BMI View: Despite expected currency devaluation in 2016, Argentina's real GDP and private consumption growth rates are forecast to accelerate to 2.5% and 1.5% respectively. These figures indicate only a marginal economic improvement after several difficult years and are wel l-reflected in our outlook for the food and drink industry, which is forecast to expand by 14.5% in 2016 local currency terms, but face a 9.9% contraction in USD terms.
Headline Industry Data
Total food consumption (local currency) growth year-on-year (y-o-y) in 2015: +9.9%; compound annual growth rate (CAGR) 2014-2019: +9.3%
Total food consumption (USD) growth (y-o-y) in 2015: -1.3%; CAGR 2014-2019: -0.7%
Per capita food consumption (local currency) growth (y-o-y) in 2015: +9.0%; CAGR 2014-2019: +8.4%
Alcoholic drinks sales (local currency) growth (y-o-y) in 2015: +13.4%; CAGR 2014-2019: +11.1%
Alcoholic drinks sales (USD) growth (y-o-y) in 2015: +1.8%; CAGR 2014-2019: +0.9%
Alcoholic drinks volume sales (litres) growth (y-o-y) in 2015: +1.4%; CAGR 2014-2019: +2.1%
Soft drinks sales (local currency) growth (y-o-y) in 2015: +11.9%; CAGR 2014-2019: +11.8%
Soft drinks sales (USD) growth (y-o-y) in 2015: +0.5%; CAGR 2014-2019: +1.5%
Mass grocery retail sales (local currency) growth (y-o-y) in 2015: +12.5% CAGR 2014-2019: +12.5%
Mass grocery retail sales (USD) growth (y-o-y) in 2015: +0.9%; CAGR 2014-2019: +2.2%
Key Industry Trends & Developments
In July 2015, The US Department of Agriculture (USDA) said it would permit fresh beef imports from Northern Argentina and Brazil, under certain conditions, to minimise the risk of foot-and-mouth disease (FMD). The Animal and Plant Health Inspection Service (APHIS) made the decision after it found Argentina and Brazil to be compliant with US import certification requirements.
In May 2015, Argentina-based Via Frutta has filed for debt restructuring after incurring losses of millions of dollars, reports RioNegro. The firm is one of Argentina's top ten apple and pear exporters with an annual turnover of about USD10mn and sales of around 40,000 tonnes.
A decline in Southern Hemisphere grape harvest volume in 2015 is likely to increase demand for bulk wine, according to a Ciatti report. Argentina and New Zealand are set to record the biggest declines in the region, noted the report.
In May 2015, Argentina shipped its first consignment of pears to China, following the agreement of an import protocol between the two countries in 2014.
In May 2015, more than 30,000 doctors, scientists and environmentalists in Argentina joined a campaign to ban products made by US-based agrochemical company Monsanto. Members of medical union Fesprosa said the protest was a reply to the World Health Organization's declaration that chemicals in Monsanto's best-selling Roundup herbicide are 'likely carcinogenic'.
Argentina exported 493,244 tonnes of seafood in 2014, equating to a value of around USD1.6bn, according to data released by the National Undersecretariat of Fisheries and Aquaculture. The data showed that revenue from seafood exports was up 6.6% in 2014, while volumes fell 2.7%. During the reported period, squid, hake and shrimp were the top three items exported.
In January 2015, grape growers in Argentina were protesting against the government's inaction over a bailout for the country's troubled wine industry. Around 5,000 people turned out in the aftermath of an agreement, signed by Argentine President Cristina Fernandez de Kirchner, which committed to a USD56mn relief fund to clear around 300mn litres of excess wine which is currently in the market. The protestors claimed the move did not go far enough to help the ailing industry.
Key Risks to Outlook
Argentina's banking sector is poorly positioned to weather a devaluation of the peso in H116. Similar to January 2014's currency adjustment, when the Banco Central de la Republica Argentina (BCRA) changed its exchange rate policy without communicating to the banking sector, Argentine lenders maintain relatively high levels of exposure to foreign currency assets.
Argentina's high inflation rate continues to pose a threat to the country's long-term economic stability, as it continues to weigh on credit growth and hampers much-needed investment. In 2016, we forecast CPI to reach 24%, up from forecast 17% in 2015.
The Argentina Food & Drink Report features BMI Research's market assessment and independent forecasts for food and drink expenditure, consumption, sales, and imports/exports and forecasts for the mass grocery retail sector. The report also includes analyses of major regulatory developments, the background macroeconomic outlook and competitive landscape comparing national and multinational companies by leading products and services, sales, investments, partners and expansion strategies.
BMI's Argentina Food & Drink Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the food and drink industry and the mass grocery retail market in Argentina.
- Benchmark BMI's independent food and drink industry forecasts for Argentina to test other views - a key input for successful budgeting and strategic business planning in the Argentinian food and drink market.
- Target business opportunities and risks in Argentina through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Exploit latest competitive intelligence on your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key industry forecasts and views, covering food and drink manufacturing and consumption and the mass grocery retail market.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the food, drink and mass grocery retail sectors and within the broader political, economic and business environment.
BMI’s Food and Drink Risk Reward Index
BMI’s Risk Reward Index provides investors (food and drink manufacturers and mass grocery retailers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic points. These provide indices of highest to lowest appeal to investors, with each position explained.
BMI’s food chapter is divided into sections such as meat, fish, confectionary, dairy and canned foods, and provides insight into each market’s food industry, centred on a forecast to end-2019 for the sector. The chapter includes the following elements:
- Industry Forecast Scenario: Historical data series and a forecast to end-2019 for growth of key indicators within a market’s food industry. Indicators include food consumption, food consumption as % of GDP, canned food sales, confectionery sales and food and drink imports and exports, among others.
- Industry Developments: A summary of corporate developments, including news on M&As, FDI, expansions, closures and financial results, in addition to analysis and explanation of the latest industry events and how these could influence further investment.
- Market Overview: An overview of the structure of the market, introducing the key players and discussing underlying trends.
Segmented the same way as BMI’s food chapter, the drink section provides insight into each market’s drink industry, centred on a forecast to end-2019 for the sector. Forecast indicators include alcoholic and soft drink sales by value, volume and sub-sector and tea and coffee sales, among others.
Mass Grocery Retail Forecasts
Segmented the same way as BMI’s food and drink chapters, the mass grocery retail section provides insight into each market’s grocery retail industry, centred on a forecast to end-2019 for the sector. Forecast indicators include mass grocery retail sales by format (including supermarkets, hypermarkets, convenience and discount stores) and a breakdown of the organised retail sector versus the traditional sector, among others.
Illustration of the mass grocery retail and food and drink industries via rankings tables comparing revenues, number of outlets and number of employees. This chapter also includes data-rich, in-depth regional analysis of the market position, business strategies and investment potential of the region’s leading mass grocery retail and food and drink operators.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Food & Drink reports draw on an extensive network primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.