BMI's Executive Summary

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While the Argentine economy continued to perform strongly throughout 2007, analysts widely agree that a benign external environment has played a pivotal role in this performance, and that 2008 will be a crucial year for the country's medium-term economic outlook. Following her success at the October 2007 presidential elections, Cristina Fernandez de Kirchner is now presented with a narrow window of opportunity to implement a range of necessary policy reforms. The fact that Fernandez has already expressed support for a competitive exchange rate to aid domestic industries and using price controls to stem inflation does, however, not bode well for change.

The 'voluntary' price freezes and reductions on basic foodstuffs, as well as export bans on beef and limits to wheat sales abroad, introduced by president Nestor Kirchner in 2006 with the aim of containing surging inflation have already taken their toll on food manufacturers' and retailers' margins, and Argentine consumers are increasingly faced with food shortages. Milk, meat and other basic foodstuffs were affected in particular during the first nine months of 2007. In several instances, the Center for Consumer Education, a non-governmental watchdog, was unable to carry out its weekly survey of basic food prices because many of the items regularly surveyed were not available in stores. The shortages are a clear sign that the government's price controls are not working, with food producers holding on to their products rather than selling them at lower prices. In terms of animal-derived products, the price controls might also affect producers' capacity to maintain animal stocks. Representatives at one of Cencosud's Jumbo outlets in Palermo reported that ranchers refuse to sell to the retailer at government-set prices.

In conflicting reports, Miguel Schiariti, head of the Chamber of Meat Industry, stated that retailers refuse to buy meat that is offered to them by wholesalers at the higher prices because they have been instructed not to do so by Argentina's Interior Commerce Secretary. Milk has been another seriously affected product, and the supply of milk and milk derivates has decreased by 30%, according to Miguel Angel Calvete, general manager of the Argentine Chamber of Chinese Supermarkets.

With headline inflation expected to return to double-digit figures in 2008 and distortions and imbalances in the domestic economy growing, the sustainability of Argentina's long-term growth is under serious threat, and in September 2007 buoyant consumer confidence dipped sharply to its lowest level in three years, according to a survey carried out by University Di Tella.

The government, unless it takes urgent action, will continue to undermine the recovery of the Argentine economy of recent years, as well as food and drink manufacturers' efforts and investments.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Latin America Business Environment Rankings

SWOTs

Argentina Food & Drink Industry SWOT

Macroeconomic Outlook

Table: Argentina – Economic Activity

Chapter 2 – Retail

Regional Overview

Trending Towards Hypermarkets in Latin America

Rise of Hypermarkets

Table: Number Of Supermarkets/Hypermarkets, 2005

Table: Top Five Mergers & Acquisitions In The Latin American Retail Sector, 2005

Share of MGR Sales in Total Sales

Industry Forecast Scenario

Table: Argentina MGR Value Sales by Format – Historical Data & Forecasts

Industry Developments

Market Overview

Table: Structure Of Argentina’s MGR Sector By Number Of Outlets

Chapter 3 – Food & Drink

Regional Overview

Table: Per-Capita Consumption Of Wine (litres)

Table: Wine Production Estimates By Country 2005

Industry Forecast Scenario

Table: Argentina Food And Drink Indicators

Industry Developments

Company Developments

Market Overview

Table: Argentina Agricultural Sub-Sector Production Volume – Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales – Historical Data & Forecasts

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players in Argentina’s MGR Sector

Table: Key Players in Argentina’s Food & Drink Sector

Regional Company Case Studies

Company Case Study – Organization Soriana

Table: Organizacion Soriana: Stores By Format, June 2006

Table: Organizacion Soriana, S.A. – Income Statement, January-June 2005 & 2006

Table: Organizacion Soriana: New Store Openings, April-June 2006

Table: Market Shares Of The Four Largest Mass Grocery Retailers In Mexico, 2005

Company Case Study – SABMiller

Table: Top Five M&As In Latin America In 2005

Table: SABMiller In Colombia, As At June 2006

SABMiller in Peru, as at June 2006

Wal-Mart in Latin America

Table: Wal-Mart Latin America Regional Operations

Table: Wal-Mart de Mexico (Walmex)

Table: Wal-Mart Brazil

Nestlé in Latin America

Table: Nestlé Operations in Latin America

Company Analysis

Quickfood S.A.

Molinos Rio de La Plata

Quilmes Industrial S.A.

Molfino Hermanos (Saputo Group)

Carrefour

Cencosud

Nestlé Argentina SA

Arcor Group

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Latin America Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Latin American Food Sources

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BMI's Latin American Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: