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Brazil Food & Drink Report Q4 2013 - New Market Study Published

New Food research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 09/10/2013 -- We have revised down our 2013 real GDP growth forecast for Brazil to 2.6%, from 3.3% previously, as economic activity data remains weak, interest rates are set to continue heading higher, and our Infrastructure team increasingly believes that numerous projects are unlikely to be completed in advance of the end of the government's PAC II growth acceleration programme and the FIFA World Cup in 2014.

Our core view for relatively weak private consumption remains in play. High household debt levels and weaker purchasing power (exaggerated by the recent collapse in the currency) is likely to constrain private consumption growth considerably over the coming quarters. With real private consumption growth expanding by just 2.1% year-on-year (y-o-y) in Q113, and continued headwinds in the form of high inflation and interest rate hikes on the horizon, we believe that Brazil's consumer sector will grow more slowly in 2013 than we previously expected. As such, we are revising down our forecast for real private consumption growth in 2013 to 1.8% y-o-y, from 2.2% y-o-y previously.

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Food and retail consumption is likely to outperform among the country's private consumption items, and we project generally strong sales growth for the main companies in the sector. We also believe that a moderation in input prices (grains) could help margins for these companies to recover in the coming months.

Headline Industry Data (local currency)

- 2013 per capita food consumption = +10.4% y-o-y; forecast compound annual growth rate (CAGR) to 2017 = +8.6%.
- 2013 alcoholic drink sales = +10.5% y-o-y; forecast CAGR to 2017 = +10.3%.
- 2013 soft drink sales = +9.2% y-o-y; forecast CAGR to 2017= +8.7%.
- 2013 mass grocery retail sales = +7.7% y-o-y; forecast CAGR to 2017 = +8.2%.

Key Company Trends

Away From Beef, Towards Poultry And Dairy Sectors: Out of all the emerging regions we cover, we believe Latin America will see the slowest meat consumption growth in the coming years, with beef consumption particularly subdued. This will in turn affect beef production in large producers such as Brazil and Argentina. Meat consumption per capita in the region, especially beef demand, is among the highest in the world despite the low levels of growth in recent years. Indeed, meat consumption in Latin America averaged 60.0kg per capita in 2012, compared with 72.5kg for Europe and North America, and 23.5kg in Asia and Africa (excluding developed markets such as Australia, Hong Kong and New Zealand). Latin America is therefore nearing developed market standards in terms of meat consumption.

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