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Brazil Food and Drink Report Q2 2008Published by: Business Monitor International Published: Apr. 4, 2008 - 66 Pages Table of Contents
AbstractControl over Brazil’s mass grocery retail (MGR) sector is currently one of the most highly-prized assetsin the whole of global retailing as discussed in BMI's newly-published Q208 Brazil Food & DrinkReport.One local firm - Companhia Brasileira de Distribuição (CBD) - and two international firms -Wal-Mart and Carrefour - are currently battling ferociously to secure market share and consolidation iscontinuing at a very rapid pace - in total 12 of the top 20 supermarket chains that existed in 1997 havebeen absorbed by other groups. On top of this, the three largest firms have announced massive investmentprogrammes in the coming year as they all look to secure the loyalties of Brazil’s huge population. According to the Brazilian Supermarket Association, in 2007 the supermarket sector grew at its largestrate for five years - taking into account an official inflation rate of 4.46%, supermarket sales rose 5.9% inreal terms. This figure is in line with BMI’s forecasts for the next five years with total MGR salesexpected to grow by 24.6%. The primary drivers of this growth are increased incomes, the expansion ofcredit, a decline in unemployment and rising food prices. This rate of growth has made Brazil a veryattractive investment location for the world’s top retailers. For example, in December 2007 Wal-Martexplicitly stated that Brazil was among its top four countries for strategic growth and since then it hasannounced plans to invest BRL1.2bn (US$693mn) in 2008 which will go towards opening 36 new stores.This investment exceeds the BRL1bn spent on around 20 new stores in 2007. Brazil’s largest retailer, CBD, which is part owned by French firm Casino, has announced its ownexpansion plans for 2008 and intends to invest around BRL1bn (US$523mn) opening 105 new outlets.These will include 80 convenience stores, 14 cash and carry stores, seven supermarkets, three discountstores and one hypermarket. Although CBD is investing in all of its formats it appears that in 2008 theconvenience store sector will receive particular attention - a strategy that BMI believes is sensible;convenience stores are becoming increasingly popular as they fit in well with the lives of middle-classurban Brazilians. With the supermarket sector starting to look reasonably saturated in the most prosperousregions, the convenience store format is one of the avenues left open to target high-income shoppers.Sales at convenience stores are forecast by BMI to grow by a healthy 45% over the next five years. For French-based Carrefour, Brazil has become increasingly important as sales have slowed in many ofits traditional markets. It has announced it will invest BRL1bn (US$523mn) a year over the next threeyears. Carrefour is likely to focus on its Carrefour-branded hypermarkets and its Dia-branded discountstores in the coming year, along with its newly-acquired Atacadão cash and carry chain. All three of themajor Brazilian retailers have announced similarly-sized expansion plans for the coming year. Withfinancial resources fairly even between the ‘big three’, the differentiating factor that will decide whodominates Brazilian retailing in the future is likely to be strategy and choice of store format - which firmhas the edge here is likely to become more apparent in the coming year. Get Full Details About This Report >> |
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