São Paulo – The factory that Brasil Foods, the owner of brands Sadia and Perdigão, will have in the United Arab Emirates should answer to 60% of local demand for company products. The raw material will be supplied by Brazil, but the labour will be local. This information was disclosed by the company’s vice president for Corporate Affairs, Wilson Mello, who answered a series of ANBA questions by email.
The scheduled investment is US$ 120 million, the unit’s processing capacity will be 80,000 tonnes of food a year and operation should begin in late 2012. Among the advantages of having a factory in the Middle East, the second main market for Brazilian chicken, Mello mentions the proximity with clients, the opportunity of expanding participation in the food service sector and the greater flexibility in development of products according to regional taste.
“BRF may develop other product lines and even local brands,” said the executive. Sadia and Perdix, the Perdigão name there, are among the leading brands in the Middle East.
According to him, the agreement made with the Administrative Council for Economic Defence (Cade), which determined alienation of assets to permit the Sadia-Perdigão merger, does not affect business in the Arab world, as it only influences operations in Brazil. The units will be sold to a single buyer. “These are high-level assets which, combined, will grant the buying company the status of second largest player on the Brazilian market,” he added. The company offering the highest price will take them. The interview follows:
ANBA – Where exactly will the factory [in the Emirates] be installed?
Wilson Mello – The exact site is yet to be defined. It may be in Dubai or Abu Dhabi.
Will the estimated yearly production of 80,000 tonnes supply the entire demand of the region, or will finished products continue being shipped from Brazil?
Local production should supply around 60% of the demand in the region. The remaining volume will be exported from Brazil.
Will the unit use Brazilian raw material?
Yes. Brazil is the most competitive country in the world in production of raw material. The factory will process raw material shipped from Brazil.
What about the labour force?
It will be local.
What is the advantage of owning a factory in the Arab country?
There are many advantages. We will be closer to clients and consumers. We will have greater adaptability and flexibility to develop products adapted to regional demands. Not to mention greater retail penetration, because the local factory enables a broader presence in food service channels as well.
Sadia and Perdix already are leading brands in the Middle East. Is there room for more?
Both brands really do have an important presence in the region and under our strategy, the significance of either should not decrease. Still, based on local production, BRF may develop other product lines and even local brands.
After the merger, what changes in terms of the products sold to the Middle East?
We have no limitations in the foreign market. However, due to the assessment of the Cade (Administrative Council for Economic Defence), we used to have limitations on our operation. We were only allowed to operate the commercial aspects jointly. Now that the merger has been approved, we will integrate our operations completely. As a matter of fact, after the merger, the changes will enable us to be even more efficient in servicing our clients in the foreign market.
Based on the agreement with the Cade, BRF should waiver some of its assets. Does that involve some business in the region?
No, all of the assets to be sold are in Brazil. The sale will not impact on our services to foreign clients in any way.
Are there any Arab groups interested in the assets to be sold by the company?
There are no formal proposals yet. We have hired the BTG Pactual bank to carry out the sale process. At the right time, the bank will receive the formal proposals and we will review them thoroughly. Under the agreement with the Cade, we are obliged to sell all of the assets to one sole buyer. We will sell them to whoever offers the best price. These are high-level assets which, combined, will grant the buying company the status of second largest player on the Brazilian market.
What are the main issues that the company is eventually faced with in the Arab market?
We have no issues. The Middle East is a very important market, in which we have been active for over 35 years now. Right now, the Middle East accounts for nearly 32% of the company’s exports. We have established brands in many of the region’s countries. And the same as with the building of the factory, we are certain that our local presence will contribute even further to boost our business in that market.
*Translated by Mark Ament & Gabriel Pomerancblum
