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Colombia Food & Drink Report Q1 2014 - New Report Available

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2013-12-08 13:58:57 - Fast Market Research recommends "Colombia Food & Drink Report Q1 2014" from Business Monitor International, now available

As its political risk profile continues to improve, Colombia is rapidly evolving into one of Latin America's highest-potential consumer markets. From retail to soft drinks, foreign companies are paying more attention to opportunities in Colombia, underscoring the progress the country has been making. We believe the best is yet to come; as long as the political situation remains stable, both staple and discretionary consumer goods firms will remain well placed for growth. This is especially true given that Colombia has largely taken a backseat in recent years, with multinational food and drink investors primarily focused on the standout Latin American economies of Brazil and Chile.

Headline Industry Data (in local currency)

Full Report Details at
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* 2014 per capita

food consumption = +7.9% year-on-year (y-o-y); forecast compound annual growth rate (CAGR) 2014-2017 = +7.4%.
* 2014 alcoholic drink sales value = +5.8% y-o-y; forecast CAGR 2014-2017 = +4.5%.
* 2014 soft drink sales value = +9.7% y-o-y; forecast CAGR 2014-2017 = +7.0%.
* 2014 mass grocery retail sales = +9.8% y-o-y; forecast CAGR 2014-to 2017 = +10.3%.

Key Company Trends

Starbucks To Open First Store In Colombia: Starbucks says it will open its first cafe in Colombia, where the popular Juan Valdez chain has a very firm foothold. The Seattle-based chain says the Bogota store will open in the first half of 2014 and be operated through a joint venture between the company's Latin American franchisee, Alsea, and the food company Grupo Nutresa. Starbucks says it has "aggressive plans" to open cafes across Colombia over the next five years. CEO Howard Schultz says Starbucks has discussed with Colombia's coffee federation increasing its use of Colombian coffee worldwide by about 20 percent over the next three years. The federation is a partner in the Juan Valdez chain, which has more than 225 shops, mostly in Colombia. Starbucks says it has more than 650 stores in Latin America.

Coca-Cola FEMSA Breaks Ground On $200mn Bottling Plant In Colombia: Mexico's Coca-Cola FEMSA said it broke ground on a $200 million bottling plant in Tocancipa, a city in central Colombia. The new plant will be in operation in late 2014, the Mexican corporation, considered the world's largest independent bottler of Coca-Cola products in terms of sales volume, said. The bottling plant is in Parque Industrial FEMSA, "the first cluster for non-alcoholic beverages in the country," the company said. The plant "will feature state-of-the-art design and technology, and will be considered green because it will have the highest sustainability standards," Coca-Cola FEMSA said. The new bottling plant will create 150 direct jobs and other indirect jobs, Coca-Cola FEMSA said. The company currently has bottling plants in Bogota, Medellin, Bucaramanga, Barranquilla, Cali and La Calera.

Krispy Kreme Enters Fray As Colombia's Appeal Grows: As its political risk profile continues to improve, Colombia is rapidly evolving into one of Latin America's highest-potential consumer markets. From retail to soft drinks, foreign companies are paying more attention to opportunities in Colombia. The latest major food and drink company to take on this opportunity is Krispy Kreme after it signed a franchise agreement with the Colombian company IRCC with the aim of launching 25 stores over the next five years, according to the Financial Times. With a lot of room for incomes to grow as the first chart illustrates, this could well be a good time for Krispy Kreme to get its foot in the door, particularly with its larger rival in the US, Dunkin' Donuts, having led the way in Colombia. Considering Columbia's population (about 46mn), it is not surprising that an improved economy presents excellent opportunities for companies like Krispy Kreme.

Key Risks To Outlook

Colombia Agricultural Strike Sparks Fear Of Shortages: In the summer of 2013, agricultural workers in Colombia went on strike in an attempt to get the country's government to agree to a wide- ranging set of demands including subsidies for their products, and cheaper fuel prices. The farmers say they need help from the government as the prices for raw materials and fuel needed to transport their goods rise, while the prices their products fetch have been falling. Though the situation on the ground has since calmed, tensions could rise among workers as many global commodities prices continue to fall.

Risks Of Weaker Oil Revenue And Weakening Peso: We believe that the recent sell-off in commodities, additional depreciatory currency measures by monetary officials and a key technical break will see a relatively weaker Colombian peso over the coming weeks. The ongoing dollar strength associated with weaker commodity prices will weigh on Colombia's exchange rate. This will be compounded by weaker oil prices. Indeed, the oil sector is key for Colombia, being the main destination of foreign investment, as well as its main export. Thus, the prospects of weaker oil revenue will likely prompt foreign investors to adopt a more cautious stance towards Colombia, ultimately adding downside pressure to the peso, which will have an impact on the price of imported consumer goods. In addition, Colombian authorities will very likely continue to pursue measures to weaken the peso in an attempt to bolster export competitiveness

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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