April 2018
by Carlos Bonilla, Principal and General Manager of Bonilla Stefanallo Ltda, Brazil
According to research conducted in 144 countries with 31,000 companies, world feed production was 1.07 billion tonnes in 2017, up 2.5 percent over 2016. Brazil contributes 69.9 million tonnes
Brazil's burgeoning pet food industry – An insider's overview
Brazil is an extraordinary country because of its continental dimensions: 8,516,000km². Not without reason, Brazil has become one of the world"s largest producers of protein in the last 30 years. Here we replicate a summary of reports with official sources and interviews of leaders of the sector pet food and animal nutrition. From the sources and respectability the credit is indisputable.
Impressive cattle herds
According to the agricultural census of the Ministry of Agriculture the number of cattle reached the record mark of 218.23 million heads. Pork farms in Brazil reached 40.33 million head in 2015, up 6.3 percent over 2014. Also for poultry, according to the Brazilian Institute of Geography and Statistics (IBGE), in 2015 the reduction of the population"s purchasing power and the increase in beef prices contributed to the country reaching the record of 1.3 billion chickens with a growth of 0.9 percent over 2014.
As a consequence, the Brazilian market for animal nutrition has grown by an average of 2.49 percent in the last five years, in a movement directly linked to the increase of meat consumption by the populations of emerging nations that will have Brazil as a supplier. The third largest producer in the world and the largest in Latin America, Brazil is the only country with potential for growth in the coming year, even though confined cattle production is still incipient due to extensive production.
Global feed production
According to research conducted in 144 countries with 31,000 companies, world feed production was 1.07 billion tonnes in 2017, up 2.5 percent over 2016. Brazil contributes 69.9 million tonnes, behind only China (186.9 million tonnes) and the United States (173 million tonnes). The national volume still corresponds to four percent of the 160.7 million tonnes produced in Latin America.
Beyond the market for protein conversion there is a market for emotional nutrition, as recent research shows that in all social classes pets are considered members of the family, something like children who do not talk but interact. The pet market represents over 50 million dogs and 22 million pet cats. These impressive numbers, released last year by IBGE help us understand the success of one of the fastest growing businesses in Brazil: the pet market. With projected revenues of 19.2 billion realised (US$6 billion) and expansion of almost seven percent over last year.
Diversity in the market
There are more than 3,100 manufacturers in Brazil dedicated to pet food, additives, concentrates, cores, supplements and premix. There is also huge diversity in the Brazilian market: organisations that serve both the pet and animal nutrition markets are rare, since multinationals operating in the Brazilian market are dedicated to one segment or another.
In a vision of the future, business and activity consolidation will be inevitable, because only gains in scale will allow the maintenance of margins and business development.
To further strengthen this positive scenario, during a meeting with the Minister of Agriculture, Livestock and Supply, Blairo Maggi, the president of Mars Pet Care Brazil, José Carlos Rapacci, announced the intention of the US multinational to invest more than R$1 billion (US $293,000) by 2020 in Brazil.
Pet care
In the pet care sector, Mars is the market leader with the brands Pedigree, Royal Canin and Whiskas, respectively, with a market share of 28.7 percent in dog care, 66.9 percent of super premium foods, and 44.1 percent in cat care.
In a simple interpretation, the Brazilian market has been prodigal in organic growth, although the country is not yet recognised by the great world players as an opportunity for inorganic growth through consolidations.
Conclusion
Thus, we have no doubt that the compilation of the news of the last years is the ideal moment to selectively search for the best opportunities for acquisitions or other strategic movements in Brazil. A good hunter will not need much ammo to reach his targets. There is plenty to hunt.
