Peru Food and Drink Report 2008 : Market Research Report

Peru Food and Drink Report 2008

Published by: Business Monitor International

Published: Feb. 29, 2008 - 79 Pages

Executive Summary

Business Environment

Regional Food & Drink Business Environment Ratings

Table: Latin America Food & Drink Business Environment Ratings - Q108

Peru’s Food & Drink Business Environment Rating

SWOT Analysis

Mass Grocery Retail

Peru Mass Grocery Retail Industry SWOT

Food and Drink

Peru Food & Drink Industry SWOT

Macroeconomic Outlook

Table: Economic Activity

Retail

Regional Overview: The Expansion of Mass Grocery Retailing

Table: Latin American MGRs’ Share In Food Retailing - 2006

Table: Latin America’s Top Ten Regional MGRs, 2006

Table: Latin America: Estimated Concentration And Multinationalisation Of MGRs - 2006

Industry Forecast Scenario

Table: Peru Mass Grocery Retail - Value Sales by Format (US$bn) - Historical Data & Forecasts

Table: Sales Breakdown by Retail Format Type - 2006

Industry Developments

Market Overview

Table: Structure of Peru's Mass Grocery Retail Market by Estimated Number of Outlets

Table: Average Annual Sales Value by Format (US$mn) - 2006

Food and Drink

Drink Regional Overview: Coffee Consumption In Latin America

Table: Latin America - Leading Coffee Producers By Co

Table: Latin America - Actual And Projected Coffee Production, Exports And Imports

Table: Latin America - Domestic Coffee Consumption, 2006-2007

Food Regional Overview: Confectionery in Latin America

Table: Latin America - Estimated Confectionery Sales by Sub-Sector (US$mn)

Table: Latin American Confectionery Producers Ranked Among the World's 100, 2006

Industry Forecast Scenario

Food

Table: Peru Food Consumption Indicators - Historical Data & Forecasts

Agriculture

Drink

Table: Peru Beverage Sectors - Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Food

Drink

Market Overview

Agriculture

Food

Drink

Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales - Historical Data & Forecasts

Market Overview

Competitive Landscape

Key Players

Mass Grocery Retail

Table: Key Players in Peru's Mass Grocery Retail Sector

Food and Drink

Table: Key Players in Peru's Food and Drink Sector

Regional Company Case Studies

Food: Grupo Bimbo in Latin America

Table: Grupo Bimbo - Net Sales 2005 vs. 2006 (US$mn)

Table: Grupo Bimbo - Divisions

Table: Grupo Bimbo - Plants & Brands in Latin America

Mass Grocery Retail: Falabella In Latin America

Table: SACI Falabella - Company Structure

Table: SACI Falabella - Financial Indicators (US$mn)

Mass Grocery Retail: Groupe Casino

Table: Casino Group Latin America, Operations By Country, As At March 31 2007

Drink: Embotelladora Andina SA

Table: Embotelladora Andina SA, Sales Volumes By Country (million unit cases*)

Table: Embotelladora Andina SA, Operations By Country, 2006

Table: Embotelladora Andina SA, Volume Sales By Distribution Channel, 2004 And 2005 (%)

Company Analysis

Food

Grupo Gloria

Good Foods SA

Drink

Union de Cervecerias Peruanas Backus y Johnston (Backus)

Corporacion Jose R. Lindley (J.R. Lindley)

Mass Grocery Retail

Wong (formerly E. Wong)

Saga Falabella

Food & Drink Ratings Appendix

Introduction: Revised Methodology

Ratings Overview

Ratings System

Indicators

Table: Limits of Potential Returns

Table: Risks to Realisation of Potential Returns

Weighting

Table: Weighting

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Abstract

The boom of the Peruvian economy has not only benefited multinational food producers looking to export their products to Peru, but has also improved the operating environment for domestic producers which, in many cases, are in a better position to offer products in line with Peruvian consumers’ tastes and at lower prices than imported food products. Thus a broad range of competitively priced, domestically produced food products have appeared on the shelves of Peru’s mass grocery retailers over recent months.

An example is provided by Alicorp’s AlaCena brand of mayonnaise, first launched in 2002, which in 2006 accounted for 94% of mayonnaise sales by volume. The imported brands available on the market prior to AlaCena’s launch were considered too expensive by many Peruvian consumers and, more importantly, also lacked the preferred zesty lemon taste. Alicorp meanwhile also produces other condiments under the brand, and AlaCena has become the company’s flagship product, according to general manager Leslie Pierce, and is now also exported to Ecuador and the US. The company was first established in 1956 as Anderson, Clayton & Company, a manufacturer of oils, edible fats and laundry soap. In 1971, it was acquired by Grupo Romero. Alicorp’s 2006 sales reached US$664mn, a year-on-year (y-o-y) increase of 20%, while net income increased by 41% y-o-y to US$35mn, illustrating the company’s success story. According to spokespeople, all three business segments, including foodstuffs, animal nutrition, and processed industrial feeds, performed strongly.

Following the overwhelming success on the domestic market, Alicorp now aims to further expand abroad in order to maintain sales growth, and products are already being sold in 20 countries, mainly in Latin and Central America and the Caribbean. As a next step, the company wants to increase its presence in the US and Asia. In 2006, export sales accounted for 12% of revenues, compared to 8% in 2005 and, over the coming five years, Mr Pierce expects this share to rise to more than 50%, driven by market entry in China, which is planned for 2008. Within its home market, Alicorp plans to enter new business lines, including personal care products in the form of the Anua shampoo and conditioner. Analysts rate the company highly, owing to its strategy of diversifying markets and growing its product portfolio of added value products. In addition, Alicorp’s brands are well positioned in Peru’s leading mass grocery retail (MGR) chains, and a business manager at Corporacion Wong, Peru’s largest MGR, has praised Alicorp’s excellent logistics and customer service. Other Peruvian food producers can be expected to follow suit, increasing the variety of products available to Peruvian consumers and adding to MGRs’ attractiveness.

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Peru Food and Drink Report 2008

Table of Contents

Abstract