Brasil Foods Sets its Sights on the World

Following its take-over of Sadia, Brasil Foods (BRF) has set its sights on developing into a totally global company by 2015, writes ThePoultrySite Editor in Chief, Chris Harris.
calendar icon 9 November 2011
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At the take-over, BRF laid down a five year plan – BRF15 – which set out parameters for the merger, consolidation of the domestic market in the 2010-2012 period, development of a multinational culture and growth towards internationalisation between 2013 and 2014 and becoming a world class company with a global culture by 2015.

Speaking in London last week, the group CFO. Leopoldo Saboya, said that the company wanted to capture BRR700 million synergies – mergers and acquisitions – this year and it has set itself a target of BRR1 billion in mergers and acquisitions for the next two financial years.

The total investment for these ‘synergies’ is expected to be about BRR700 million.

With the acquisition of Sadia, BRF has hit a peak in the domestic market and some of the brands and companies will have to be shed to meet anti-trust demands.

The main loss to the company will be the meat interests of Batava, which are expected to be sold.

Because of the company's extensive interests in Brazil, the focus of the company has now turned abroad with a focus on expansion in both the Middle East and in Latin America.

"We will expand operations by acquisitions and greenfield development involving processing, distribution and local brands," said Mr Saboya.

He said the company will be consolidating its current businesses, capturing retail and food-service clients, and it will develop products to match the specific demands and cultures of each of the international markets it is in.

In Europe, the company focus will be on improving the product mix and growing its share of the processed products market by increasing its value-added range using Brazilian raw materials because of the competitive production costs.

Europe and Eurasia already represent 27 per cent of BRF's export market.

The Middle East is going to see the greatest investment with about $120 million being invested in an 80,000-tonne capacity Greenfield production plant. The development will give BRF a stronger position in the market and enable it to have greater penetration in the retail and food-service sectors. The Middle East already enjoys a 30 per cent share of BRF's exports and it a leading exporter to the region.

Latin America has 10 per cent of BRF's international market and the company is aiming to become a major producer of primary meat products and enjoy the growth in Argentina's poultry production.

Mr Saboya said that the company has invested in "modest" production plants, investing $150 million in Avex and Dánica, compared to the plants in Brazil.

The aim is to have locally produced chickens and processed products through the Avex brand. Avex slaughters 150,000 chickens a day and has production facilities for 40,000 tonnes of animal feed and a hatchery producing 758,800 eggs a week. Tt also has integrated nursery farms and fattening farms run by growers.

The Dánica operation produces margarines, oils, sauces, mayonnaise, pasta and pastries.

In the Far East, the company sees Japan as a present market that is will consolidate with value-added products, repositioning the Sadia brand with premium products and it is looking towards China as the future with a joint-venture with DCH based in Hong Kong. At present, the joint-venture is focusing on the distribution side of the business with Sadia-branded processed products but the intention is to look for a greenfield site for production.

While Africa has just eight per cent of BRF's international business, the company sees this area as a region for growth because meat consumption is so low in the developing nations. As the nations become wealthier, meat consumption will grow and BRF says it intends to capitalise on this growth.

As recorded in the company's third-quarter results this year, Brasil Foods is making great strides to fulfil its targets with marked rises in both domestic and export markets and EBITDA margins rising to 11.5 per cent on a continual sales growth.

Sales were up by 14.3 per cent in the first nine months of the year, reaching BRR18.607 billion.

Since the merger of Perdigão and Sadia within Brasil Foods, the company has moved into the top 10 global food producers, vying with Heinz for number six spot.

November 2011
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