São Paulo – The Arab market is a priority for Brasil Foods (BRF), a new company in the food sector established after the merger between Sadia and Perdigão. This statement was made yesterday (19th), by Sadia president and co-president of the BRF Board of Governors, Luís Fernando Furlan, during a press conference in São Paulo. "We already have a plot in the Middle East, but we do not yet know where to open a new factory," said Furlan, referring to the project of installing a production unit in the Arab countries, which is awaiting new coordinates.
To the head of the Market Development Department at the Arab Brazilian Chamber of Commerce, Rodrigo Solano, the installation of a factory in the Arab countries will be very positive for the strengthening of BRF in the Arab market. "One of the routes for Brazilian companies is establishing partnerships and joint ventures in the countries where they plan to increase their participation in the market. Nowadays, several benefits are granted to Brazilian companies interested in establishing themselves in the Arab countries," said Solano.
The Arab countries are already among the main markets for both companies. According to information supplied by a spokesperson for Sadia, exports to the Middle East answered to 31% of company exports. The organisation did not disclose the volume, nor the export revenues. However, according to the Ministry of Development, in 2008, Sadia exported over 50 million Brazilian reals (US$ 24 million) to Saudi Arabia, the main Arab buyer of Brazilian processed foods, alone. Perdigão, in turn, disclosed that in 2008 the countries of the Middle East were destinations for 25.6% of company exports.
The new company already has net annual revenues of 22 billion reals (US$ 10.7 billion), 42 factories in ten Brazilian states and offices in eighteen countries. BRF employs 116,000 people. It is among the main producers and exporters of processed meats in the world and the third main Brazilian exporter. "We are setting up a great Brazilian multinational of processed products and one of the three main employers in Brazil, losing only to Vale and Petrobras," said Furlan. According to him, there should be no shutdown of factories and it is expected that demand should rise and, consequently, so should production, due to the joint efforts of both companies for expansion of the business.
With regard to consumers, both Sadia and Perdigão guarantee that there should be no changes and that all brands and products currently offered will be maintained. "We want to release new products on the foreign market, but the traditional brands are going to continue. BRF will be an institutional brand, but we are going to keep brands Sadia, Perdigão and Batavo," said the president at Perdigão and co-president of the new company, Nildemar Secches.
Despite the optimisation of means of production and logistics resulting from the merger, there is not indication of price reductions for consumers. According to Secches, the main reason for there being no cost reduction is the fact that the companies are just part of the productive chain, which also involves distributors, wholesalers and retailers.
With regard to a possible cornering of the market, Secches admitted that Brasil Foods will have a significant share of several sectors of the food market, but pointed out that the dimensions of the company’s market share are not yet known. According to him, a significant part of the company’s activities are on the foreign market.
"BRF may produce more, sell more and export more. We are going to focus on growth and on better competitiveness," said Furlan.
Alignment
Initially, while the operational structure and logistics unification process is in progress, both companies should coexist. Each will keep its board of governors and both brands will remain on the market. A company specialized in management will be hired to help in the transition, which should take place gradually.
Perdigão shareholders should have 68% of the BRF capital and Sadia, 32%. Together, Sadia and Perdigão currently have 63,000 shareholders. The group should be responsible for decision-making process, to have professional administration. The 3,000 BRF food products will be sold throughout Brazil and in another 100 countries.
*Translated by Mark Ament
