Foods from Latin America to the world's tables.

Author:Clavijo, Daniela
Position:MULTILATINAS: FOODS
 
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Globalization has brought Latin American products to the table of the world. And today our multilatinas are battling successfully with traditional multinationals for territory in the food sector. The end of the cycle of bonanza in commodities has deepened this trend and a few years ago speeded up the search for other markets, in some cases in regions that had been little explored by Latin American countries.

Mexico's popular gastronomy in the form of tortillas, fried foods, and many corn derivatives has arrived at tables in 112 countries of the Americas, Asia, Europe, and Oceania under the brand names of Gruma, one of the world's most important multilatinas of food.

In 2015 alone, the Mexican company expanded its presence in Russia, Malaysia, the Ukraine, and the United States, and its international operations now account for 73 percent of its total sales.

Gruma's strategy was to focus on efforts to improve profitability while maintaining presence and leadership in the markets in which it operates without neglecting investments, which totaled $220 million in 2015.

At the end of March, the company acquired the Spanish division of Azteca Foods Europe, a company specialized in producing wraps -wheat tortillas, tortilla chips, and similar foods. Now it has customers in 19 European countries, the Middle East, and northern Africa.

Analysts say the sector has been more active than ever over the last three years: there are new local players forging an intimate relationship with consumers, multilatinas are interested in smaller companies with roots in local markets, and other companies are seeking alliances with their peers. The goal is to continue conquering the tables of the world, fighting for territory against multinational companies like Kraft, Mars, Kellogg's, Unilever, P&G, or Nestle.

Food-based multilatinas such as Gruma, Carozzi, SuKarne, Sigma, Arcor, Colombina, JBS, and Marfrig, to name a few, are the ones that are embarking on this strategy.

"The food sector is in the midst of a consolidation process," said Marisol Huerta Mondragon, assistant director of market analysis for Grupo Financiero Banorte, a Mexican financial conglomerate. As a result, these large companies -that once were local firms-will take larger positions in international markets in the medium term.

"The biggest change is the focus on expansion," said Manuel Valencia Bastida, director of international business at the Institute of Technology and Higher Studies of Monterrey (ITESM).

The United States and the Latin American countries are still the most important markets for the multilatinas, although from 2015 onward, the expansion into markets previously unimagined by regional companies was well underway. Thailand, Nigeria, Hong Kong, Laos, Vietnam, and China are all on the list.

Valencia said the next region to conquer should be African countries, a move that would require investing in local plants for distribution on the continent. "The food multilatinas are attacking the large countries with growth potential, both in Africa and in Asia," he said. "China is no longer the answer for everyone; they have to learn to sell in Laos, Thailand, or Cambodia, due to the sheer size these markets provide for them, and do the same in Africa, in countries like Nigeria and Egypt."

Other analysts think the multilatinas should first continue to derive maximum benefit from selling in the markets of the region; and then develop in markets where their countries have free trade agreements; and thirdly advance to other regions.

The multilatinas of Peru, Mexico and Chile have an additional benefit: the Transpacific Partnership (TPP), which will enable them to plan their entry into countries such as Japan, Australia, Brunei, Malaysia, New Zealand, Singapore, and Vietnam.

M&A INCREASE

In 2015 and 2016, several food multilatinas went shopping and acquired flagship...

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