New Food market report from Business Monitor International: "Brazil Food & Drink Report Q3 2013"

Boston, MA -- (SBWire) -- 07/13/2013 --We have downgraded our estimate for 2012 real GDP growth in Brazil to 1.0% (from 1.5% previously), as Q312 data indicate that the economic recovery is progressing more slowly than we expected. However, we continue to expect a significant pickup in economic activity in 2013. We forecast real GDP growth of 3.5%, as we expect a construction backlog to bolster growth and continued stimulus measures to modestly boost activity in the consumer and manufacturing sectors.

Our core view for relatively weak private consumption remains in play. High household debt levels and weaker purchasing power on the back of the Brazilian real's depreciation is likely to constrain private consumption growth considerably over the coming quarters. We expect private consumption to pick up modestly in 2013, growing by 3.2% in real terms and contributing a more significant 2.1 percentage points to headline growth, as fiscal and monetary stimulus increasingly feed through to the domestic market.

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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% year-on-year (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

Tomato Prices Increase 122% In Brazil: The price of tomatoes in Brazil has increased 122% in the last year, causing widespread discontent among Brazilian consumers and buyers, reports Fruitnet. The recent price hike prompted Brazil's leading Italian restaurants Cantina and Pizzeria to boycott tomatoes for 10 days. The rise has been attributed to a poor harvest and a 6.59% increase in inflation in the past 12 months. The price of tomatoes is as high as US$5 per kilogram, a 122% increase compared with the price in 2012.

Brazilian Beer Market Remains Promising: Brazil, Latin America's largest beer market, is set to continue offering strong opportunities for brewers. With a youthful population of around 200mn and with incomes set to rise, the country is a promising prospect for investment in the beer sector. Moreover, Brazil's economy is picking up, with our Country Risk team forecasting 3.5% real GDP growth in 2013. The country tops BMI's Food & Drink Risk/Reward Ratings for the Latin American region, and low-cost discretionary sectors such as beer are set to be benefactors of rising affluence among an increasingly dynamic consumer base.

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