São Paulo – Brazilian exporters may further explore the Arab processed food market. Although this category of product answered to 21.5% of sales of Brazil to that region of the world last year, for a total of US$ 2.1 billion, sugar alone answered to 84% of shipments, according to a study by the Market Development Manager at the Arab Brazilian Chamber of Commerce, Rodrigo Solano.
This shows that other Brazilian products in the same category have a reduced presence in the Arab world. Products like juice, chocolate and pasta have much lower weight on the export basket to the region than in total sales of Brazil to the world.
"To the world, the division of export products is more pulverized, which shows that the world has already discovered Brazilian processed products, but the Arabs have not," said Solano. "Greater promotion is necessary," he added. To give an idea of the situation, whereas juice represented around 10% of the total foreign sales of Brazilian processed food, to the Arabs the percentage is just 0.5%.
In Solano’s evaluation, Brazilian companies need to apply the know-how they already have in exports of beef and sugar to the Middle East and North Africa to the promotion of other items. This includes, for example, the obtaining of Halal certification and the adaptation of products and packages to the taste of consumers in the region.
The potential for expansion of this market is clear for those who generally operate in this area. This is the case with Eduardo Moraes, a partner at trading Latinex, from Curitiba, which is specialized in food. He has already travelled a large part of the Arab world after import and export opportunities. "In general, it is a market with great potential, but one that is little explored [by Brazilians]," he said.
In the Gulf region, for example, according to Moraes, the market is sophisticated and has great presence of products from countries that compete with Brazil and with the local industry. According to a study by the Market Development Department at the Arab Brazilian Chamber, in Saudi Arabia, the main economy of the region, the sale of industrialized foods grew 14% last year when compared to 2007. In the United Arab Emirates the sale of processed food grew 15% in the same comparison, especially in dried and frozen products and sweets.
In the region there are some factors that boosted the sector, like the economic growth, boosted by the cycle of high oil prices that lasted until mid 2008, the expansion of per capita income, the growth of the population, the release of new products, aggressive advertising by companies and changes in consumer habits. There is a greater and greater search for differentiated products, more nutritious and healthier, with lower levels of fat, as well as organics.
There is, for example, great competition in the Gulf. Large multinational and local companies are fighting for consumer preference. Moraes explains that in the Emirates the local juice industry works with low production cost, good logistics and great know how in the commercial area, which guarantees competitiveness. Oman, according to him, is another example, as good quality biscuits are produced there at competitive prices, from imported inputs.
This, in the evaluation of the businessman, does not mean that competition is a bottleneck to greater Brazilian exports, but shows that exporters should work on two fronts: in promotion of products ready for consumption that may be competitive, like fruit, vegetables and canned meats, and in the sale of semi processed food for industry in the region, like mashed fruit and concentrated juice. "They are areas that are greatly evolved in Brazil, but that do not yet have a sales channel that is totally formed in the region," said Moraes.
He himself operates on these two fronts, working with finished and partly manufactured items. Latinex, for example, has just closed a deal to export mashed mango and oranges to a factory in Syria that produces ready food made from fruit. "The same thing is done in Libya," he declared.
Advantages in the crisis
In this area, the international crisis itself may bring advantages to Brazilian exporters. Moraes said that in recent months, after the worsening of the financial situation, the number of enquiries to Brazilian companies by Arab importers has risen. "It is a market that is standing out as a strong one during the crisis," he said.
He believes that European traders, who work much with outsourced financing and are traditional suppliers of the Middle East, are suffering due to the lack of credit, which makes the cost of products higher and less interesting for Arab importers. In Brazil, many companies operate with their own capital and have attracted the attention of businessmen in the region, which has caused great expansion in the number of Brazilian companies recently seeking business in the area, according to Moraes.
Other Arab countries, like Egypt and Morocco, have also presented good rates of growth in processed food retail. According to a study by the Arab Brazilian Chamber, sales of pasta were the ones that grew most in Egypt, as the product is relatively new to consumers and has gained great popularity. Still there, great supermarket chains have taken over a space that used to be in the hands of small grocery stores.
In Morocco, trade of products considered healthy has grown more than those of traditional foods, and this scenery should remain, according to the study.
Moraes added that Brazilian companies must overcome one more barrier to expand their share of the Arab market: the strengthening of the image of Brazil as a great producer and exporter of foods, which it really is. He added, for example, that the largest share of the canned meats consumed in the region come from Brazil, but that local consumers do not know that as, generally, the products tend to be sold under local brands.
Further information on the Arab market for foodstuffs
Arab Brazilian Chamber of Commerce
Market Development Department
Tel: (+55 11) 3283-4066
E-mail: infobiz@ccab.org.br
Site: www.ccab.org.br
*Translated by Mark Ament
