Business Monitor releases latest findings for Brazil’s growing food & drink industry
(PRWEB UK) 4 September 2013 -- Business Monitor has just released its latest findings on Brazil’s food & drink sector in its newly-published Brazil Food & Drink Report. The report explains that 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, Business Monitor believes that Brazil's consumer sector will grow more slowly in 2013 than previously expected. As such, it is revising down its forecast for real private consumption growth in 2013 to 1.8% y-o-y, from 2.2% y-o-y previously.
The report identifies that food and retail consumption is likely to outperform among the country's private consumption items, and projects generally strong sales growth for the main companies in the sector. The report also remarks that a moderation in input prices (grains) could help margins for these companies to recover in the coming months.
Key Company Trends - Away From Beef, Towards Poultry and Dairy Sectors:
Out of all the emerging regions Business Monitor’s food & drink coverage spans, it believes that 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). The report therefore remarks that Latin America is consequently nearing developed market standards in terms of meat consumption.
Frosts, Hoarding Present Downside Risks to Exportable Surplus: Business Monitor maintains its forecast for Brazilian coffee output in 2013/14 to come in below official estimates, as it sees downside risks to production on the back of recent frosts in the country. The report forecasts production to reach 46.0mn 60kg bags in 2013/14, a 9.0% y-o-y decline, as the coffee crop is currently in a down-year. This compares with the 49.6mn bags forecast by Brazil's Companhia Nacional de Abastecimento. The current coffee harvest is only 44.0% complete, and Business Monitor believe increasing risks of frosts in the country's coffee-growing regions will delay the harvest and could even freeze coffee pods.
Carrefour Remains Committed to China and Brazil: French retailer Carrefour has confirmed its commitment to securing growth in both Brazil and China while restructuring its domestic operations. Following a string of asset sales in recent months, Business Monitor believes the company's pledge to drive sales in Brazil and China demonstrates their potential in terms of mitigating the effect of austerity-hit consumers in maturing European markets on sales. The report explains that Carrefour's expansion in these key markets will very likely play a significant role in spurring its revival.
Key Risks to Outlook - Downside Risks to Growth Forecast: Should inflation increasingly eat into consumers' purchasing power, weighing on private consumption growth, and should infrastructure projects remain hampered by delays, Business Monitor predicts that we could see real GDP growth underperform their 2.6% forecast this year.
Upside Risks to Interest Rate Forecast: Business Monitor remarks that should consumer price inflation persist above the upper limit of the central bank's 4.5% ± 2.0% tolerance band in the coming months, and inflation expectations continue to head higher, we could see more aggressive monetary tightening than currently expected in the next few months. Indeed, the report explains that such a scenario would likely bring the Selic rate to 9.50% or 10.0% by year-end, exceeding Business Monitor’s end-2013 forecast of 9.25%.
Business Monitor is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 195 countries and 24 industry sectors. It offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities.
Sarah Sutcliffe, Business Monitor International, http://www.businessmonitor.com, +44 2072480468, [email protected]
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