New Market Report Now Available: Chile Food & Drink Report Q1 2014

From: Fast Market Research, Inc.
Published: Mon Jan 06 2014

We expect growth to slow in the Chilean economy over the next year as increases in annual GDP per capita reach their lowest rate for four years at 3.4%. This will have an impact on the spending patterns of consumers, an effect common across much of Latin America. Private consumption is therefore forecast to grow at 4.0% in 2014 compared with 6.1% and 4.7% in 2012 and 2013 respectively. However, we expect to see per capita food consumption increase to US$1,706 in 2014, up 5.6% on 2013. With inflation at around 3.2% for the period, this represents real growth in food consumption as the market continues to develop and offers new products to the consumer class.

Full Report Details at

Headline Industry Forecasts (local currency terms)

* 2014 per capita food consumption growth = +5.6% year-on-year (y-o-y); compound annual growth rate (CAGR) to 2017 = +5.7%.
* 2014 alcoholic drinks value sales = +5.5%; forecast CAGR to 2017 = +5.7%.
* 2014 soft drinks value sales = +7.1%; forecast CAGR to 2017 = +7.0%.
* 2014 mass grocery retail value sales = +5.6%; forecast CAGR to 2017 = +5.8%.

Key Company Trends

Cencosud Sacrificing Short-Term Profitability: Chile-based Latin American food retail giant Cencosud has been working hard to diversify its business over recent years, with the most recent high-profile example coming in October 2012 as the company reached an agreement to acquire Carrefour's assets in Colombia for US$2.6bn. This move was largely debt-financed (JP Morgan loaned the retailer about US$2.5bn) and inevitably had a negative effect on the company's short-term profitability given increased financing costs. Indeed, in the first quarter to March 2013, excluding a one-time provision expense, Cencosud's net income was down 26% y-o-y.

Andina's Net Profits Decline In FY12: In March 2013, Coca-Cola bottler and beverage company Embotelladora Andina posted a 9.7% y-o-y decline in net profits for FY12, reporting them at CPL87.64bn (US$185.4mn). The results released by Andina were consolidated to take into account Q412 figures of Embotelladoras Coca-Cola Polar. The amalgamated company's sales went up by 19.3% y-o-y to CPL1.172trn (US$2.47bn). In April 2013, Andina announced that it plans to invest US$350mn for the year, which will go towards its Brazilian plant and maintenance work Concha y Toro 2013 Profits Hit: In April 2013 local wine major Concha y Toro reported that its full-year net profits for 2012 dropped 40.5% y-o-y to CLP30.02bn (US$63.5mn). Operating profits for the year were down 9.1% y-o-y to CLP53.68bn. That said, net sales increased by 6.6% for the year to CLP450.4bn, making up in part for weak domestic demand. Asian sales were particularly strong, up 21% y-o-y.

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