
PRLog -- BMI expects overall household consumption growth in Brazil to come in at 3.6%, down from a previous projection of 4.8% earlier this year, which could impact on food consumption in the short term. The Brazilian economy is highly reliant on strong consumer spending levels, which have been driven by a credit boom. However, tighter credit and liquidity conditions amid the global financial crisis are leading to consumer retrenchment, casting growing uncertainty over the economy. Nonetheless, between 2008 and 2013, per-capita food consumption is forecast to grow by 46.3% (nominal growth rate in local currency terms). With the size of the Brazilian population forecast to increase by 6.3% over the same period, total food consumption is expected to grow by 55.5%. Under BMI’s current currency forecasts, total Brazilian food consumption in US dollar terms is expected to increase by 75.2%, driven by consumers trading up to higher-value, branded and premium products, and by lower-income consumers simply buying more. In urban locations, there is also an ongoing trend towards value-added convenience foods as consumers’ working lifestyles increasingly come to mirror those in the developed world. Certainly, over the last quarter there have been continuing announcements of investments in the country’s food and drink sector from multinational players. At the start of April, Swiss business-to-
business chocolate manufacturer Barry Callebaut signed a distribution and cooperation agreement with Brazilian food producer Bunge Alimentos – a subsidiary of global agricultural giant Bunge Limited. The deal will see Bunge distribute Barry Callebaut's food service chocolate products. The two firms will also work together to develop chocolate products that meet the specific needs of the Brazilian food service/bakery market. As part of the push into this market, Barry Callebaut has announced the construction of a chocolate factory in the south-east of Brazil. Meanwhile, in February, soft drinks giant Coca-Cola announced that it will invest BRL1.75bn (US$804.4mn)
in Brazil in 2009. This represents a 16.6% increase on the amount invested in 2008 and part of the money will be used to build two new bottling and manufacturing plants. The company further indicated that the economic downturn had not affected its Brazilian unit and revealed that the firm is 'very confident in [their] long-term planning and in the Brazilian market'. Finally, France-based vegetable processor Bonduelle revealed that it is looking to expand its operations in Brazil. The company is to invest EUR15mn (US$19.6mn) to build a preserved and frozen vegetable facility in Brazil to supply other markets in South America, including Argentina. With Brazil entering a recession and signs of liquidity conditions in the country becoming tighter, a raft of annual results from the country’s leading food and drink players over the last quarter mirror the greater problems being faced. At the end of March, Brazilian meat processor Sadia posted its first ever annual loss due to large losses on currency derivatives during the last quarter of 2008. Over 2008 as a whole, Sadia reported a net loss of BRL2.48bn (US$1.14bn), compared to a net profit of BRL768.3mn (USD353.2mn)
in the year earlier period. Likewise, dairy and meat group Perdigão saw its net income for FY08 slump 83% due to the real's devaluation against the US dollar and financial charges. However, the company reported a 72% rise in net sales for 2008 to BRL11.39bn (US$5.32bn), with export sales rising by 58% in total. Meanwhile, meat processor JBS booked a net loss of BRL53.3mn (US$22.3mn) in the last three months of 2008, although for the full year, the company filed net income of BRL25.9mn (US$57.8mn), compared to a net loss of BRL165mn (US$75.8mn) in 2007. Drinks giant AmBev reported that net income for the year rose by 8.6%, to more than BRL3bn (US$1.37bn), despite a fourth quarter decline, relating to currency charges. Beer volumes rose by 3% for the year, although were hit by a 0.9% decline in the fourth quarter. At the same time the company confirmed that it is to close a factory in the state of São Paulo and shift production to its other plants in the state.
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