 |
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| Trends: | 97
 |
1H98
|
2H98
|
99
 |
|
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| $ Important Listed Companies | ||||
| Makro | ||||
| Other Relevant Companies | ||||
Adriano, Arcom, Atacadão, Ciro, Cofesa, Emoreira, Drogacenter, Makro, Martins, Peixoto, Vila Nova |
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| O The Brazilian Industry | ||||
| The
Brazilian wholesale sector is around 40 years old, although until the 70’s
wholesalers were regarded as mere middlemen. In the middle of the latter decade, however,
the installation of Makro, linked to an international group, as well as introducing the
self-service concept, brought the industry greater credibility. The creation of ABAD (the
sector association) in 1981 strengthened it still further, forging international links and
facilitating market studies. However, the rampant inflation at the beginning of the 90’s favored the huge supermarket chains, which competed head-to-head with the wholesalers by negotiating highly competitive prices directly with manufacturers. Following stabilization in 1994, minimarkets once again began to play an important role in day-to-day purchases and the wholesale market took off. After the Plano Real, the leaders’ real revenue, according to ABAD and Nielsen, moved up 25.4% between 1994 and 1996, thanks to heightened productivity and the sector’s improved financial situation. |
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| m The Global Industry | ||||
| Wholesalers/distributors
are extremely important in that, as well as supplying the big cities, they are largely
responsible for covering the country’s most distant regions. In the United States, 60% of all products consumed pass through the hands of a wholesaler, 30% through distribution centers run by major retail chains, 7% are acquired directly by shopkeepers and 3% are distributed via the Internet. |
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| I Attention! | ||||
| Given declining retail profits, problems at other points in the supply chain constitute a major threat. consequently, wholesalers will have to intensify their adjustment process in 1998. | ||||
| L Outlook | ||||
| We
expect a 0.6% drop in sales this year, close to ABAD’s estimate which points to no
change. Firms will have to optimize all components of the supply chain, streamlining
connections with all the sectors involved: raw-material suppliers, the manufacturing
industry, wholesalers, retailers and final consumers. Thus, given increasing competition from multinationals and giant retail networks, the sector should become more and more similar to its American counterpart. That is to say, it will cease to act as a mere middleman for clients who have no contact with their suppliers and will provide business management consulting services for its customers, making purchases a natural consequence of resupply. Consequently, it will be striving to introduce new technology and logistics, as well as boosting productivity. Such a restructuring process will make a price war with the big retailers unnecessary. Another clear tendency is the progressive consolidation among the largest firms. Given Brazil’s socio-geographical structure, wholesalers have ample room to expand, both vertically (greater demand from areas already covered) and horizontally (moving into new regions). The country is enormous and new consumption centers far from the traditional ones are springing up every day and the idea that they can be supplied by large-scale retailers (or directly by manufacturers) is entirely mistaken. Nevertheless, the actual pace of growth will depend on the restructuring process. If wholesalers cannot get closer to consumers, refuse to take advantage of the expanding market and continue to be the protagonists of a price war with retailers, growth may well be seriously jeopardized. Thus we expect a profound transformation over the next four years, particularly in the logistics area. |
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