BMI's Executive Summary

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In the face of falling real incomes and food shortages, Venezuelan consumers had to adapt their purchasing decisions over recent months. Fresh foods have remained the most popular food choice, partly owing to the fact that they are cheaper than many processed or packaged foods, but also because they are considered to be healthier and tastier. As a consequence, some processed and packaged food categories have experienced declining sales.

These include most prominently frozen foods, where sales are estimated to have declined by around 5% in 2006 and per-capita consumption during the year was as low as 185g. Sales of frozen vegetables are considered to have declined most strongly, at a rate of around 11% in 2006, followed by frozen red meat (-8%) and frozen poultry (-4%).

The dairy products sector was also hit particularly hard by the economic difficulties – prices have increased significantly as a result of increased reliance on imported products, with domestic producers having restricted their investments. The situation has been further emphasised by the falling value of Venezuela's currency.

A product sector that has not been subjected to price controls because it is not considered essential are snacks and meal replacements. Sales suffered significantly at the height of economic turmoil in 2003, but have meanwhile stabilised owing to the fact that prices have remained comparatively low and a significant proportion of consumers appears to have chosen to consume more snacks, while reducing traditional food consumption.

Food shortages do, however, remain a key problem for Venezuelan consumers. According to a survey carried out by the newspaper El Nuevo Herald, 73% of respondents admitted having difficulties finding sugar, 52% had problems finding beef, and more than 45% were unable to find powdered milk and chicken.

With President Chavez tightening his grip on power, the situation can not be expected to improve over coming months. Consumer price inflation picked up again in October 2007, reaching 2.4% month-onmonth (m-o-m) compared with 1.3% m-o-m in September, bringing the year-on-year (y-o-y) rate to 17.2%, and no cooling in prices is expected any time soon against the background of domestic supply constraints.

Consumers will continue to be attracted to the government-subsidised Mercal retail chain for basic purchases, putting further pressure on both food and drink manufacturers and mass grocery retailers (MGRs).

Contents

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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

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: