 |
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| Trends: | 97
 |
1H98
|
2H98
 |
99
|
|
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| $ Important Listed Companies | ||||
| Lacta | ||||
| Other Relevant Companies | ||||
| Garoto, Nestlé, Simas, Kraft, Warner Lambert | ||||
| O The Brazilian Industry | ||||
| Lacta,
Garoto and Nestlé together account for around 88% of the chocolate market, concentrating
on the midrange. There are also a welter of firms turning out cheaper items or more
up-market, limited-production items. The segment takes in around US$ 1.5 billion p.a., as
does remaining confectionery. As a result, the sector as a whole generates close to 4% of
all food sales. In 1997, Brazil consumed 398,000 t of general confectionery and 302,000 t of chocolate (83% of the latter in São Paulo and the South). Exports account for around 10% and 8% of output respectively. |
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| m The Global Industry | ||||
| The
country is the world’s second biggest confectioner (433,000 t in 1997) and the 5th
largest chocolate producer (305,000 t in 1997), accounting for around 2% of global sales
of US$ 84 billion (1995). In 1994, annual per capita consumption in Switzerland, the leading consumer, totaled 9.9 kg, versus only 1.5 kg in Brazil, behind Japan (1.7 kg), Italy (1.9 kg), Argentina (3.8 kg) and the USA (4.6 kg). |
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| I Attention! | ||||
| The long-standing market carve-up among the big three, threatened in 1998 by increased sales from new firms, could well return given the shrinkage in domestic demand and the high cost of financing scheduled investment projects. | ||||
| L Outlook | ||||
 |
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| Source: Sicab/Secex, Lafis .projection | ||||
| Thanks
to the recession, consumers are likely to replace more expensive food items with cheaper
ones. In the confectionery sector in particular, however, the drop in demand evident since
1996 is likely to be even more accentuated given the slowdown in activity and mounting
unemployment. In order to rein in declining sales, manufacturers are likely to absorb the
expected increase in costs (implementation of the fiscal package, tax hikes), thereby
trimming margins and, consequently, investment capacity, although this may be partially
offset by cheaper raw materials (cocoa and sugar). In 1998, assuming GDP growth of 0.5%, chocolate production and domestic consumption should drop by 2.6% and 3.6% respectively, with corresponding figures of 1.4% and 2.3% for other confectionery items. Next year, this time assuming a GDP decline of 1.5%, we estimate a respective slide of 8.9% and 11.6% for chocolate, and 4.5% and 7.3% for other candies. In addition, any increase in exports (planned by the producers to offset at least some of the reduction in local consumption) may also suffer due to lower demand from the importing nations. |
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