BMI's Executive Summary

[TOP]

South Korea's rating of first place out of 14 Asia Pacific markets in BMI's new Food and Drink Business Environment Ratings says much about the existing and remaining potential of this market's increasingly developed food and beverage sector. However, the leading local companies are already well into their preparations for the impending day where South Korea's market maturity begins to resemble saturation.

Leading South Korean mass grocery retailers, Lotte Shopping and Shinsegae have been vocal for some time about their desire to become major regional players, with both looking to the immense and highgrowth Chinese market as a point of immediate strategic focus. Both have stressed the importance of a strong presence in truly emerging markets, while using the now developed South Korean grocery retail market as a backbone for regional expansion. Elsewhere, the final months of 2007 have seen the country's leading food and beverage players as keen to diversify internationally in order to offset the threat of market maturity – leading local dairy producer Maeil Dairy Industry's acquisition of a stake in Vietnam's Hanoi Milk Company for US$218mn being one such example.

Ambitious South Korean companies are right to prioritise international growth; BMI has for some time viewed the country as a developed rather than an emerging market and our growth forecasts for the various food and beverage sub-sectors reflect this. Although not inconsiderable when compared to growth in the immensely saturated market of Japan for example, a coffee sales growth forecast of just 11.9% to 2012, or an alcoholic drinks sales growth forecast of 12.7% to US$1.4bn in 2012, are indicative of a market in which explosive sales growth is no longer realistic.

That said, however, retailers and manufacturers would be wrong to take their eye off the ball in South Korea for fear of a smaller, more focused player making inroads into their market share by committing to the few high-growth categories that remain. South Korea's Business Environment Ratings position, backed by a number of our industry forecasts this quarter, highlight strong – if un-explosive – growth opportunities. South Korea can still be a goldmine for retailers and food and beverage producers provided they can meet the specific and often demanding needs and wants of local consumers. BMI's forecast for the discount retail sector is an excellent example of this. By addressing the desire of local shoppers to spend on non-essential food and drink products and to consume within a modern environment, but coupling it with the inherent price sensitivity that has become commonplace since the Asian financial crisis, the discount retail sector has gone from strength to strength. To 2012, BMI expects discount retail sales to increase by 40.3%, compared to general sector growth of 32.3%. Many such opportunities remain, provided companies are willing to balance their international aspirations with a long-term commitment to South Korea.

Contents

[TOP]

Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Latin America Business Environment Rankings

SWOTs

Venezuela Food & Drink Industry SWOT Analysis

Macroeconomic Outlook

Table: Economic Activity Indicators

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: Venezuela MGR Value Sales by Format – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Structure Of Venezuela’s MGR Market By Numbers Of Outlets

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

Chapter 3 – Food & Drink

Regional Overview

The Growing Market For Wine Sales And Production In Latin America

Table: Per-Capita Consumption Of Wine (litres)

Table: Wine Production Estimates By Country 2005

Industry Forecast Scenario

Table: Food, Drink And Tobacco Indicators

Industry Developments

Company Developments

Market Overview

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

Chapter 4 – Tobacco

Industry Forecast Scenario

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

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In Venezuela’s MGR Sector

Table: Key Players in Venezuela's Food & Drink Sector

Regional Company Case Studies

Company Case Study – Organization Soriana

Table: Organizacion Soriana: Stores By Format, June 2006

Table: Organizacion Soriana, SA – Income Statement, January-June 2005 & 2006

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

Table: Market Shares Of The Four Largest MGRs 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

Mercado de Alimentos Mercal CA

Coca Cola FEMSA

Alimentos Heinz CA

Pernod Ricard Venezuela

Makro Venezuela

Cargill de Venezuela

Empresas Polar

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil In Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken In Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

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

[TOP]

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 Asain Food Sources

[TOP]

BMI's Asian 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: