Mercado de Biscoitos Massas e Grãos

Mercado de Biscoitos Massas e Grãos

Cookies & Crackers Industry in Brazil

Brief description of the Cookies & Crackers Sector in Brazil

Cookies & Crackers are segmented into filled cookies, Crackers and Water and Salt, Wafers, Maria and Maisena, Dry Sweet, Butter Cookies, Salt, Donut and others. Brazil is the fourth largest cookies and crackers seller in the world with 910.6 thousand tonnes commercialized in 2017, according to ABIMAPI and Euromonitor. According to AC Nielsen data for 2017, the Southeast region was responsible for the higher sales volume of Brazil, around 45.0%, as the region has the highest per capital income of Brazil, the consumption of these products is influenced by acquisition power of the families.

Nowadays, the Brazilian per capita consumption is 8.0 kg per year, while countries such as Argentina and United Kingdom the consumption are more than 10 kg per year.

Cookies & Crackers Per Capita Consumption (2014*)
Country Per Capita Consumption (Kg/year)
Argentina 12.44
United Kingdom 10.02
Italy 7.37
United States 6.91
Brazil 6.05
Russia 5.75
France 5.56
Mexico 4.75
China 2.23
India 1.37
Source: ABIMAPI / Euromonitor
*Still haven‘t released 2015 data.

Until the beginning of the Real Plan (“Plano Real”), implemented in 1994, the sector was characterized as being predominantly by family businesses. The sector passed through a strong growth period, which led the large international brands to buy the smaller companies. In 2003, with the controllership of Adria passing to the Company, the Brazilian market leadership returned to a national Company. Currently, Marilan is in second place with 8.2% share, Nestlé occupies the third place with a 7.1% share, and so successively with Bauducco (6.6%), Pepsico (5.7%) and Mondelez (5.0%), while M Dias Branco leads the market with 32.5%, according to AC Nielsen’s data for 2017. The remaining market is fragmented among a large number of companies

Recent Performance of the Cookies & Crackers Sector in Brazil

The population’s social ascension is encouraging the cookies & crackers consumption, including the ones with higher value added. The cookies & crackers of the healthy category are also showing an expressive growth rates, evidencing an opportunity to expand the production.

The table below presents the cookies & crackers competitors’ market share for Brazil, Northeast and Southeast region in the indicated periods, in terms of volume sold and retail value:

Cookies & Crackers Segment
Market Share in terms of volume sold
Brazil Northeast Southeast
M. Dias Branco 32.5% 62.0% 15.3%
Marilan 8.1% 5.0% 10.8%
Nestlé 7.1% 3.0% 9.5%
Bauducco 6.6% 3.1% 9.3%
Pepsico 5.7% 1.8% 6.5%
Mondelez 5.0% 1.7% 6.8%
Piraquê 3.8% 0.3% 8.1%
Outros 31.2% 23.1% 33.7%
Source: AC Nielsen (Retail + Cash&Carry: 2017)

 

Cookies & Crackers Segment
Market Share in terms of retail value
Brazil Northeast Southeast
M. Dias Branco 24.4% 54.9% 11.0%
Marilan 8.0% 5.8% 9.6%
Nestlé 9.2% 4.9% 10.9%
Bauducco 8.7% 5.5% 10.7%
Pepsico 6.2% 2.5% 6.4%
Mondelez 8.6% 4.3% 10.2%
Piraquê 6.2% 0.6% 12.0%
Others 28.7% 21.5% 29.2%
Source: AC Nielsen ( Retail + Cash & Carry:2017)

According to AC Nielsen data for the year 2017, the Southeast region is responsible for 45.0% of the cookies & crackers consumption in Brazil, the Northeast region for 34.2%, the South for 12.2%, the Midwest for 7.5% and the North for 1.0%.

Pasta Industry in Brazil

Brief description of the Pasta Sector in Brazil

The total volume of pasta sales in Brazil was around 0.8 million tons in 2017, according to the Brazilian Association of Crackers and Cookies, Pasta and Breads & Industrialized Cakes Association – ABIMAPI, behind Italy (1,515 thousand tons), the United States (1,101 thousand tons) and Russia (957 thousand tons, according to the table below.

World Pasta Sale 2017 (thousand tons)
Countries 2015 2016 2017
World 13,664.8 13,639.6 13,848.3
1º Italy 1,532.2 1,525.7 1,515.7
2º USA 1,086.0 1,092.0 1,101.1
3º Russia 977.5 963.7 957.9
4º Brazil 882.0 872.5 864.4
5º Germany 728.1 731.9 735.1
6º France
601.1 606.2 613.5
7º Peru 555.1 565.8 595.7
8º Iran 517.7 540.1 568.8
9º Egypt 480.6 503.2 528.0
10º Argentina 411.8 416.1 422.1
Source: ABIMAPI & Euromonitor

The productive process for pasta allows a pasta manufacturer to produce any type, requiring only small adaptations in the productive process and low investments. The industry’s flexibility in adapting the productive process requiring low investments, allows the producer to offer a large variety of pasta. Therefore, the pasta industry presents low barriers to entry in terms of product diversity.

Pasta is a low value added product and the freight has a significant relevance on its final price, justifying the implementation of regional production, consumption and distribution centers.

The pasta consumption per capita of Brazilians reaches 5.82 kg per inhabitant, 3.34% lower than the previous year (2016), which had reached the mark of 6.02 kg per inhabitant. According to ABIMAPI – Brazilian Association of Crackers and Cookies, Pasta and Breads & Industrialized Cakes Association -, the challenge for a broader expansion of the level of domestic consumption is the fact that the Brazilian sees the pasta as a complement and not as a main course. In addition, rice is pasta’s largest competitor because it is a carbohydrate of lower price.

Recent Performance of the Pasta Sector in Brazil

The process of economic openness experienced by the country since the 1990s introduced new challenges in the Brazilian consumer goods market and resulted in structural changes in the industry.
In the pasta sector, this process has taken on decisive contours in terms of market consolidation and has driven companies to invest in technology, state-of-the-art equipment and training of their professionals. The result of these investments is production facilities among the most modern in the world and perfectly able to provide quality products.
Dried pasta in Brazil is produced almost entirely from soft wheat and is segmented into: semolina pasta with eggs, semolina pasta, regular pasta and homemade pasta. The name “noodles” is popularly used, including in packaging, as synonymous with “pasta”.
Many companies in the industry have an integrated process with wheat mill and overall have a broad portfolio with other products derived from wheat, such as flour, cake mix, crackers and cookies, ready-made cake, etc. Instant noodles are one of the products offered by companies, with the possibility of adapting flavors to the target market.
Dry pasta currently has the largest share of the pasta sector, with 81.8% of the sales volume of the entire pasta category in 2017, according to AC Nielsen data published in ABIMAPI. According to AC Nielsen, sales volume of dry pasta in 2017 were subdivided into: (i) 37.3% of the semolina without eggs type; (ii) 33.9% semolina with eggs; (iii) 24.9% of regular pasta; (iv) 2.6% of durum wheat and (v) 1.3% of homemade.
Until 1997, the Brazilian pasta market was very dispersed, with the two main representatives of the sector, Adria Alimentos do Brasil (acquired by M Dias Branco in 2003) and Santista Alimentos, respectively, holding 6.8% and 6.7%, respectively, of consumption. The concentration in the industry became more significant with the intensification of mergers and acquisitions. Currently, more than half the market, in terms of volume sold, is dominated by six companies: M. Dias Branco, J. Macedo, Selmi, Santa Amália, Vilma and Piraquê. The table below shows the market share of competitors in the domestic pasta industry and the Northeast and Southeast regions of the country for the period indicated:

Pasta Sector
Market share in terms of Volume sold
Brazil North Southeast
M. Dias Branco 32.4% 61.9% 20.1%
J. Macedo 12.5% 11.8% 17.0%
Selmi 9.6% 1.4% 12.2%
Santa Amália 6.9% 0.2% 14.3%
Vilma 5.0% 2.8% 9.0%
Piraquê 3.4% 0.4% 7.1%
Others 30.2% 21.5% 20.3%
Source: AC Nielsen (2017)

 

Pasta Sector
Market share in terms of Sales
Brazil North Southeast
M. Dias Branco 28.6% 61.3% 17.8%
J. Macedo 11.5% 12.8% 14.6%
Selmi 11.0% 2.2% 12.7%
Santa Amália 8.7% 0.3% 17.2%
Vilma 5.2% 3.1% 8.8%
Piraquê 4.2% 0.6% 8.2%
Others 30.8% 19.7% 20.7%
Source: AC Nielsen (2017)

According to data from Nilsen and ABIMAPI, between 2013 and 2017, the pasta type showing the highest increment was the dry pasta, with 2.8% growth. From 2013 to 2017, the pasta industry has grown more than 26% in sales, while in volume there was a slight increase of 0.76%. According to data released by the IEA – Institute of Agricultural Economics of São Paulo, pasta prices (overall pasta, packaging of 500 grams) declined 5.9% in 2017, ranging from R$ 2.56 to R$ 2.41, in the twelve months period. Thus, companies increased their investments in product development and updating, concentrating efforts on two factors: convenience (with the development of ready-made pre-cooked pasta dishes and functional packaging for the public seeking fast options) and nutrition.
According to AC Nielsen data for 2017, the Southeast region accounts for 46.6% of the pasta volumes sold in the Country, the Northeast region accounts for 31.5%, South for14.1%, Mid-West for 6.4% and North for 1.4%.

 

Wheat and Wheat Milling Industry in Brazil

Brief Background of the Wheat and Wheat Milling Industry in Brazil

On November 22th, 1990, entered into force the Law 8,096 that revoked the Decree-Law 210. The Law 8,096 declaredfree, nationwide, commercialization and industrialization of wheat any source, releasing, as a consequence, the marketing and wheat industrialization in Brazil, without the economic agents are more attached to limits, quotas and governmentcontrols, including to import the grain. The sector passed through an intensive transformation as result of the sudden deregulation and opening to the international market, especially Argentina, where the production costs were below those found in Brazil and by consequence, produced wheat with more competitive prices than Brazil.

Recent Aspects of the Wheat Milling Industry in Brazil

The Government is currently adopting interventionist measures directed towards the sector, whether through Federal Government Loans (EGF), the Minimum Price Guarantee Policy (PGPM) and Production Distribution Award (PEP). In practice, the PEP is a subsidy in two fields. The producer, where he charges the difference between the minimum price and market price and at companies as a subsidy for transporting wheat from the producing region to the mill.

Despite having evolved considerably in recent years, the productivity of national wheat cultivation is still low in relation to the main world wheat producers. The disadvantages involve climatic conditions unfavorable to the winter crop in the majority of the national territory, associated to soil characteristics, and has influenced the quality of Brazilian wheat and/or production costs for the grain.

Despite the government efforts to guarantee the producer’s income, the suppliers, especially Argentina, are able to deliver the grain at lower costs if compared to the domestic wheat costs and/or with higher quality standards.

The table below presents Brazilian wheat consumption in the last 4 years:

Wheat Consumption in Brazil
Year Nacional Change Imported Variation Consumption Change
(In thousand tons – calendar year, except percentage)
2013/2014 5,300 21.00% 7,066 -3.96% 11,400 4.59%
2014/2015 6,000 13.21% 5,374 -23.95% 10,700 -6.14%
2015/2016 5,540 -7.67% 6,745 25.51% 11,100 3.74%
2016/2017 6,730 21.48% 7,349 8.95% 12,200 9.91%

Source: United States Department of Agriculture – USDA

The domestic production remains insufficient to attend the consumption. Thereby, Brazil is still highly dependent on imported wheat grain, mainly from Argentina. The import need imputes the mills a strong vulnerability regarding fluctuations in international commodity prices, which is influenced by external factors, including speculative movements. Nowadays, the imports reach half of the domestic consumption.

General Aspects of the Wheat Milling Industry Competition

According to the USDA (United States Department of Agriculture), the global wheat production for the 2017/2018 harvest was forecasted in March of the current year at 758.78 million tons, 1.1% higher than the 750.50 million tons obtained in 2015/2016. As major wheat producers, we highlight China, the European Union, India, Russia and the United States, with the United States and Russia being the largest exporters in the world. Brazil is ranked among the 5 largest importers in the world, and in 2017 Argentina, based on data released by the Brazilian Wheat Industry Association – Abitrigo was responsible for supplying most of the demand for wheat imported by Brazilian mills.

The tables bellow shows the world largest producers, consumers and exporters of wheat, as well as the production and consumption of Brazil and Argentina:

World Largest Wheat Producers
Year European Union China India USA Russia World Production
(In thousand tons)
2013/14 144,583 121,930 93,506 58,105 52,091 715,107
2014/15 156,912 126,208 95,850 55,147 59,080 728,171
2015/16 160,480 130,190 86,530 56,117 61,044 735,205
2016/17 145,248 128,845 87,000 62,833 72,529 750,506

Source: United States Department of Agriculture – USDA

World Largest Wheat Consumers
Year European Union China India Russia USA World Consumption
(In thousand tons)
2013/14 117,300 116,500 93,848 34,100 34,260 690,872
2014/15 124,677 116,500 93,102 35,500 31,328 700,496
2015/16 129,850 112,000 88,551 37,000 31,942 708,959
2016/17 128,000 118,500 97,120 40,000 31,753 735,323

Source: United States Department of Agriculture – USDA

World Major Wheat Exporters
Year USA European Union Canada Russia Ukraine World Export
(Em Mil Toneladas)
2013/14 32,012 32,032 23,268 18,609 9,755 165,876
2014/15 23,523 35,455 24,170 22,800 11,269 164,175
2015/16 21,168 34,686 22,110 25,543 17,431 172,836
2016/17 28,716 27,319 20,157 27,809 18,107 183,282

Source: United States Department of Agriculture – USDA

According to data from ABITRIGO, updated up to the year 2016, there were, in Brazil, 196 active wheat mills in operation. Much of them are concentrated in the South and Southeast regions of the country (and thus close to the main suppliers of the raw materials). In 2016, the South region has the highest wheat milling percentage (42.2%), followed by the Southeast region (24.5%) and the North and Northeast regions (30.1%). The Midwest is the region with the lowest share, only 3.2%. As of the date of conclusion of this document, ABITRIGO had not provided the information relating to 2017.

Perspectives for the Wheat Milling Industry

The National Supply Company (Companhia Nacional de Abastecimento – Conab) pointed out that the wheat planted area in 2016/2017 harvest showed a 9.6% reduction as compared to the previous year, reaching 1,916.0 thousand hectares, and there was also a 36.6% reduction in production compared to the previous year. Production reached 4,253.50 thousand tons, versus the 6,726.80 thousand tons recorded in the previous year. The forecast indicated in the 5th Survey of Grain Harvest 2017/2018, for planted area in 2018 is already in line with that presented last year, of 1,916.0 thousand hectares, but with an expected increase in production of 9.2%, estimated at 4,657.0 thousand tons.

Brazilian wheat is affected by subsidies granted by the European Union, the United States and Canada. In the absence of subsidies, Brazil would be competitive in this sector, because despite suffering from climatic aspects, which are less favorable than the climate of other countries, and more expensive prices for some inputs, it has relatively cheap labor force and can count with two annual crops.

The consumption of wheat in Brazil has grown in recent years due to the population’s income growth and consequent increase in food demand. The graph below shows the evolution of wheat consumption in Brazil during the last decade.

* USDA March 2016 forecast for the 2016/2017 harvest
Source: United States Department of Agriculture – USDA

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