Boston, MA -- (SBWIRE) -- 07/26/2012 -- Although Brazil has plenty to offer to foreign investors, we highlight that the country remains a challenging market in which to invest. High entry barriers are manifested through often conflicting regulatory frameworks across different states, high taxes and local companies aided by state subsidies. Moreover, some of Brazil's largest and most successful businesses remain firmly in state hands, further raising entry barriers for foreign companies looking to set up shop in the country. Nevertheless, with a population of almost 200mn, Brazil will remain an important target for multinationals.

Headline Industry Data (local currency; year-on-year growth; compound annual growth rate)

- 2012 per capita food consumption = +8.06%; forecast to 2016 = +7.92%.
- 2012 alcoholic drink sales = +14.42%; forecast to 2016 = +13.19%.
- 2012 soft drink sales = +10.20%; forecast to 2016= +9.62%.
- 2012 mass grocery retail sales = +7.98%; forecast to 2016 = +8.88%.

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Key Company Trends

Brasil Foods Continues Domestic Expansion: In March, Brasil Foods inaugurated a BRL30mn (US$16.9mn) cheese factory in Itumbiara in the state of Goias. The factory enhanced its monthly output by about 1,000 tonnes, according to the firm. The Goias facility, producing Sadia and Santa Rosa mozzarella cheese, will supply primarily the north and north-east regions of the country, according to Fabio Medeiros, the vice president of dairy for Brasil Foods. Medeiros added that the firm sells around 700,000 tonnes of cheese annually in the country, which mainly comprises mozzarella and prato cheeses.

General Mills Returns to Local Acquisitions in Brazil: According to February reports in Brazilian newspaper O Estado de S.Paulo, US food firm General Mills has signed a deal to acquire Brazil-based Yoki - which manufactures around 600 products across a range of categories - in a deal worth BRL2bn. General Mills in 2009 sold Brazilian baked goods producer maker Forno de Minas, which had been acquired through the 2011 acquisition of the Pillsbury Company in 2001 but was divested largely over the lack of fit with the parent company.

Mexican Modelo Considering Entry into Brazilian Beer Market: Mexican brewer Grupo Modelo is considering entering the Brazilian beer market, according to Jose Pares, head of sales and marketing. Pares mentioned that the company is evaluating the available options and the appropriate time to make an entry into Brazil. Modelo's brands include Corona, Modelo, Especial, Victoria, Pacifico and Negra Modelo. Modelo is half-owned by multinational brewer Anheuser-Busch InBev.

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