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Chile Food and Drink Report Q2 2010
Market |
Food and Drink |
Report Type |
Market Research |
Country |
Chile |
Published |
9 March 2010 |
Number of Pages |
75 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
The economic and natural advantages encouraging multinational firms to build production facilities in Chile is reflected in the news that, at the start of 2010, Swiss food giant Nestlé opened a new research and development (R&D) centre for biscuits and cereal-based snacks in the capital, Santiago. The facility is to be a hub for R&D, focusing both on innovation and reformulation of existing products. CEO Paul Bulke said that it will allow for creative development in a 'very important product category' and that it will help Nestlé 'offer consumers in Latin America and beyond the choice of tasty, healthy, more nutritious biscuits'.
Nestlés biscuit unit represented around 1.3% of the companys total turnover in 2008. The firm generates 60% of its biscuit sales in Latin America which explains why it has chosen to site a research hub in this region. The decision to site the plant in Chile is likely to stem from Nestlés existing extensive production capacity in the country, which will facilitate the roll-out of new products. In particular the firm has identified synergies between the new facility and its biscuit manufacturing plant in Maipu, which employs 1,200 workers. Nestlé is just one firm making particular use of Chiles natural advantages and its Chilean plants produce nearly the entire range of Nestlé products, which are then exported to the rest of Latin America. The firm even produces some products in Chile for export outside of Latin America, such as condensed milk, which is exported to the US. While currently representing only a small percentage of Nestlés total sales, the biscuit category has strong growth potential in both Latin America and other emerging markets.
In the drinks sector, the fortunes of the major players have been more mixed. Embotelladora Andina, for example, reported that 2009 full-year net profits were down by 6.2% to CLP86.92bn (US$161.9mn), while net sales decreased by 9.7% to CLP743.1bn (US$1.39bn). The lacklustre financial performance was attributed to exchange rate losses, the high cost of sugar and the difficult economic environment. As one of the largest Coca-Cola bottlers in Latin America, Andina for a long time has been able to rely on the prestige and brand recognition of one of the worlds most famous products. However, although sales of carbonated soft drinks are continuing to grow, Andina is having to spend an increasing amount of money on advertising to maintain this growth rate. With a rise in health-consciousness in more developed markets, carbonated soft drinks may at some point start to decline. Meanwhile, the impressive sales figures for the firms other divisions, including juices and bottled water, perhaps indicate other markets that have not yet been fully exploited.
In contrast, Chiles largest wine producer, Concha y Toro, reported strong sales growth of 12% for 2009 to CHP353.5bn (US$720mn). This was driven by an 11% increase in export sales and a 7% increase in domestic wine sales. In Chile per capita wine consumption reached a peak in 1982 of 52 litres per year, but then fell to a low of only 13 litres in 1994. Since then the market has improved somewhat with per capita consumption stagnating at around 16 litres for several years. However, the high quality of domestic wine along with increased efforts of producers to market wine to the local population look to be having an impact on domestic consumption and Concha y Toros 2009 results may well be indicative of a return to steady growth in the sector.
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